IVA and Windfalls: Inheritance, Redundancy & Unexpected Money

What Is a Windfall?

A windfall is any unexpected lump sum received during the course of your IVA. Most IVA proposals include a windfall clause requiring you to pay any such receipt above a set threshold into the arrangement. This ensures creditors benefit if your financial position improves unexpectedly.

Common Windfalls and How They Are Treated

Inheritance

Any inheritance - money, property, or assets - received during your IVA must be declared immediately. The full value may be required to be paid into the IVA. If the inheritance is large enough to clear the arrangement entirely, any surplus above the amount needed to pay creditors in full (plus fees) is returned to you.

Redundancy Payment

Statutory redundancy pay (the legal minimum) is generally exempt from the windfall clause, as it replaces lost income. However, any enhanced redundancy above the statutory amount is likely to be treated as a windfall and required to be paid in (wholly or partially).

PPI Refunds

PPI refunds received during an IVA are almost universally treated as windfalls and must be declared. Your IP will typically require the full refund to be paid into the arrangement.

Personal Injury Compensation

Compensation for pain and suffering is generally protected and not treated as a windfall. Compensation that replaces lost income or covers financial loss may need to be declared. Always seek your IP's guidance before assuming any compensation is exempt.

Lottery and Gambling Winnings

Any significant lottery win or gambling payout must be declared and will be treated as a windfall.

What Happens After You Declare a Windfall?

1. 1You contact your IP as soon as you receive or become aware of the windfall
2. 2Your IP assesses the value and how your IVA terms apply
3. 3If above the threshold, a formal variation is put to creditors
4. 4If large enough, the windfall may fund complete early settlement of the IVA
5. 5Any surplus after all creditors are paid in full (plus fees) is returned to you
6. 6Your IP issues a completion certificate once the variation is approved and funds distributed

What If I Do Not Declare?

This information is for general guidance only and does not constitute financial or legal advice. An IVA is a formal insolvency solution - fees apply and your credit rating will be affected. Seek independent professional advice before making any decisions.