Do You Have to Hand Over Savings When You Enter an IVA?#
Yes. When you enter an Individual Voluntary Arrangement, you must declare all your savings to your Insolvency Practitioner. Any savings over a small emergency buffer (usually £100-500) must be paid into your IVA as a lump sum.
You can’t hide savings from your IP. They’ll review your bank statements and check for undeclared assets. If you hide money and get caught, your IVA will fail.
Here’s what happens to savings when you start an IVA and what you must declare during your arrangement.
How Much Savings Can You Keep When Starting an IVA?#
Most IPs let you keep £100-500 as an emergency buffer. The exact amount depends on your IP’s policy and your circumstances. A single person might be allowed £100-200, while a family might keep £300-500.
Anything over this buffer must be paid into your IVA when it starts.
Example:
You have £3,500 in savings when you apply for an IVA. Your IP allows you to keep £300 as an emergency fund.
You must pay £3,200 into your IVA as a lump sum when your arrangement starts. This reduces your total debt and might lower your monthly payment slightly, but you hand over the savings upfront.
Some people ask why they can’t keep savings and just make higher monthly payments instead. Your creditors want the money back as quickly as possible. Lump sums reduce the total debt immediately, which is better for them than promises of future payments.
What Counts as Savings That Must Be Declared?#
You must declare all savings and assets when you apply for an IVA. This includes:
- Current accounts (money over your monthly living costs)
- Savings accounts
- ISAs (cash ISAs and stocks & shares ISAs)
- Premium Bonds
- Shares and investments
- Cash kept at home
- Money in PayPal or other payment accounts
- Cryptocurrency
- Money you’ve lent to family or friends
The only savings you can keep are registered pension schemes. Your pension is protected and doesn’t have to be paid into your IVA.
Can You Save Money During an IVA?#
You can only save from your allocated living expenses. If your IP gives you £250/month for food and you spend £230, you can save the £20 difference. If you walk to work instead of driving and save £30/month on petrol, you can keep that.
But you can’t build significant savings during your IVA. If your income increases or expenses drop, your IP will review your budget at your annual review and increase your IVA payment.
Example:
You’re paying £200/month into your IVA. Your car gets written off and you don’t need to replace it (you can walk to work). Your car insurance and fuel costs were £150/month.
You tell your IP at your next review. They’ll increase your IVA payment by around £100-120/month. You don’t get to keep the £150/month to build savings - your creditors get the benefit of your reduced expenses.
Some people try to hide reduced expenses or increased income to build a secret savings pot. This is fraud and will end your IVA if discovered.
What Happens If You Hide Savings From Your IP?#
Your IVA will fail and you could be made bankrupt. Hiding savings from your IP is fraud.
Your IP has the right to review your bank statements at any time during your IVA. They’ll see undeclared savings accounts, large cash deposits, or unexplained money. When they find hidden savings (and they will), the consequences are:
- Your IVA fails immediately - Your creditors can take you to court and make you bankrupt instead
- You lose IVA protection - Creditors can contact you again, add interest and charges, and take legal action
- You might face criminal prosecution - Hiding assets in an insolvency arrangement is fraud under the Insolvency Act 1986
- You could lose the hidden money anyway - Your IP or a trustee in bankruptcy can seize undeclared assets
It’s not worth the risk. If you’re caught hiding £2,000, you’ll lose your IVA, face bankruptcy (which is worse for your credit file), and possibly end up in court.
Some people think “my IP won’t check that account” or “they won’t find out about cash”. IPs investigate thoroughly. They check:
- All your bank accounts (current and savings)
- Credit reference agencies for accounts you didn’t declare
- Land Registry for property ownership
- Companies House for business interests
- HMRC records for income and tax credits
If you’ve hidden money, they’ll find it.
The Windfall Clause - What You Must Declare During Your IVA#
All IVAs include a windfall clause. This means if you receive a lump sum of money over £500 during your IVA, you must declare it to your IP and pay it into your arrangement.
Windfalls include:
- Redundancy payments - The statutory amount plus any extra your employer pays
- Inheritance - Money or assets you inherit when someone dies
- PPI payouts - Compensation for mis-sold payment protection insurance
- Accident compensation - Personal injury payouts from insurers or courts
- Tax rebates - Large HMRC refunds (small refunds under £500 are usually exempt)
- Lottery or gambling wins - Any win over £500
- Bonuses from work - Large performance or Christmas bonuses
- Gifts - Significant cash gifts from family (over £500)
You must tell your IP as soon as you know you’re receiving a windfall, even if the money hasn’t arrived yet.
Your IP will decide how much of the windfall must be paid into your IVA. In most cases, 100% of windfalls over £500 must go to your creditors.
Can You Keep Any of a Windfall?#
Sometimes. Your IP can let you keep part of a windfall if:
- You need redundancy money to retrain for a new job
- You need accident compensation for medical equipment or adaptations
- The windfall is needed for essential one-off costs (like replacing a broken boiler)
But these are exceptions. Most windfalls go straight into your IVA.
