What happens to your IVA when the firm that set it up closes

The arrangement is with your creditors, not the firm

This is the point that reassures most people. An IVA is a statutory agreement between you and your creditors, approved by a creditors’ meeting or decision procedure. The insolvency practitioner supervises it. If that practitioner retires, changes firm, or the firm is wound up, the arrangement itself continues; what has to happen is that a new supervisor takes over the case.

That transfer is a formal process. A block transfer order, or in simpler cases a straightforward appointment of a replacement supervisor, moves the cases across. You should be told in writing when it happens, and the new supervisor’s details should appear on the Individual Insolvency Register in place of the old ones.

What should not change

• Your monthly contribution. A change of supervisor is not a reason to increase what you pay. Contributions can change if your circumstances change, or through a formal variation that creditors vote on, but not simply because the firm changed hands.
• The length of the arrangement. The term agreed in your proposal stands.
• The protection you have. Creditors bound by the arrangement still cannot pursue you separately while it is running and you are keeping to its terms.

What sometimes does change, and what to watch for

Case transfers are also the moment when people are asked to agree to a variation. A variation is a formal change to the terms of the IVA, put to creditors for approval, and it can be entirely legitimate — reducing payments after a drop in income, for example. But variations have also been used at the point of transfer to increase the supervisor’s share of the fees.

If you are asked to agree to something at the point your case moves, three things are worth doing before you sign anything. Ask, in writing, exactly what is changing and why. Ask what it does to the total fees taken from your contributions. And ask what happens if you say no.

What you should never be told is that your IVA will be terminated if you refuse a variation. That is not how it works, and where this has happened in the past the firms concerned have had to say so publicly.

If the firm was dissolved rather than sold

Some providers do not sell their book — they simply stop trading and the company is struck off the register. The insolvency practitioner is still personally licensed and still has professional obligations, so cases are normally transferred before dissolution. Occasionally the paperwork is untidy and clients are left unsure who holds their case.

In that situation, work through it in this order: search the Individual Insolvency Register for the current supervisor; check the name on the direct debit taking your payments; look up the dissolved company on Companies House, where the final filings often name the practitioner or the firm that took the cases; and if none of that answers it, call the Insolvency Service enquiry line on 0300 678 0015.

Keep paying while you find out

The instinct when a firm disappears is to stop the direct debit. Resist it unless you are certain the arrangement has ended. Missed contributions are the usual route to an IVA failing, and a failed IVA revives the original debts with the arrears added on top. If you genuinely cannot identify who to pay, put the money aside rather than spending it, and get the position confirmed in writing before you do anything else.

If you are no longer sure whether the arrangement is even running, start with how to check whether your IVA is still active.

More guides on this site

• How to check whether your IVA is still active
• Where your IVA payments actually go: fees explained
• How to complain about an insolvency practitioner

See all guides