Missed IVA Payments: What to Do Next

What happens if you miss a payment

A single late payment is not usually the end of the IVA, but it needs attention. Your practitioner will normally contact you, ask why you missed it and expect you to catch up. If payments continue to be missed, they may issue a notice of failure or breach, giving you a period to put things right. If you do not, the IVA can be treated as failed. When that happens, the legal protection ends and creditorsHow to Deal with Creditors: Communication and NegotiationPractical advice on communicating with creditors, negotiating affordable repayments, and understanding your rights when dealing with the companies you owe.Read more → can take action again for the full original debts, less what they have received. They may also seek to make you bankrupt.

Talk to your practitioner first

Contact your practitioner as soon as you think you may miss a payment, ideally before it happens. Explain what has changed and give evidence, such as a redundancy letter, medical note or new budget. Many practitioners can help in genuine hardship, and the options may include the following.

1. A payment break: Some arrangements allow payments to be paused for a limited time if you lose your job or face another serious change. Check what your agreement says.
2. A reduced payment: If your income has fallen permanently, the payment may be varied to reflect the new position.
3. A short extension: The term may be extended to make up the shortfall.
4. Catching up later: You may be allowed to make up the missed payments over time.

Get independent advice at the same time

Alongside speaking to your practitioner, talk to a free adviser at StepChangeStepChange Explained: What It Does and How It WorksWhat the debt charity StepChange offers, how its free debt advice and debt management plans work, who it suits and what to expect when you contact them.Read more →, National DebtlineNational Debtline: How It Works, When to CallWhat National Debtline is, who runs it, what it can help with, how to get free advice by phone, webchat or online tools, and what to expect.Read more → or Citizens Advice. They can check your budget, look for income you may be missing, and explain your options if the IVA cannot continue. They have no interest in selling you anything. See free debt advice in the UK.

Look at your budget again

Before assuming the IVA is unaffordable, check where the money is going. Rebuild your budget using the debt budget guide and our budget planner. Make sure you are claiming benefits and discounts you are entitled to, such as Council Tax Reduction, and review your bills using how to cut household bills. If your essential costs have risen permanently, the practitioner needs to know.

If the IVA is going to fail

Sometimes the IVA cannot be saved. In that case, you have other options, and planning ahead is much better than a sudden failure.

See our comparison of IVA, DMP, DRO and bankruptcy. A failed IVA does not wipe out the debts. They revert to their original amounts, less what creditors have been paid, so creditors can pursue them again.

Protect your priority bills

While you sort things out, keep priority bills like rent or mortgage, council tax and energy up to date. These have the most serious consequences for non-payment. See priority and non-priority debts. If you cannot keep up, ask for help early and use Breathing Space where it applies.

Preventing problems in the future

Ask your practitioner at the start what happens if your circumstances change, and keep an emergency fundHow to Build an Emergency Fund in the UKWhy you need an emergency fund, how much to save, where to keep it and how to build one even on a tight budget, with practical steps for UK savers.Read more → if you can. Tell your practitioner about changes in income or costs, good or bad, because failing to mention a pay rise can also cause problems. Attend every annual review. If you think the IVA was unsuitable from the start, see our guide to mis-sold IVAs.

A worked example

Marcus has paid £200 a month into his IVA for three years. He is then made redundant. He writes to his practitioner within a week, attaches his redundancy letter and asks for a payment break while he looks for work. The practitioner checks the agreement, which allows a short break, and sets out the terms in writing. Marcus keeps his rent and council tax paid, claims Universal Credit and starts again when he gets a new job. If he had said nothing and missed three months, the IVA could have been treated as failed. The difference was simply speaking up in time.

What practitioners will want to see

Be ready to provide recent bank statements, proof of the change in your circumstances and an updated budget. The more evidence you give, the easier it is for the practitioner to justify a change to creditors. If your income has fallen only temporarily, say so and give an estimate of when it will recover.

Keeping a record

Keep every letter and email to and from your practitioner, along with bank statements showing payments. If you agree a change, such as a payment break, get it in writing and keep it with your IVA paperwork. If you later need to challenge a failure notice, or move to another solution, these records are the evidence you need.