IVA and Inheritance | Can an IVA take my inheritance?

We all enjoy goods for which we do not have to labour. Receiving an inheritance has the same effect. However, if you receive an inheritance while under an individual voluntary arrangement, the terms may be different.

Did You Know You Can Write Off Up To 85% Of Your Debts?

Do I Qualify?

When a person passes away, you may inherit money or property from them. If you get an inheritance, the amount that will be handed to you is explicitly indicated. A solicitor will usually notify you of what has been left for you, whether in the form of assets or a cash lump sum.

Suppose you receive an inheritance while in an IVA. You may not be able to keep it. The funds will be utilised to pay off your debt first. While in an IVA, if you inherit a sum of money or a share of an asset via a will, you will be required to contribute it to your IVA plan.

When you sign into an IVA, which usually lasts 5 to 6 years, you agree to pay your creditors less each month, and they will be entitled to additional sources of funds if you can provide them.

If your inheritance is sufficient to pay off all of your IVA debts, you will be expected to do so, as well as any IVA expenses. If you have any money left after paying off your IVA, you can keep it. You’ll learn more about IVAs, inheritance, and debt solutions in this article.

Table of Content

1 Will my inheritance be affected by an IVA?
- 1.1 What happens if I inherit but have an IVA in place?
2 How can I keep inheritance money from IVA?
- 2.1 Can I keep any of my inheritance payments?
- 2.2 Should I delay starting my IVA if I know I am getting an inheritance?
3 Is it illegal to hide inheritance money from IVA?
4 How much of my inheritance will I have to pay into my IVA?
5 Does inheritance help complete IVA sooner?
6 Summary
7 IVA Debt Help Information
8 Other Debt Solutions

Will my inheritance be affected by an IVA?

You will be obliged to contribute to your IVA if you receive a sum of money or a share of an asset from someone’s will while in an IVA. Your IVA company is likely to have a windfall clause that explains this. You must tell your IVA firm if you receive an inheritance that can be a debt solution.

You will be paying your creditors less every month if you sign into an IVA, and they will be entitled to your additional sources of money. To pay for your IVA, one debt advice that you may hear from a debt management company is to sell a portion of any inherited assets.

What happens if I inherit but have an IVA in place?

You are expected to pay back the debts in your IVA first; therefore, any inheritance money you get should be used to pay off your IVA.

If your inheritance is sufficient to pay off all of your IVA debts, you will be expected to do so, as well as any IVA expenses. You will be able to keep any money you have left after paying off your IVA.

You will still be required to contribute to your IVA if you do not receive enough to cover your IVA. If you believe you can make a suitable offer to your creditors, you may be able to make a full and final settlement to them through your IVA.

How can I keep inheritance money from IVA?

There is no way to keep the entire inheritance legally. However, you might get a bit out of it.

Your Insolvency Practitioner has discretionary power, and if they believe it is appropriate, they may let you keep some of your money. In most cases, the IP will assess your existing financial condition and determine how much money is significant to you.

Expect a little bit of money from the IP; usually, the IP will give away small quantities for various reasons.

Can I keep any of my inheritance payments?

One of the most frequently asked questions regarding an inheritance payment received during an IVA is whether you’ll be able to keep any of it to pay for unexpected expenses.

The guidelines state that you must put all of your inheritance money into the arrangement. On the other hand, your insolvency practitioner has the discretion to enable you to keep some of the money if they believe you have a genuine need for it.

You might be in desperate need of money to fix your automobile or your home’s boiler. Your IP may let you keep the money needed to pay for it. This is not a guarantee, and it will rely on the specific circumstances surrounding your situation.

If you receive less than £500 in inheritance, you may not be required to pay it into your IVA. Again, it is up to your IP to choose how much money is suitable for you to keep.

Nevertheless, the entire inheritance must be used to pay off your debts and make monthly payments to your creditors because of the windfall clause. To be certain, you should consult with your Insolvency Practitioner.

Should I delay starting my IVA if I know I am getting an inheritance?

If you get an inheritance payment before starting an IVA, the money is yours to retain, and you can spend it any way you wish. As a result, you can utilise some or all of it to pay for urgent expenses if necessary.

If you still want to start an IVA, the one thing you must not do is pay off any of your creditors, especially friends and relatives. This would be deemed a preferential payment, and it’s possible that your remaining creditors would reject the IVA proposal.

If you believe you may inherit money but are unsure when to receive it, you may wish to postpone starting an IVA. On the other hand, your creditors will continue to put pressure on you. You could utilise a Debt Management Plan (DMP) to temporarily control your debts while you wait for the inheritance payout.

Find Out The Best Debt Solution Bespoke To Your Financial Situation

30 Second Debt Assessment Quiz

Is it illegal to hide inheritance money from IVA?

IVA is a legal arrangement with some legal stipulations and consequences for your financial situation. Hiding inheritance from an IVA will violate the IVA’s windfall clause. As a result, hiding funds while in an IVA arrangement is technically prohibited.

The following are some of the repercussions of concealing the received legacy from your IVA:

Legal Procedure

Breach of a legal agreement may result in you having to face legal litigation, which would undoubtedly increase your expenditures and, if the judgement is against you, you will lose the inheritance that you attempted to conceal.

Termination of Your IVA Agreement

There will be no trust between your creditors and your IVA company once the contract has been broken. As a result, the IVA proposal or agreement may be terminated. In this circumstance, you will have no choice except to repay your creditors in any way possible.

Bankruptcy

As previously stated, hiding money from your IVA can result in bankruptcy, and hiding money can result in your IVA being cancelled. As a result, if you cannot repay your creditors, you may be forced to declare bankruptcy.

Bankruptcy has long-term consequences for your credit score and financial situation. It’s pretty challenging to reassemble your financial life following bankruptcy.

How much of my inheritance will I have to pay into my IVA?

You will be able to keep any money you have left after paying off your IVA.

Does inheritance help complete IVA sooner?

Yes, inheritance may assist you in completing your plan sooner. If your inheritance exceeds your debt, you can pay off your debt in one large sum and keep the remainder of your fortune.

Apart from that, if you are repaying your obligations due to an unexpected or unforeseen income, it will deduct your debts and monthly payments, allowing you to complete your IVA sooner than intended.

When money from an inheritance is put into an IVA, the agreement is usually not paid off faster. You must continue to make your regular payments until the arrangement expires.

The additional inheritance money will raise the total amount paid toward your debts. The amount of money that has been written off has been lowered.

Only if the sum received is very large will your IVA be finished early. There would have to be enough to pay off the whole of your original debt minus any payments you’ve previously made, plus insolvency practitioner fees and interest paid at 8% per annum on the debt from the arrangement’s commencement date.

The arrangement would subsequently come to an abrupt end in these circumstances, and you would no longer be required to make your monthly payments.

Summary

Receiving unexpected gifts can be a benefit, but to properly care for that blessing, you must handle it responsibly.

Even if you don’t want to pay it to your IVA firm, inheritance could be a blessing in disguise in an IVA deal. Finally, it may assist you in moving closer to a debt-free life.

Interested In Finding Out More About The Debt Solutions Available?

Find Out More

IVA Debt Help Information

If you want to know more about the debt help plan of an IVA we have all articles related to individual voluntary arrangements here: