An Individual Voluntary Arrangement (IVA) is a legally binding agreement between yourself and your lenders to repay your debts over a fixed timeframe. In order for an IVA to be officially set up, you will need to obtain the services of an insolvency practitioner.
Whilst an IVA can be a useful way to grant you more breathing space with your debt repayments, they can nevertheless be highly expensive both in the long term and short term and come with a number of inherent risks that must be taken into consideration. Furthermore, whilst the majority of debts can be included in an IVA, there are certain liabilities that do not qualify. The following page will outline clearly which debts you can pay off with your IVA, so you can decide whether an IVA is suitable for your situation.
Debts which qualify for an IVA
The majority of debts can be placed into an IVA, though the debt solution is commonly utilised for the following kinds of debt:
- credit card debt
- personal loan debt
- overdraft debt
- store card debt
- charge card debt
Debts such as these are classified as non-priority debts. However, if your IVA is accepted, you will also be able to include priority debts. These are:
- council tax debt
- tax credit debt
- utility bill debt
Secured loan debt, mortgages and rent arrears
Secured loans are liabilities you take out with the condition that they are secured against one of your most valuable assets, usually your property. This entails that if you fail to repay your debt in full or on-time, your creditor is legally entitled to repossess your property and sell it off in order to use the money towards the repayment of your debt.
Legally, you are allowed to put secured loan debt into your IVA, though whether you are actually able to do this in reality is dependent on whether you acquire the consent of your creditors, which is supremely unlikely.
Is there a limit to how much debt I can put into my IVA?
Any sum of debt can be placed into your IVA and there are no lower or upper limits specified in its terms and conditions. However, you should keep in mind that your lenders will likely reject your request unless your debts amount to over £10,000.
Quantity of debts included in your IVA
There is no maximum to the quantity of your debts that can be put into your IVA, though the debt solution is ideally suited to people who have over three liabilities to more than two separate creditors.
Debts that can’t be included in an IVA
The types of debt that cannot be put into an IVA include:
- student loan debt
- child support debt
- court fines handed out by the magistrates
- maintenance arrears handed out by court
How do I address the debts I can’t include in my IVA?
If you have certain types of debt that are not applicable to be part of your IVA, then you will need to keep in mind that you’ll have to allocate a portion of your income to address these debts individually. As such, you’ll have to make sure you have enough money to pay both these and your IVA contributions each month and you should avoid the acquisition of an IVA if you do not believe that you can realistically afford to do this.
In cases such as these, you might wish to opt for a debt solution that can address the entirety of your liabilities.
Deciding on an IVA
- How does an IVA work?
- Which debts can I include?
- How much does an IVA cost to set up?
- Income and Asset Requirements
- How an IVA will affect homeowners
- How an IVA will affect your bank accounts and pension
- How an IVA will affect your credit rating
- How an IVA will affect your work, home and assets
- The lasting power of attorney
- Is an IVA the right solution for me?