Familiarising yourself with what happens after a completed IVA can help you know what to expect. If you're nearing the end of your IVA, this guide is designed to tell you everything you need to know, from what a completion certificate is to when you can expect to receive it.
How does an IVA work?
An Individual Voluntary Arrangement (IVA) is a legally binding agreement with your creditors to repay your unsecured debt at a rate you can comfortably afford over a fixed period (typically five years). It must be set up and managed by an Insolvency Practitioner (IP), who will communicate with your creditors and distribute your payments on your behalf.
Before your IVA can begin, the majority of your creditors by debt value must vote to approve it. Even if some of your creditors reject your IVA proposal, they will be added to your arrangement if it gets 75% approval.
Because an IVA is a formal debt solution, you'll have relief from creditor contact, legal action, fees and interest for the duration of your arrangement, and your assets will be protected. Your IP will manage all communication between you and the people you owe money to.
There are certain rules you must stick to while you're in an IVA. As well as sticking to a budget, you must report any windfalls received and get permission from your IP to borrow more than £500.
By law, all IVAs must be reported to the Insolvency Service. It's also a requirement to attend an annual review once a year, during which your IP will review your financial documents to ensure your circumstances haven't changed. Your final review will happen after you've made your final IVA payment, and will check that you've stuck to all the terms of your arrangement so you can be discharged as planned.
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What happens after an Individual Voluntary Arrangement (IVA)?
Once you've made your final payment towards your IVA, your Insolvency Practitioner (IP) will check that all your payments have been made and you've stuck to the terms of your arrangement as originally agreed.
If they can confirm that you have successfully completed your arrangement, all remaining debts included in your IVA will be written off. This means you won't have to pay them back and you shouldn't be contacted about them again.
Your entry on the Individual Insolvency Register (IIR) will also be changed to 'completed', and your details removed within three months. Your IVA will remain visible on your credit report for six years from the start date, so it will likely remain on your credit file for another 12 months if your IVA lasted the standard five years. If you apply for credit (e.g. a loan or mortgage) in this time, lenders will be able to see your IVA.
Remember, your IVA can be extended to six years if you have sufficient equity in your home or you missed payments at some point. It can also end sooner if you're able to repay your debt with a lump sum payment.
It is your responsibility to ensure credit reference agencies are made aware that your IVA has ended. Failure to do so can lead to your arrangement being visible on your credit report and put you at risk of your finances being damaged for longer than necessary.
Once your IVA term is complete, you can start to rebuild your credit rating and get back on your feet financially.
What is an IVA completion certificate?
An IVA completion certificate is a legal document that is issued by your IP and can be used as evidence that you've successfully made all your monthly payments and completed your arrangement. In other words, it proves that you're no longer legally bound by its terms.
Your IVA technically isn't complete until you've received your completion certificate.
Receiving a completion certificate triggers an update to the IIR. Your IP should also inform your creditors that you've officially received your completion certificate.
It's important to keep your completion certificate safe in case any of the included creditors claim that you didn't repay a debt down the line or you need to prove to credit reference agencies that your IVA is complete.
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How long does it take to receive an IVA completion certificate?
The process of issuing a completion certificate usually takes around six to 12 weeks, but delays are unfortunately not uncommon, especially if you have a complex case due to an unresolved windfall or a disagreement over your final balance.
Generally, if you haven't received your completion certificate within eight weeks of your IVA ending, you should follow it up with your IP. There could be a perfectly valid reason for the delay, but reaching out can ensure you're kept informed at every step of the way.
If more than six months have passed and your IP has failed to submit a satisfactory response or justify the delay, you can submit a written complaint. If your complaint is not resolved within eight weeks, you can escalate the matter by completing this form on the GOV.UK website.
How much does an IVA completion certificate cost?
There is no fee required for a completion certificate. This is because all of the relevant fees are covered in the early stages of your IVA when they are taken from your monthly payments.
When you first enter an IVA, administration and management fees are deducted from your monthly repayments before the remaining funds are distributed to your creditors. This way, you'll never be sent a separate bill outside of your normal contributions or after you've completed your IVA.
How can I improve my credit score after an IVA?
There are many steps you can take to improve your credit score and work towards a healthier financial future after an IVA, such as registering on the electoral roll, getting a credit builder card and paying the balance each month, keeping your credit utilisation below 30%, paying all your bills in full and on time, and checking your credit record for errors.
Taking steps to repair your credit score can help show potential lenders that you're committed to recovering financially and, in due course, your credit rating should start to gradually increase.
However, it's worth noting that, for most people, the impact of an IVA on your credit score tends to decrease over time. This means that an older IVA will likely be viewed more favourably by lenders than a brand-new IVA.
Once six years have passed since the IVA was registered, all evidence of the IVA will be removed from your credit file. A lender may still ask you if you've ever had an IVA or been declared bankrupt in the past, and it's important that you're open and honest when explaining your financial history. If it's later discovered that you've been dishonest, your application could be rejected.
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Conclusion
IVAs typically run for a period of five years, but they can be extended if you need more time to make up the full amount owed. Your arrangement will remain on your credit file for six years from the date your IVA began, which can damage your credit score and make it difficult to access credit.
Once you've officially been discharged from your IVA, you should receive a completion certificate within six to 12 weeks. If it's been over three months since your final IVA payment and you still haven't received a completion certificate, contact your IP for an update.
An IVA can help you repay your debt in a series of regular payments and improve your financial situation, but it isn't the only option available. In the UK, there are many debt solutions that could help you deal with your unaffordable debt. Reaching out for professional debt advice can help you know what solutions you could be eligible for.
