Generally speaking all of your unsecured creditors have to be included in your IVA. However in certain circumstances if might be possible to leave debt out.
Included in this article:
- Do all your debts have to be included in an IVA?
- Is it ever possible to leave debts out?
- Can money owed to family be left out?
Want to start an IVA? Give us a call (0800 077 6180) or complete the form below to speak to one of our experts
Can I keep debts out of my IVA?
All of your unsecured debts must be included in an Individual Voluntary Arrangement (IVA). Can any of your unsecured debts be left out? Can you include secured debts in the Arrangement? To find out more please visit: http://beatmydebt.com/individual-voluntary-arrangement-frequently-asked-questions/which-debts-are-included-in-an-iva
Do all your debts have to be included in an IVA?
If you carry out an IVA you should include all of your unsecured debts. These are things like personal loans, credit cards, CCJs and even money owed to HMRC.
Generally speaking you are not allowed to leave any of these types of creditors out. If you try to do so you are likely to run into problems. You are unlikely to have any spare cash available to keep up the repayments.
Once your IVA starts all the spare money you have each month must be paid into the agreement. There will be non left to maintain any unsecured debts that have been left out.
Secured debts such as your Mortgage or car finance agreement are not included in an IVA. Sufficient money is added to your expenses budget to enable you to keep paying these.
Struggling to get your head round all of this? We can help. Call us (0800 077 6180) or complete the form below. The advice is free and confidential.
Is it ever possible to leave debt out of an IVA?
There are some circumstances where it might be possible to leave debt out of your IVA. If there is a specific reason why you need to maintain a line of credit you may be allowed to do so.
An example of this is if you need a credit card to pay for business expenses. Another is if you owe your employer money and including them would jeopardise your employment and ability to repay any of your debt.
The fact that you plan to leave debts out of the Arrangement and the reasons for this must be made clear in your IVA proposal. Where necessary an amount to maintain the repayments is added to your living expenses.
You will generally not be allowed to keep an unsecured debt out of your IVA unless including it would jeopardise the whole Arrangement.
Can money owed to family be left out of an IVA?
Any debt you owe to friends and family is normally unsecured. As such it can be included in your IVA. Having said that you might feel that you want to leave it out as you do not want to involve people you know.
However it can be very useful to include this type of debt in your Arrangement. If included they will have an opportunity to vote on the Proposal and help ensure it is agreed.
It is possible to leave out friends and family debt if you wish. However you must first make clear to them that you will not be able to continue paying them back the money you owe until after the Arrangement is over.
You cannot include an amount in your living expenses budget to continue paying friends and family during your IVA. Payments to them must stop until after the Arrangement is completed.
Want to start an IVA? We can help. Give us a call (0800 077 6180) or complete the form below. The advice is free and confidential.
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Hi is it possible to leave debts with your local council out of an IVA. Eg. Council tax arrears?
Hi Ivana
It is possible to leave council tax arrears out of an IVA. Instead, this debt can be paid by agreeing a repayment plan with the council and building the extra monthly payment into your living expenses budget. Once the arrears are paid, the extra amount you have been paying to the council would then have to be added to your ongoing IVA payment.
Whether or not you can use the above option will depend on the attitude of the IVA company you use. Some companies will prefer you to include the debt in the IVA. This is usually a better option particularly if the amount of the arrears is significant or you can’t afford to agree a sensible repayment plan with the council and maintain a reasonable IVA payment at the same time.
Hi
I have a car on finance and would need to keep it as needed for my commute to work – can this be left out of an IVA arrangement?
I cannot get to work using public transport
Hi Marc
Yes, leaving your car finance out of the IVA is perfectly acceptable and in fact quite common. This is because car finance is a secured debt. You simply include the car payment in your living expenses budget. At the end of the agreement what happens depends on whether the finance is PCP or HP.
If it is HP, you will have paid for the car and it will be yours. The money you were paying to the finance company is then added to your IVA payment for the remainder of the agreement.
Where your car is on a PCP agreement, it will not be yours at the end. Under normal circumstances you would hand the vehicle back and finance another. However, in an IVA it is not so simple because it will be more difficult to get credit. You will probably have to use a specialist finance company who will charge more and you might end up having to get a cheaper replacement vehicle. Alternatively it might be possible to keep yours and refinance the balloon payment.
It is very important that you fully understand what your options will be at the end of the finance agreement particularly if you have PCP. Make sure you discuss this up front with your IVA company.
Can I leave a guarantor loan off an iva
Hi Dave
The answer to this is no unless the guarantor is happy to pay the debt. There are for 2 main reasons:
First, the other creditors are unlikely to agree to the IVA if they can see you are still paying one debt in full. Second, guarantor loan payments are normally quite large. Trying to keep up with the loan and pay your IVA is unlikely to be affordable.
Given the guarantor can’t pay, the only solution is normally to delay starting the IVA until the guarantor loan is paid off (perhaps use a debt management plan for the other creditors in the mean time).
You can read more about guarantor loans and IVAs here: Can a guarantor loan be included in an IVA?