In 2018, delays on completing IVAs aren’t as bad as they were a few years ago. but some still take over 6 months to finish, often with no good reason.
This article looks at why these delays matter and what you can do if you are waiting for your IVA completion certificate after 6 months.
How bad have delays been?
In 2014 an Insolvency Service report said:
“a high proportion of complaints are about Individual Voluntary Arrangements (IVAs), in particular in relation to delays in the closure of the arrangement due to the supervisor of the IVA claiming Payment Protection Insurance (PPI) refunds”.
The Insolvency Service’s statistics showed a few hundred people as being affected. These seem likely to be the tip of a much bigger iceberg, as few IVA clients get to the stage of complaining through the Complaints Gateway.
The Comments at the bottom of this page have examples of people complaining of waiting nearly two years, 27 months and even 39 months!
By 2016, the Insolvency Service still wasn’t happy with the delays, see the Insolvency Service’s report on the IPA, one of the main IVA regulators:
“Where the complaint relates to an IVA, and specifically the delay in the debtor receiving their completion certificate, the Insolvency Service has previously agreed with all of the [IVA regulators] that, if the delay exceeds six months from the date of the debtor’s final payment, the matter will be investigated. In three cases sampled the IPA closed such complaints without an investigation.”
What happens at the end of an IVA
When you have made your last payment, your IVA firm has to check that no more money should be paid into the IVA. For more about this process, see What happens when I have made my final IVA payment for details.
When the Insolvency Practitioner (IP) is sure no more money is due, a final distribution to your creditors is made and you are sent an IVA completion certificate. Actually if you are expecting a real “certificate”, you may be disappointed to find it’s only a letter headed Completion Certificate.
This is an important legal document – you need to file it somewhere safe and keep it for at least six years – I would actually suggest forever.
At this point your IVA is legally finished and you are released from all the debts that were included in it.
Don’t wait more than 6 months
This closure process used to typically take 4-8 weeks, and many IVA firms are still working on that sort of timescale. However some firms, including a few of the largest arrangers of IVAs, appear to be experiencing prolonged delays in dealing with PPI refunds.
On IVA forums such as iva.co.uk and MoneySavingExpert clients have been asking whether nine months, a year or even longer is acceptable.
There are two good reasons why these delays are not reasonable and you should want to get your IVA completion certificate as soon as possible. Until you do:
- your IVA will remain on the Insolvency Register and your creditors aren’t going to mark your debts as being satisfied, so you aren’t going to be able to start improving your credit record. This can badly affect your ability to remortgage.
- if you get a windfall such as an inheritance you may be obliged to pay it into your IVA. (Some Insolvency Practitioners are saying that they wouldn’t ask for the inheritance to be paid into your IVA in this situation and you may also be able to challenge any request based on the wording of your IVA.) If this happens a year after your last IVA payment, you are going to be rightly very upset.
The Insolvency Service’s report on complaints says:
“we are in ongoing discussions with the regulators over their handling of these complaints and we are pleased that both the ICAEW and the IPA, who handle the vast majority of these complaints, have agreed to take forward all cases for investigation where the delay in closing the IVA exceeds six months from the debtor’s final payment.”
That suggests that six months is generally considered an unreasonable length of time by the industry as a whole.
Put in a formal complaint
Before you decide to complain, do think about whether you have contributed to the delay. Have you provided the information your IVA firm has asked for? Is your IVA firm saying it will close your IVA if you agree to sign a form allowing it to reclaim PPI after your completion certificate has been issued? If you feel confident the delay is not partly your fault, here is how to put in a complaint.
Your IP will want to have as few cases as possible being investigated by their regulator, so you should put in a formal complaint to your IP before the six month point as this may well get your case speeded up. I have written a previous article on complaining about an IVA that you may find helpful – this covers both complaining to your IP and taking the complaint further.
This is a particularly simple case – you just need to state that the delay is unreasonable and that if it is not resolved you intend to complain through the Complaints Gateway. If the delay is causing you specific problems, you should state these (eg “I am unable to re-mortgage / obtain car finance”) but you don’t need to be able to point to these. The delay is unacceptable in itself and a good reason to complain.
I suggest that you should put in this complaint to your IP after four months, with the intention of going through the Complaints Gateway at six months. If your delay is already longer than six months, I suggest you put in the formal complaint to your IP and through the Complaints Gateway at the same time.
If you have inherited money
Go through the procedure outlined above first. If you feel you have been badly affected by unreasonable delays by your IP, your IP is insisting that this inheritance has to be paid into your IVA and the Complaints Gateway process doesn’t result in an acceptable settlement, you may wish to consider legal action against your IP, see my previous article on How to Complain about an IVA.