Five years is undoubtedly quite a long time and although when a debtor agreed to the terms of their Individual Voluntary Agreement (IVA) they did so with the very best of intentions to keep up the payments for the full duration of time, it is a fact of life that people's circumstances can change. For example they can be made redundant or have an accident which makes it impossible for them to carry on working in either the short or long term, they may also become separated from their partner or have a new child.

For whatever reason the debtor's circumstances change it is essential that they inform their Insolvency Practitioner as soon as possible to see if there is a possibility to make a variation in the IVA. The Insolvency Practitioner will consider this possibility and if they believe there is a reasonable chance that the creditors will agree to a variation in the IVA arrange a meeting with them. However, there is no guarantee that the creditors will agree to either a meeting or a variation.

In a more positive light there are also changes of personal circumstance which makes it possible for the debtor ask for the IVA to be paid before the end of the five year term. This could be for example that they have unexpectedly inherited some money or they have a change in their marital situation which leaves then with some additional income or assets. In these types of circumstance it is possible to ask for a ‘full and final settlement', however this will only be possible if the new contribution of money is sufficient to pay back the original debt in its entirety or a highly significant amount of it. If there is insufficient money to pay the entire amount back to the creditors they may consider taking some of the contribution from the lump sum but will also continue to take the monthly payments as well. Whichever option may be available; the debtor should speak with their Insolvency Practitioner and take their advice as they will then make any necessary arrangements on the debtor's behalf.

Although most IVAs include specific clauses which take into consideration windfalls, bonuses and more than anticipated pay rises the creditors will stipulate that they will require fifty percent of these occurring within the five years to be contributed to the IVA, unless the money is sufficient to request a full and final settlement.

The Insolvency Practitioner will assess what monies are available in the IVA fund at the end of each year, this money will then be divided out to each of the owed creditors on the debtor's behalf. The division of the monies is dependant on how much each creditor was originally owed.

When the five year term has come to an end and all of the agreed monthly monies have been successfully paid the IVA will pay the final dividend to the creditors and the IVA closed. At this time the monthly payments are stopped and the bank account closed. All parties will be informed by the Insolvency Practitioner of a successful completion and this particular episode in the debtor's life will be finished.