A reader who has settled his Individual Voluntary Arrangement (IVA) early asked:
My IVA is still showing on my credit history. The start date was January 2018. It was settled early after 3 years in 2021. I have been removed from the Insolvency Register.
I have now been told that I have to wait for another 18 months until 2024 before the IVA will be removed. Is that right? I am sure you have heard it all before but none of this was in the agreement and I was told a different story as to when the IVA is paid I would be free of this curse. Surely this should be 5 years at the most?
The IVA marker stays for 6 years even if the IVA is settled early
An IVA that is completed in under six years will disappear from your credit record six years after it started. Where an IVA takes more than six years to complete, it stays on your credit record until it is finished.
It doesn’t make a difference that the IVA was completed early. This happens because your credit record shows your credit history, not just your current situation.
So what the reader has now been told is correct.
Is this fair?
There is a general rule for credit records that problems more than six years ago are deleted. This applies to defaulted debts and CCJs. It also applies to the other two forms of insolvency, bankruptcy and Debt Relief Orders – so it’s logical that it should apply to IVAs as well.
The only point where this feels unfair is the rare case where someone has repaid all their debts in full through the IVA, so nothing has been written off.
There is a way to do this for bankruptcy – if you pay all your debts plus the bankruptcy costs, you can apply for your bankruptcy to be annulled and then the bankruptcy marker is deleted. But you can’t do this for an IVA.
Can you improve your credit score before the 6 year point?
Completing your IVA early doesn’t improve your credit score at all. But once your IVA has ended, you can start to clean up your credit record and get some positive markers added, see How to improve your credit score after an IVA.
This won’t make a lot of difference to your credit score in the short term. While the defaulted debts and the IVA itself are still showing, the new positive marks don’t help much – your credit score is unlikely to get up to be “good”.
But doing this now means that after the six-year point, when the IVA and all the debts included in it have dropped off, your credit record will be looking great, not just “empty”.
So think why you want to settle your IVA early
Some people want to end their IVA because they find it very stressful and intrusive. Perhaps family have offered to help out and you just want to put the debts and your IVA behind you and feel free. If you are expecting a big improvement in your situation, then you may be anxious to settle now for as little as possible. All good reasons…
But if you want to end your IVA so that you can rent a different house easily, get a mortgage, or get car finance on reasonable terms, or get a job where having had an IVA is a big problem, then you need to stop and think.
Settling your IVA early will not help you with any of these credit-related problems as the IVA will still be on your credit records for six years.
This also applies if your IVA firm suggests that you could end your IVA by taking out a loan. The loan will only help your credit record after the six year point, not before. And if your IVA runs to the end, you can still start the process of improving your credit record when it finished so this loan isn’t needed to get a good credit score after six years.
Do you want to settle your IVA early?
What happens if you can’t afford your IVA?
james says
I have some agreement with a credit card company but it is not called an IVA but and agreement to pay back monthly of some sort. It was sold to a debt collection agent and they just send me a letter once a year stating it is being kept in place.
In 2013 I went abroad for five months and thought all of my cards were being automatically being paid off by direct debit, for some reason this card was not and so when I got back I found it was in default.
I told the company it was an accident and could pay off the arrears immediately but they said it was too late and there was nothing I could do, it is in default and so I pay £13 per month by DD with no interest added.
It has caused my credit scoring to go from the best possible to very poor but there is nothing I can do about it for six years.
I could pay it off early but I read it stays on my report for 6 years anyway and then is not included in the report after six years so I though “xxxx” , why pay it off so I will leave it to run well past the 6 year public report limit which is next year.
I do not need to apply for any new credit as I have current credit cards at very low 3.9% interest for life and I do not need any loans, I own my own home etc so I will leave it.
Mr Starr says
I was in an IVA and settled early. Some of my creditors have kindly listed the outstanding balances/accounts as settled, however, some are still listed as Default. I am going to see if I can get these amended to reflect the actual situation otherwise, I will have to wait until 2023! I am saving hard and hoping to apply for a First Time Buyers mortgage in the next couple of years rather than in 3 as I currently live with my parents and this situation is not ideal! Has anyone had any joy in getting default notices amended/removed following an IVA?
