IVAs are designed to help people who are struggling with debt. They may have fallen behind on the repayments, usually to more than one creditor. This debt solution can allow you to renegotiate the terms of your loans, helping to make paying your debts become more manageable. Whilst your creditors aren’t obliged to agree to an IVA, they will usually consider it if the alternative option is bankruptcy. If you were to declare bankruptcy, they’d receive less of their money back.
What types of debts can be placed on an IVA?
When you get an IVA, you can include quite a wide range of debts, including:
- Personal loans
- Credit cards
- Store cards
- Charge cards
- Gas and electric arrears
- Water arrears
- Council Tax arrears
- Payday loan debts
- Income tax and NI arrears
- Tax credits or benefits overpayments
What about secured loans, mortgage, or rent?
Secured loans refer to debts that are secured against your property. If you can’t pay back the debt, your home or other assets can be taken away from you. Whilst it’s possible to include secured loans, as well as mortgage or rent arrears, in IVA debt, your creditors will need to give their permission. Unfortunately, they’re unlikely to do this since the only real motivation they have to agree to an IVA is that they may not be paid anything otherwise. If you have a secured loan, the lender may simply choose to take your property to recover their money.
I’ve forgotten to include debts – what do I do?
If a debt comes to light once the IVA has been set up, you need to tell your Insolvency Practitioner (IP) right away. Legally, these creditors are referred to as ‘unknown creditors’. Many people are surprised to hear that the IVA is legally binding on creditors discovered later on. They are required to stick to the arrangement and are unable to take any action against you to recoup their money. Some of your monthly IVA debt repayment will go to them. If they’re unhappy with the arrangement, they have 28 days to apply to the courts to challenge the IVA.
How much debt can I put on an IVA?
There’s no minimum or maximum level for IVA debt. However, it’s important to keep in mind that since fees can sometimes be high, an IVA may not be the right option if your debt owed is less than £10,000. Other debt solutions may be more appropriate for your solution. There’s also no limit on how many different debts you can place on to an IVA. Although, an IVA really is better suited to those who owe money to more than one lender.
What debts can’t I include?
Some debts can’t be added to IVA debt. These include:
- Child support appears
- Maintenance arrears (ordered by a court)
- Student loans
- Court fines
- TV licence arrears
- Social Fund loans
If you have debts that aren’t included in your IVA debt, you need to make sure you’re able to repay them alongside your IVA repayments. If you’ll struggle to do this, you may want to choose another debt solution that allows you to deal with all your debts together.
An IVA can allow you to pay back the money you owe to your creditors over a period of time. They can usually be quite flexible too, which means that can often be adapted to suit your changing circumstances. For expert advice on what can and can’t be included in IVA debt, and how to apply for an IVA, contact Debt Assist UK.