What Happens to an IVA When Someone Dies? IPA Closure and Probate

Dealing with probate when the deceased had an IVA (Individual Voluntary Arrangement) adds a layer of complexity that most executors are not prepared for. This guide explains what happens to the IVA and the associated IPA (Income Payments Agreement) when someone dies, what the executor needs to do, and how the IVA creditors interact with the probate process.

What is an IVA and what is an IPA?

An IVA (Individual Voluntary Arrangement) is a formal, legally binding arrangement between a person in debt and their unsecured creditors, supervised by a licensed insolvency practitioner (IP). It allows the debtor to repay a proportion of what they owe over a fixed term — usually five or six years — in full and final settlement of those debts. IVAs are regulated under the Insolvency Act 1986.

Within many IVAs, particularly where the debtor has income from employment or self-employment, the arrangement includes an IPA (Income Payments Agreement). The IPA is the mechanism by which the debtor pays a portion of their surplus income into the IVA fund each month for the benefit of creditors. The IPA continues for the duration of the IVA, and the IP monitors the debtor's income annually and adjusts the IPA payments if income changes significantly.

Some IVAs are property-based rather than income-based. The structure varies, but the core principle is the same: the IP supervises the arrangement and distributes funds collected to creditors.

What happens to an IVA when someone dies?

The legal position when an IVA debtor dies is more complex than it might first appear, and there is genuine legal uncertainty in some cases. The practical outcome depends on the terms of the specific IVA and the nature of its assets, and specialist advice should always be sought. The broad position is as follows:

• The IPA ceases immediately. Since the IPA relies on the debtor's income, and there is no more income after death, the income payments agreement ends on the date of death. No further IPA payments are due from the estate.
• The IVA may or may not automatically terminate. Standard IVA terms (including the IVA Protocol 2025) expressly provide that IVA assets are held on trust for the purposes of the arrangement and remain subject to it even after the debtor's death. This means the IVA can — and often does — continue in respect of assets already within the arrangement, even though the debtor has died. The supervisor and creditors work through the IP rather than the estate executor for those assets.
• The IP must be notified promptly. The insolvency practitioner supervising the IVA must be told of the death as soon as possible. They will assess what assets are within the IVA, what can still be realised for creditors, and what the appropriate next steps are under the specific IVA terms.
• If the IVA cannot continue, the supervisor may apply to court for an Insolvency Administration Order, under which the estate is administered under bankruptcy rules rather than standard probate rules. In this scenario, the IP — rather than the executor — takes charge of distributing estate assets to creditors.

The outcome varies significantly case by case. The executor should not assume the IVA simply "goes away" on death, nor that IVA creditors automatically revert to claiming full original balances. Both assumptions can be wrong.

Notifying the insolvency practitioner

As executor, one of your early tasks is to notify every institution the deceased dealt with — and this includes the insolvency practitioner supervising the IVA. Notify them as soon as you are aware of the IVA. You will need to provide:

• The death certificate
• Your details as executor, along with a copy of the will or letters of administration once available
• Contact details so the IP can correspond with you about the IVA closure

The IP will then formally close the IPA, notify creditors, and provide you with details of the amounts owed to each IVA creditor. You will need this information to prepare the estate's creditor schedule.

The IP may also have been holding funds in the IVA that have not yet been distributed to creditors. These funds belong to the creditors, not the estate — the IP will distribute them in the normal way, or may return them to the estate depending on the circumstances and the terms of the IVA.

IVA creditors and probate: who gets paid?

Where the IVA continues after death (which is common under standard IVA terms), assets held within the IVA are distributed to IVA creditors through the insolvency practitioner, not through the probate process. The executor and IP need to coordinate to establish which assets are within the IVA and which form part of the wider estate.

Where assets fall outside the IVA and are administered through probate, the standard creditor priority order applies. Unsecured creditors (which may include any remaining IVA creditors for amounts outside the arrangement) are paid after:

1. Secured debts (for example, a mortgage)
2. Funeral costs
3. Testamentary expenses (costs of administering the estate)
4. Preferred creditors (certain HMRC debts)

If the estate is insolvent — debts exceed assets — the rules of the Administration of Insolvent Estates of Deceased Persons Order 1986 apply. The executor should take specialist legal advice before distributing anything in this scenario.

The picture in any individual case will depend on the terms of the specific IVA, what assets it holds, and what the IP and court agree should happen. Do not proceed without taking advice from the insolvency practitioner and, if the estate is complex, a solicitor experienced in insolvency and estates.

The insolvency practitioner's fees

The IP will charge fees for winding up the IVA following the death. These fees are a matter between the IP and the IVA estate (the funds held in the IVA), not directly chargeable to the probate estate in most cases. However, if the IP incurs costs in corresponding with you and providing creditor information, some of those costs may be raised as a claim against the estate. Ask the IP to confirm their position in writing as soon as you make contact.

Does the estate need probate if there was an IVA?

The existence of an IVA does not itself determine whether probate is needed. Probate depends on the nature and value of the assets the deceased held — not on the debts. If the deceased owned property in their sole name, or held accounts above bank probate thresholds, the estate will still require a Grant of Probate (or Letters of Administration if there is no will) in the usual way.

If you are unsure whether probate is needed, see our guide to do I need probate? or use the free Settle probate assessment.

What if the estate is insolvent?

If the total debts of the estate — including all IVA creditors at their full amounts — exceed the total assets, the estate is insolvent. An insolvent estate is administered under a separate set of rules, and the executor should take legal advice before distributing anything. Distributing from an insolvent estate in the wrong order can expose the executor to personal liability.

An IVA supervisor or insolvency practitioner may be well-placed to advise on insolvency administration if the estate is in deficit. See our overview guide to executor duties for more on your general obligations when managing a complex estate.

Summary: what the executor needs to do

1. Locate the IVA agreement in the deceased's documents or correspondence
2. Identify the name and contact details of the insolvency practitioner supervising the IVA
3. Notify the IP promptly with a copy of the death certificate and your details as executor
4. Ask the IP to confirm: which assets are within the IVA arrangement, what the IVA creditors are owed, and what the IP's proposed next steps are
5. Do not assume the IVA simply ends — it may continue in respect of assets already held within it
6. Coordinate with the IP to establish which assets fall within the IVA and which fall into the wider estate for probate
7. If probate is required for the wider estate, apply in the usual way alongside the IVA process
8. Take specialist legal advice before making any distributions, particularly if there is any doubt about whether the estate is solvent

For more on the general order of priority for paying debts from an estate, see what happens after probate is granted. For guidance on executor duties and personal liability, see executor duties explained.