Sara (Debt Camel) says
Did your IVA start in 2017?
MrStarr says
Yes it did. I settled back in November last year.
Sara (Debt Camel) says
Then the IVA will remain in your credit record until 2023 and make it VERY hard to get a mortgage except at a very bad rate.
Getting the defaults removed will not help much at all.
“I am going to see if I can get these amended to reflect the actual situation “
the actual situation is that you defaulted and the debts have now been partially satisfied. There is no reason at all why a creditor should agree to remove a default.
MrStarr says
Thanks for this. Will have to play the waiting game then!
Paul says
I have just completed an IVA in January after 6 years, I have not received my completion certificate however on clear score it shows as Discharged does this then remove the IVA from my credit report when it next updates and would this be the same once all the other credit agencies have been notified
Sara (Debt Camel) says
See https://debtcamel.co.uk/end-of-iva/ for what should happen and how to check it. And chase up why you don’t have the completion certificate – you want that bit of paper.
Sally Turner says
“This won’t make a lot of difference to your credit score in the short term. While the defaulted debts and the IVA itself are still showing, the new positive marks don’t help much.”
This is absolutely false. Readers, don’t let this put you off doing what you can to improve your credit score. I settled my IVA early, and immediately took on a credit building credit card and only used it for one grocery shop a month, making sure I paid it off diligently, kept up all my utility payments, signed up with Creditladder, so my rent payments counted towards building my credit, lived responsibly within my means, and within 18 months, my credit score is in the high end of “fair”, approaching “good”. My IVA will still be on my record for another two years, and it’s really not stopping my credit score increasing slowly but surely.
Bad advice in this article, to be sure.
Sara (Debt Camel) says
I am not trying to put anyone off improving their credit score – it is a very good idea to go through the repair process. I give full details on how to do this in https://debtcamel.co.uk/repair-credit-record-iva/ which is linked to in the article above.
Kerry Austin says
This is really helpful thank you as I have just paid off my IVA early
Sally Turner says
Yes, but you say it doesn’t help much, and that’s absolutely not true. 18 months ago my credit score was poor. Now it’s reaching being good. It does help, a lot.
Sara (Debt Camel) says
I see too many people expecting big improvements when they settle an IVA early.
You will really struggle to get car finance at an OK rate, anything other than a credit builder card or a mortgage while the IVA remains on your record.
Martin says
I entered an iva September 2015 settled this after 2 years it’s been 5 years and 7 months now and my father passed away so I’m looking at some inheritance as my iva was finished early I April 2017 and now completed in September 2020 as it’s not 6. Years will I be expected to pay anything
Sara (Debt Camel) says
I don’t understand how your IVA was settled in 2017 but only completed in 2020?
But if you have a completion certificate, then it shouldn’t make a difference how much you inherit – it’s all yours.
Mark says
I completed my IVA 8 weeks ago, this has gone on for 7 years so we asked for a settlement and paid, as this Iva is over 6 years would it be removed when the certificate is issued ? as it’s been over 6 years since the start of the IVA ?
I have been told they have up to 12 weeks to issue the cert , I have managed to build a score of 871 while on the Iva but still am unable to obtain car finance etc I believe this is due to the Iva mark on my record my forecast for 3 months is max score only negative is the Iva so I am hoping with the age there a good chance this will be removed over the next few months ?
Sara (Debt Camel) says
as this Iva is over 6 years would it be removed when the certificate is issued ?
yes.
Mark B says
I’ve been in an IVA for the past 4 years, my option were gone through over the phone and was encouraged to go with an IVA. I’ve just read the reviews of my insolvency practitioners and it seems as though they have a habit of doing this. My term is 6 years so I’m only in it for 2 more years. Is it worth me challenging whether I have been mis sold it or am I too far gone?
On a side note, a few of the reviews mentioned the IP not sending the money on to creditors, how do I find this out?
Thanks
Sara (Debt Camel) says
what option do you think would have been better for you?
Mark B says
Looking through the various forums and websites, I would say a DRO. Although I had a car on finance at the time so I’m not 100% on whether I’d have qualified.
