Redundancy During an IVA: Will It Take My Redundancy Pay?

What Happens to My IVA if I’m Made Redundant?

Tell your insolvency practitioner straight away. Some of your redundancy pay may go into the IVA, and your payments can usually be reduced or paused while you find work.

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.

Losing your job while you’re in an IVA is worrying, but it doesn’t automatically mean the IVA will fail. IVAs are designed to cope with changes in income, as long as you tell your insolvency practitioner early.

The short answer

Contact your insolvency practitioner as soon as you know about the redundancy.
Redundancy pay is usually treated as a lump sum. Part or all of it may go into the IVA.
Your IVA terms may let you keep some of it to cover living costs while you look for work.
Payments can often be reduced or paused for a few months.
If your income drops for good, the IVA can be varied with creditors’ agreement.

Will my IVA take my redundancy pay?

Redundancy pay is usually treated like other lump sums received during an IVA. Your IVA terms set out what happens. Commonly, some of the money may be used to keep your IVA payments going while you’re out of work, and the rest may be paid to creditors. Don’t spend redundancy money until you’ve spoken to your insolvency practitioner.

Can I pause my IVA payments?

Many IVAs allow a short payment break if your income falls through no fault of your own. Your insolvency practitioner can explain whether that applies to you and how long it could last. Missed months may need to be made up, often by extending the IVA.

What if I can't find work quickly?

If your income is likely to stay lower, your insolvency practitioner can propose a variation to reduce your payments. Creditors vote on it. If an IVA is no longer workable, other options such as a DRO or bankruptcy may need to be looked at. Our guide to dealing with debt after losing your job covers wider help, including benefits.

Common questions

Do I have to tell my IVA company I've been made redundant?

Yes. Your IVA terms require you to report changes in income. Telling them early gives the best chance of keeping the IVA on track.

Can I keep my redundancy pay in an IVA?

It depends on your IVA terms and your circumstances. Some may be kept to cover living costs while you look for work, with the rest going to creditors.

Will my IVA fail if I lose my job?

Not necessarily. Payments can often be paused or reduced. An IVA usually only fails if you can’t pay and no workable arrangement can be agreed.

Can I get an IVA if I'm unemployed?

It’s harder, because an IVA needs regular affordable payments. If you have little spare income, a DRO or bankruptcy may be more suitable.

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.