IVA windfall clause: what you need to know

A windfall clause is a term in your IVA agreement that outlines what happens if you come into some unexpected money while the arrangement is in place. This could be through an inheritance, a lottery win or any other financial windfall.

Basically, the windfall clause states that if you receive a lump sum of money over a certain amount (usually around £500), you must pay a portion of it into your IVA. The exact amount you'll need to pay will depend on the specifics of your IVA agreement.

You might be thinking, ‘hold on, if I come into some money, shouldn't I be able to keep it?’ Well, the windfall clause is there to make sure your creditors get a fair deal.

Remember, an IVA is a legally binding agreement between you and your creditors. You agree to pay a certain amount each month, and in return, your creditors agree to write off some of your debt. If you suddenly come into a large sum of money, it's only fair that some of it goes towards paying off your debt.

Your IVA might include a term that means you still have to pay a portion of any windfall you receive into your IVA even after it’s ended.

Check with your IVA supervisor to find out if this is the case for you.

Now we know it might be tempting to keep quiet about a windfall, especially a big one. But trust us, that's not a good idea. If you fail to declare a windfall, you’ll likely be in breach of your IVA agreement.

If your IVA supervisor finds out about an undeclared windfall, they could:

• cancel your IVA
• demand you pay the full amount of your debt
• take legal action against you

In short, it's really not worth the risk. Honesty is always the best policy when it comes to your IVA.

If you're unsure whether a particular sum of money counts as a windfall, the best thing to do is to speak to your IVA supervisor. They'll be able to advise you on whether you need to declare it and how much you'll need to pay into your IVA.

Remember, your IVA supervisor is there to help you. If you're ever unsure about anything, just get in touch.