To give you some back story I was 27, living at home with parents and no fixed assets.
Sara (Debt Camel) says
How much was the car worth ?
How much were you paying to the IVA at the start?
How much are you paying now and are the payments affordable?
Mark B says
The car was worth about £12,000 (I read that a vehicle has to be worth less than £1,000 for a DRO?)
IVA payments were and still are £130 a month which is affordable
Sara (Debt Camel) says
Then that doesn’t sound like at was close to being a DRO 4 years ago. (The DRO limits got more generous last year, but that’s not relevant to whether you were missold one 4 years ago.)
Emily Olukunle says
I entered into an IVA 5 years ago in July 2017 and have recently completed payments. But I have two creditors on my IVA who entered their default date in August 2018, I find this strange because they were included in the IVA as well. Am confused because my IVA should drop off my credit report in a year’s time but what about the other defaults registered after the IVA will it still be on my file even though the IVA has been completed?
Sara (Debt Camel) says
You need to ask those creditors to change the default date to be the start date of your IVA. See https://debtcamel.co.uk/repair-credit-record-iva/
Joanne Patterson says
When you take out an IVA do they tell your mortgage company as mine have an insolvency flag on my mortgage, now it’s complete (within 6 years) will the IP update them as well ? Thank you
Sara (Debt Camel) says
No, your mortgage lender will have seen it on your credit record.
When does your current mortgage fix end? And who is the lender?
Joanne Patterson says
My fixed rate ended a few years back I’ve just completed an IVA 5 years just gone on march. I’ve rang Halifax today and they said as soon as they brought my details up sorry there’s an insolvency flag on your account before we even discussed anything. I told them I had the completion cert and they said to send it in but they usually get notification from the iVA company, thanks Sara
Sara (Debt Camel) says
do you have any arrears on the mortgage?
Joanne Patterson says
No never missed a payment in the 11 years I’ve had the mortgage just a maternity break in 2012.
Sara (Debt Camel) says
ok, are you wanting to get a new fix?
If you are, I suggest you read https://debtcamel.co.uk/new-mortgage-fixed-rate-poor-credit/ which says that you should be able to get a new fix from most lenderds 9and that would certainly include the Halifax) without them having to check your credit record or do an affordability check providing that you don’t have mortgage arrears and that you only want a new fix – you don’t want to borrow more or change the term.
Daniel Starr says
Hi,
I entered into an IVA in May 2017. I have a mortgage, however, the interest rate is 8.7%. sadly my credit rating has not been proved that greatly despite still having use of a credit card I am hoping that the end of the month as that will be six years since the initial IVA started I will begin to see improvements on my credit rating.
I personally feel that it completely unfair once settled that an IVA remains on your credit file. It’s like having a prison sentence even though you have been classed as non guilty.
Sara (Debt Camel) says
Who is the mortgage lender?
Daniel Starr says
Bluestone. They are very good
Sara (Debt Camel) says
they are also a bad credit lender. I don’t know if they will run an affordability check if you want a new fix – almost all high street klenders won’t. See https://debtcamel.co.uk/new-mortgage-fixed-rate-poor-credit/
Anon says
Hi, my IVA started in 2017 and will finally complete in September this year. When I went into the IVA I had a second property which was in negative equity and being rented out to tenants so I stupidly didn’t include it in the IVA. About 2 years into my IVA I had to request a variation and add this property /mortgage to my existing IVA. I’ve just downloaded my credit file and whilst my IVA will drop off in a few months, the lender that was included in the IVA later has added a default to my file in 2019. I’m guessing this will stay on my record until 2025 now but is there anything I could / should do to let future lenders know this was part of an IVA that has now been settled? I’m looking to buy a house next year.
Sara (Debt Camel) says
So the second house was sold and the deficit on sale went into the IVA? Assuming that is correct:
When the IVA completes, the lender should mark that deficit as being partially satisfied. I don’t think you have much chance of getting a mortgage at an OK rate while that shows on your credit record. Telling a future mortgage lender you put the deficit from a house sale into an IVA hardly sounds like a plus point…