How Inheritance Works When An IVA Is Involved

Are you wondering about IVA and inheritance? You’re in the right place to find out more. Each month, over 170,000 people visit our website seeking advice on dealing with debt.

We know that the idea of an IVA can be confusing and that paying off a debt can feel hard. You’re not on your own. In fact, from July to September 2023, the Gazette reported that there was a total of 13,965 Individual Voluntary Arangements.1

In this handy guide, we’ll help you understand:

  •  How getting an inheritance might change things.
  •  If you can keep some of your inheritance.
  •  What the rules say about hiding inheritance money.
  •  How to know if an IVA is the best choice for you.

Our team is made up of people who have dealt with debt problems too. We know what it feels like, and we’re here to help you make the best choices.

How Does It Affect You Receiving an Inheritance?

IVA has the sole purpose of avoiding bankruptcy when you enter an Individual voluntary agreement, there are some restrictions placed upon your finances. 

Any inheritance that is coming your way when you have entered an IVA is treated as a windfall. The windfall clause in the IVA states that any unexpected gain or any extra money should be used in favour of your lenders to pay back the debt. That means that if you receive any inherited money, that money will be used to pay off your monthly payments of debt.

This includes any monetary gain that is received in inheritance, such as, property, cash, and jewels. The money will be handed over to your IVA company, in order to pay back creditors. 

Do You Have to Pay the Inheritance Money to your Creditors?

Yes! You will have to pay the inheritance receiving back to your lenders because if you have signed an IVA, that means you are legally and formally liable to follow its rules and arrangements. Not paying the money to your IVA company might cause some serious problems ahead of your debt solution plan.

I would personally advise you to pay your claimants the inheritance surplus because in the end your debt will be deducted and you will move one step ahead to a debt free life. Apart from that if the windfall sum is smaller than £500, it is not usually paid into the IVA agreement.

What Happens If You Inherit the Money Before an IVA?

If you inherit anything with monetary value before you have signed an IVA, the situation is different. You will not have to pay the inheritance amount to your IVA company because, at the time of receiving the inheritance sum, you were not in any agreement to pay it to your lenders. Therefore, you are not legally allowed to keep the sum that you receive in any kind of inheritance.

Should You Delay an IVA when You are Getting the Inheritance? 

If you want to keep the inheritance, you might want to delay your IVA plan. Doing that you will be able to keep all the inheritance for yourself and you will not have to pay the IVA company.One thing that you need to take care of is that after receiving the IVA money, dont pay any of your creditors because it will be implicated as a preferential payment.

This could cause you some problems if you are still looking forward to your IVA.The other creditors who didnt receive any payment might not agree to your IVA proposal due to this.

Is it Illegal to Hide Inheritance Money from IVA?

Yes. As I told you before, IVA is a legal agreement and it has some legal restrictions and implications upon your financial life. Hiding inheritance from IVA will be a breach of the windfall clause that is present in an IVA. Hence, it is technically illegal to hide funds when you are in an IVA agreement. 

There are some consequences of hiding the received legacy from your IVA, such as:-

Legal Procedure 

The breach of a legal agreement means that you might have to face some sort of legal lawsuit, in this case, it will surely increase your costs and if the decision comes against you, you will lose the inheritance as well, which you tried to hide. 

Termination of Your IVA Agreement

Once the contract has been breached, there will be no trust between your creditors and your IVA company, hence, the IVA proposal or arrangement might come to an end. In this situation, you will have to pay back your creditors by any means. 


Bankruptcy is a major consequence of hiding money from your IVA, as I have mentioned that hiding money might get your IVA terminated. Therefore, if you are not able to pay back your lenders, you might have to declare yourself bankrupt. 

Bankruptcy has some serious long term implications on your credit score and your financial life. It is really hard to gather your financial life after you have been bankrupt.  


  1. The Gazette – UK individual insolvency statistics: Q3 2023

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