How long does an IVA last?

An IVA usually lasts five years if you’re making monthly payments. It can last longer though if you need to make up for missed or reduced payments. It may also be extended, generally to six years, if you’re a homeowner.

Sometimes, creditors will accept a lump sum to settle your debts. This is called a full and final settlement IVA. This type of individual voluntary arrangement doesn’t tend to last for more than three months.

Could my IVA be extended?

Your IVA may be extended if you miss payments or don’t make all of your payments in full. If you’re a homeowner, it may also be extended from the usual five years to up to six years. This may happen if you’re unable to remortgage to raise money to cover some of your debts.

Is there a maximum length of time an IVA can last?

There isn’t a maximum length of time an IVA can last. Although they usually last five or six years, an IVA can go on for longer if you need to make up for missed or reduced payments.

If you’re unable to make all the payments as agreed, you should tell the company managing your IVA. They may be able to get your creditors to agree to lower payments and help make sure you complete your IVA successfully.

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Could an IVA last longer for a homeowner?

An IVA may well be extended if you’re a homeowner. If you have more than £5,000 of equity in your home, you’ll usually have to remortgage to release money to be paid into your IVA. Equity is the amount of money you’d make from selling your home once you’d paid off any mortgages.

If you’re unable to remortgage at the end of the fifth year of your IVA, you’ll carry on making your usual payments for up to another 12 months. This means your individual voluntary arrangement will last six years instead of five.

Can I pay off an IVA early?

If you come into some money during your IVA, it may be possible to pay it off early. You should talk to the company managing your IVA. They’ll be able to advise you on whether it’s a good idea to make a lump sum offer to your creditors.

If the money you plan to use has come from a windfall, such as a lottery win or an inheritance, it may need to be paid into the IVA anyway. In such cases, your creditors may be less likely to accept a lump sum offer to pay off your IVA early.

Sometimes, a family member or friend may offer to pay off your IVA. Creditors may be more open to this option as that money wouldn’t go towards your debts otherwise.

If you settle your individual voluntary arrangement early, you’ll be able to start rebuilding your credit score sooner.

How long does an IVA stay on your credit file?

An individual voluntary arrangement will stay on your credit report for six years from the date it was approved. You’ll find it hard to borrow during that time.

After six years, you’ll effectively need to start building your credit rating from scratch. This may take a while, but there are things you can do to move the process along:

try applying for small amounts of credit from companies that specialise in lending to people looking to rebuild their credit rating
repay your borrowing every month to show potential lenders that you’re a low-risk customer
make sure you’re on the electoral register
check your credit file to make sure all the information is correct