Money Advice, Debt Advice & Debt Help
Can I include a Payday Loan in an IVA
Money Advice, Debt Advice & Debt Help

Can I include a Payday Loan in an IVA

Can I include a Payday Loan in an IVA

Sometimes a list of debts reveals more Payday Loans than traditional forms of credit. But can you include a Payday Loan in an IVA? Rather speak to someone? Call 0800 077 6180.

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How are Payday loans treated in an IVA?

Payday Loans are different to a normal credit cards or personal loans. They tend to be for smaller amounts. However they have to be paid back over a much shorter time based on significantly larger monthly payments.  

That said they are still unsecured debts. So if you are considering starting an IVA any payday loan you owe can also be included. They are be treated the same as your other creditors and paid out proportionately depending on the amount of debt you have with them.

This means an IVA can be a significant help if you are struggling with payday loan debt. As soon the Arrangement is in place your debt payments will massively reduce and become affordable.

Payday loans are forms of unsecured debt and so should always be included in an IVA. The other creditors would not accept the agreement if you continue payments towards these debts.

How to stop your payday loan repayments

When you start an IVA you will stop making payments to your unsecured creditors. However, stopping the payments to a payday loan company may not be straight forward. This is because often the payments come from your bank debit card in the form of a continuous payment authority.

The surest way to stop this is to cancel your card. To avoid further questions, you can tell your bank that your card has been lost and that you require a replacement. They will then cancel the card immediately preventing any further payments from being drawn from it.

Don’t worry if they do manage to take extra payments. Often your existing bank are one of your creditors, even if only as an overdraft. Any outstanding overdraft which may have been increased because a payday loan payment has been made, will be included in your IVA.

You will normally need to open a new bank account with a creditor you have no debt with. This gives you better control of payments you make moving forwards.

Will you be accused of fraud?

If you are already struggling with your finances and are unable to maintain your debt repayments, trying to borrow your way out of trouble rarely works. Why are we mentioning fraud? Well, technically if you were to borrow money knowing you could not pay it back, that could be seen as fraudulent.

Depending on the amount you borrow and the circumstances, it is possible that creditor could accuse you of fraud, but it is unlikely. Especially in the case of a Payday Loan company where the amounts borrowed are lower. There would have to be a clear case of you misleading the creditor by perhaps lying on your application form.

In reality not being upfront when dealing with credit usually backfires. If you are granted credit you cannot afford your financial situation will almost certainly worsen. However, if you are open and honest with creditors when you get into trouble they will negotiate a solution, possibly including debt write off.

Taking regular Payday Loans is often a symptom of a bigger debt problem that is only likely to escalate. Contact us to find out how you can regain control and stop relying on credit each month.

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