If you are in the last few months of your IVA, you will be looking forward to making that last payment. It may feel a lot like getting to the finishing line of a marathon – and you may not be running so much as staggering over it.
But when should you cancel your standing order? How long does it take to get your completion certificate?
And when exactly are your debts written off, and how long until your credit record is clean?
This article looks at what happens at the end of an IVA.
Are you sure that is your last payment?
With a simple five or six year IVA, possibly with a further twelve months added instead of a remortgage, you may know exactly when your 60th or 72nd payment is going to be made.
But sometimes it’s less clear:
- there may be some payments outstanding if you had a payment break or extra months were added because of additional income;
- admin problems can happen – especially if your IVA has been transferred to a different firm so there is more chance that payments are outstanding;
- if you have a house but your IVA firm hasn’t spoken to you about releasing equity, don’t assume an extra year isn’t needed.
So it’s worth checking with your IVA firm a couple of months before “the end” that March 2023 or whenever really will be your last payment.
If your IVA confirms that is your last payment, you can cancel the Direct Debit or Standing order (or tell your bank by phone to end the Continuous Payment Authority).
It’s a good idea though to try to put a couple of months more payments into a savings account in case the final review (see below) turns up something.
A final review by your IVA firm
Your IVA firm will do a final review. Most firms have a special Closure Team that deals with this. Some firms do the review in the last couple of months, but many wait until after your final payment.
This is a bit like your annual reviews. Some firms ask for bank statements, payslips or a P60. They want to check if you had a lot of overtime, a pay rise, a bonus or some other windfall that you haven’t told them about. If you have, you may have to make some additional payment.
Hopefully after this, the firm will confirm that no more payments are needed.
What if they don’t get in contact?
If you haven’t heard from your IVA firm a couple of weeks week after your last payment, I suggest phoning or emailing them. Ask what you need to provide for the final review. The more you are proactive at this stage, the quicker this will all be over.
If they still don’t talk to you, then send them a weekly email. After a month put in a formal complaint.
If you want to cancel your payments in this situation, do put the money you would have transferred into a separate savings account. Don’t spend it! That way if it turns out there is still some money owing, you have it right there.
Your IVA firm starts the closure process
Once the Closure team confirms that you have made all the payments, they will distribute the last money to your creditors.
This closure procedure should in theory take a month or two. But there were major delays a few years ago caused by the IVA firm wanting to make PPI claims. And in 2022 things are getting worse again – over three months is common and some are over six months.
If your Completion Certificate hasn’t arrived after three months, I suggest asking every few weeks what is happening and whether you need to provide any more information.
If it gets to five months after your last payment, put in a formal written complaint to your IVA firm. At six months put in a complaint to the Insolvency Service about the delay in closing your IVA.
What happens when the IVA is finally completed
At last you will get your Completion Certificate!
At this point:
- Your IVA is over. The last payment – sometimes called “the final dividend” – has been sent to your creditors and the remainder of your debts have been written off.
- Your IVA firm will update the Insolvency Register. Your name stays on the register showing as “completed” for three months, then the entry is deleted.
- The Insolvency Register sends the information that your IVA has completed to the three Credit Reference Agencies. The IVA marker will remain on your credit records until 6 years from the start of your IVA. or until it is completed, whichever is later.
- If you have a house, your IVA firm will remove the restriction placed at the Land Registry so you can sell it.
This doesn’t look like an official certificate. It is just a letter on normal paper. But it’s very important – you should aim to keep this not just for a few months but forever. It is your proof that your IVA has finished – it may be hard to get a replacement if you need it in several years time, especially if your IVA firm no longer exists.
Check everything has been updated
You should check that the whole completion process has worked properly. This normally works fine but it’s sensible to check up on it.
Leave it a couple of weeks and then look up your details on the Insolvency Register – if this isn’t correct, call your IVA firm and ask them to correct it. Until this is corrected, your credit records won’t be updated.
Once the Insolvency register has been updated, wait another few weeks and check:
- Experian, Equifax and TransUnion – you do need to check all three credit reference agencies. Check the statutory reports from the CRAs as they are updated daily – most free reports are a snapshot taken once a month. If your IVA still shows as active, send a copy of your Completion Certificate to the credit reference agency and ask them to correct it.
- Land Registry – if the restriction is still showing, call your IVA firm. Make sure you do this. If you find out in 12 years time when you want to sell your house that the restriction is still there and your IVA firm has gone bust years ago and you can’t find your certificate any more you will have a major hassle getting this resolved.
And you need to wait another month or two to give your creditors time to update their records.
So that’s the end. Except…
You can start the process of cleaning up your credit file, see How to improve your credit rating after an IVA for details. This will ensure that your defaulted debts disappear when they should and that new credit starts to improve your credit score.
You shouldn’t hear from your IVA firm again. There are two exceptions.
- you may be sent a cheque for “uncashed dividends”. This is rare and it is good news if it happens to you. If this happens, your IVA firm will explain why – there normally isn’t anything you have to do except cash the cheque.
- the other one is lingering claims that your IVA firm may have made. Most PPI claims have now ended, but some IVA firms are trying to collect on a variety of other claims including affordability and pension mis-selling. You may still get some correspondence about these.
If you have a house, some people are reporting being contacted by a lender offering a remortgage or a secured loan after a few months. These are usually expensive bad credit lenders – you should think twice about doing this, especially with cost of living problems continuing. It may be better to wait a bit longer and clean up your credit record some more.