Is It Possible To Hide Money At The Start Of An IVA?

The way an IVA is set up makes it very difficult for you to hide money from the arrangement. Every source of earnings or income will have been declared as you begin the IVA, and any leftover funds will go towards the IVA payments; otherwise, you risk breaching the agreement.

Once the IVA starts, you’ll be entering into a legally binding agreement with the creditors that will allow you to pay off your debts through monthly payments that are affordable for you. In exchange, the creditors will agree to write off any remaining debt once the payment term is over.

When your Insolvency Practitioner starts drafting up your IVA proposal, the monthly payments will be based on what you can comfortably afford. They will take into account every source of money you have, from your monthly income and living costs to extra earnings, bonuses, and even your savings.

If you’re planning to hide money from your insolvency practitioner, you may be at risk of serious consequences. The nature of your financial situation will be seen on bank statements and payslips that you’ll have to hand over to your practitioner, meaning you could easily get caught.

Consequences Of Hiding Money From An Individual Voluntary Arrangement

IVA failure

If you’ve been caught trying to hide money or assets from your IVA agreement that could have been used to pay some or all of your debts off, the most likely thing to happen is the failure of your IVA.

If you don’t declare money, you’ll be in breach of your agreement, and it may be terminated. If your IVA fails, you’ll be sent a letter of termination and a report by your Insolvency Practitioner. This failure report will outline the details of your failed agreement and why it was terminated.

Once your IVA fails, your arrangement will be over, which means you won’t continue making the repayments to your Insolvency Practitioner or IVA provider. But, the remaining debt you owe will still stand.

You will still owe money included in the IVA to your creditors, and any further repayments will be your responsibility if you want to avoid being made bankrupt.

Bankruptcy

Because it’s a legally binding agreement, an IVA protects you from being harassed for payment by your creditors. If your IVA fails, you’ll no longer have that protection.

Your creditors will be allowed to start contacting you again, and they’ll be able to make you bankrupt immediately because you were in breach of the agreement.

Usually, your creditors would be obligated to send you a warning known as a statutory demand. But in the case of a failed IVA, they don’t need to do this.

Your Insolvency Practitioner will also have the power to deem you bankrupt. Although bankruptcy may be a good option if you aren’t a homeowner and have a low income, risks are involved.

If you are a homeowner, being made bankrupt means you risk losing your property, so it’s strongly recommended that you don’t attempt to hide money or do anything else to risk your IVA failing.

Court action

Like other legally binding agreements, breaching your Individual Voluntary Arrangement could mean you face court action. Not only is hiding assets or money considered a breach of contract, but it’s also fraud.

Although it’s not for certain, your creditors or IVA provider will likely take you to court. Hiding funds from the IVA could even have you sent to jail, depending on how serious the charges are.

This is why you should never hide money from your agreement. If you’ve started an IVA and you receive an unexpected sum of money, notify your IP immediately.

That money can be used to help pay off your debts or maybe pay the IVA off early, allowing you to move towards a life free from financial troubles.