What Happens If I Receive a Windfall During My IVA?

You Must Inform Your IP

If you receive any unexpected financial windfall while your IVA is active, you are legally and contractually obliged to inform your Insolvency Practitioner immediately. Failing to disclose a windfall is a serious breach of your IVA terms and could result in your IVA being terminated and creditors pursuing you for the full outstanding amount.

Windfalls that must be disclosed include:

• Inheritance (including gifts from a deceased person's estate)
• Lottery or gambling winnings
• Legal compensation or personal injury settlements
• Redundancy payments (above any threshold in your IVA terms)
• Unexpected gifts of cash or assets from family members

What Happens to the Money?

Your IVA terms will include a clause about windfalls — most standard IVA terms require that any windfall above a certain threshold (often £500) is paid into the IVA in full or in part. The exact treatment depends on your IVA terms:

• Some IVAs require 100% of the windfall to be paid in, up to the full amount of the original debt
• Others use a 50/50 split — 50% to creditors, 50% to you
• Your IP may use the windfall to propose an early full and final settlement — settling the IVA ahead of schedule

Gifts vs Inheritance

The key distinction is usually between gifts made during the donor's lifetime (which may not need to be disclosed depending on your IVA terms) and inheritance from a deceased person's estate (which almost always must be disclosed). Check your specific IVA terms or ask your IP if in doubt.