Refunds and Compensation in an IVA (Car Finance, PPI, Mis-Selling)

What Happens to Compensation or Refunds During an IVA?

They may belong to your IVA, especially if they relate to borrowing from before it started. Tell your insolvency practitioner before you spend or start a claim.

Last updated: November 2026

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Things to know about IVAs

An IVA is a formal insolvency procedure. It must be approved by your creditors, stays on your credit file for six years, fees are taken from your payments, and debts are only written off if you complete it. It isn’t right for everyone.

Read the key risks

Creditors must approve it. An IVA only goes ahead if creditors holding at least 75% of the debt that is voted agree. Your proposal can be rejected.
Credit file and public register. An IVA stays on your credit file for six years from the start date and is listed on the public Individual Insolvency Register while it runs. Getting credit will be harder.
Spending restrictions and annual reviews. You live on an agreed budget for the length of the IVA (usually 5–6 years). Your income and spending are reviewed each year, and your payment can go up.
Fees. Fees are taken from your monthly payments, so less of what you pay reaches your creditors. How IVA fees work.
Your home. Under the current IVA Protocol, your home isn’t included in the IVA and you won’t be asked to remortgage. If your share of the equity is £10,000 or more, the IVA usually lasts six years instead of five.
If it fails. If you can’t keep up payments the IVA may fail, you would owe the remaining debt again, and the supervisor may petition for your bankruptcy.
Write-off only on completion. Remaining qualifying unsecured debts are only written off if the IVA is completed successfully. Secured debts, court fines, child maintenance, student loans and some other debts can’t be included.
Other options may suit you better. A debt management plan, DRO or bankruptcy may be more suitable. IVAs are available in England, Wales and Northern Ireland only; different solutions apply in Scotland.

Refunds for mis-sold products, irresponsible lending complaints and redress schemes, such as the car finance commission scheme, can involve significant sums. If you’re in an IVA, there are rules about who that money belongs to.

The short answer

Refunds and compensation are often treated as assets or windfalls in an IVA.
Claims about borrowing from before your IVA often belong to creditors.
Your insolvency practitioner may pursue the claim on your behalf.
If a refund relates to a debt in your IVA, it may be offset against that debt.
Tell your insolvency practitioner before using a claims company.

Why might a refund go to my creditors?

When an IVA is approved, rights to claims that existed before it started can form part of what you’ve offered creditors. Your IVA terms set out how refunds and windfalls are treated. Many IVAs include clauses about mis-selling and similar claims.

What if the lender owes me money and I owe the lender?

If a creditor in your IVA owes you a refund, it may be set off against what you owe them, reducing the debt rather than being paid to you.

What about car finance redress?

If you’re due money from a car finance commission redress scheme, tell your insolvency practitioner. Whether it goes to the IVA depends on when the agreement was taken out and your IVA terms.

What about after my IVA ends?

Some IVA terms continue to cover claims relating to the IVA period, even after completion. Check with your former insolvency practitioner. See also IVAs, windfalls and inheritance.

Common questions

Do I have to tell my IVA company about a PPI or mis-selling refund?

Yes. Refunds can be treated as assets or windfalls, and not disclosing them can cause your IVA to fail.

Can I use a claims company during an IVA?

Speak to your insolvency practitioner first. They may handle claims themselves, and claims companies take a large fee.

Will a refund end my IVA early?

A large refund could help settle your IVA early, depending on your terms. See how to exit an IVA early.

How IVA Advice Online can help

Every situation is different, and an IVA isn’t right for everyone. We can look at your income, spending and debts with you and set out the debt solutions you could qualify for, including options other than an IVA. To talk it through, get in touch.