What Happens If You Don’t Declare a Windfall?#
Same as hiding savings - your IVA fails and you face bankruptcy.
Many people think “my IP won’t find out about my PPI payout”. They will. PPI companies often check the Insolvency Register and notify IPs directly when they pay someone in an IVA.
Inheritance is also easy to trace. IPs can check probate records and see if you were named in a will. Hiding inheritance is particularly risky because the amounts are usually large and the paper trail is clear.
What About Redundancy Payments?#
Redundancy payments over £500 must be declared and paid into your IVA.
If you’re made redundant during your IVA, tell your IP immediately. They’ll want to see your redundancy letter and payment breakdown.
Statutory redundancy is based on your age, length of service, and weekly pay. Most people also get extra redundancy pay on top of the statutory minimum.
Your IP will usually take all of your redundancy payment (minus the £500 buffer) and pay it into your IVA. The only exception is if you can prove you need the money for retraining or essential costs while you find a new job.
If you’re on a high income and lose your job, your IVA payment will also drop (because your disposable income is lower). Your IP will review your budget and set a new payment based on your benefits or new lower salary.
What About PPI Payouts?#
PPI compensation must be declared if it’s over £500.
Many people in IVAs received PPI payouts between 2015 and 2019 (the PPI deadline was August 2019, but claims are still being processed). If you get a PPI payout during your IVA, you must hand it over.
Some IPs actively help people in IVAs claim PPI because it pays off more of the debt. If you think you might have a PPI claim, your IP can advise you.
If you received a PPI payout before your IVA started, it’s treated like any other savings. If you spent it on living costs before entering the IVA, that’s fine. If you still have it sitting in a savings account, you must declare it.
What About Pension Savings?#
Pension savings are protected. You don’t have to pay pension money into your IVA.
This includes:
- Workplace pensions (defined contribution and defined benefit)
- Personal pensions
- Self-Invested Personal Pensions (SIPPs)
- Stakeholder pensions
- Any registered pension scheme
You can’t access most pension savings until you’re 55 anyway (rising to 57 in 2028). Even if you’re over 55 and could access your pension, you’re not required to do so to pay into your IVA.
Your IP might ask about pension contributions if you’re paying large amounts into a pension while in an IVA. If you’re paying £500/month into a pension, your IP could argue that money should go to your creditors instead. But normal employer contributions and standard personal contributions are protected.
What Happens to Savings After Your IVA Completes?#
Once your IVA completes (usually after 5-6 years), you can save as much as you want. Your remaining debts are written off and you’re no longer under IP supervision.
Many people build an emergency fund after their IVA completes. It’s sensible to save 3-6 months of living costs in case you lose your job or face unexpected bills.
Your credit score will improve gradually after your IVA completes. The IVA marker stays on your credit file for 6 years from the start date (not the completion date). Once it drops off, you’ll find it much easier to get credit, open savings accounts, and get better interest rates.
Can You Enter an IVA If You Have No Savings?#
Yes. Most people entering an IVA have no savings - they’ve used all their money to pay debts or cover living costs.
You don’t need savings to qualify for an IVA. The key criteria are:
- Debts over £6,000-7,000 (usually to three or more creditors)
- Regular income (from work or benefits)
- Enough disposable income to make monthly payments (usually £80-100+ per month)
- Living in England, Wales, or Northern Ireland
If you have no savings, your IVA will be based entirely on your monthly payment. You won’t have to hand over a lump sum when you start.
Alternatives to an IVA If You Have Savings#
If you have significant savings, you might not need an IVA. Consider:
- Using savings to pay off debts - If you owe £5,000 and have £5,000 in savings, use the savings to clear the debt
- Negotiating payment plans - Contact creditors directly and offer lump sum settlements (they’ll often accept 50-70% if paid immediately)
- Debt Relief Order - If you have less than £2,000 in savings, debts under £30,000, and low income, a DRO might be better than an IVA
- Bankruptcy - If you have minimal savings (under £1,000) and high debts, bankruptcy might write off debts faster than an IVA
An IVA makes sense when your debts are much higher than your assets. If you owe £25,000 and have £2,000 in savings, you’d hand over the £2,000 and pay off what you can afford over 5-6 years. The remaining £15,000-20,000 gets written off.
If you owe £8,000 and have £7,000 in savings, just use the savings to clear most of the debt and negotiate payment plans for the rest.
Summary: What Happens to Savings in an IVA#
- You must hand over savings over £100-500 when you start
- Hiding savings is fraud and will end your IVA
- You can only save from your allocated living expenses during your IVA
- All windfalls over £500 (inheritance, PPI, redundancy) must be declared
- Pension savings are protected
- Your IP can review your bank accounts at any time
- Once your IVA completes, you can save freely
If you’re considering an IVA and have savings, speak to a licensed Insolvency Practitioner. They’ll calculate whether an IVA is the best option or whether using your savings to reduce debts directly makes more sense.
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