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If you’re struggling to keep up with your financial commitments, seeking debt help through an Individual Voluntary Arrangement (IVA) could be a lifeline. An IVA is a legally binding agreement between you and your creditors, allowing you to repay your debts over a set period typically five to six years. But which debts can be included in an IVA, and which cannot? This comprehensive guide will help you understand your options and make informed decisions on your journey toward financial freedom.

Debts That Can Be Included in an IVA

Most unsecured debts can be included in an IVA, making it a flexible solution for many people seeking debt help. Here are the most common types:

  • Credit Cards: All outstanding balances, including those with high interest rates, can be included.
  • Personal Loans: Whether from a bank, building society, or online lender, these can be part of your IVA.
  • Store Cards and Catalogues: Debts from shopping accounts and catalogues are eligible.
  • Overdrafts: Both arranged and unarranged overdraft balances can be included.
  • Payday Loans: Short-term, high-interest loans can be consolidated into your IVA.
  • Utility Arrears: Outstanding gas, electricity, and water bills from previous addresses or suppliers.
  • Council Tax Arrears: Debts from previous years or current year if in arrears.
  • HMRC Debts: Income tax, VAT, National Insurance arrears, and overpaid tax credits.
  • Money Owed to Family or Friends: Informal loans can be included, provided they are documented.
  • Other Unsecured Debts: This includes debts from legal costs, veterinary bills, and invoices for services.
  • Debts with County Court Judgments (CCJs): CCJs and attachment of earnings orders can be included in your IVA.

Debts That Cannot Be Included in an IVA

While IVAs are a powerful form of debt help, some debts are excluded. These are typically “priority debts” or those secured against assets:

  • Mortgages and Secured Loans: Any debt secured against your home or other property cannot be included.
  • Current Rent and Service Charges: Ongoing rent and property service charges must be paid separately.
  • Current Utility Bills: You must continue paying for your current utility services.
  • Hire Purchase Agreements: Ongoing payments for vehicles or goods under hire purchase cannot be included.
  • Student Loans: Both government and private student loans are excluded.
  • Child Maintenance and CSA Payments: Legally mandated child support cannot be added to your IVA.
  • Court Fines: Fines imposed by a court must be paid as normal.
  • Recent Council Tax: The current year’s council tax, if not in arrears, is excluded.
  • Debts Incurred by Fraud: Any debt resulting from fraudulent activity cannot be included.

Why Choose an IVA for Debt Help?

An IVA offers several advantages for those seeking debt help:

  • Affordable Payments: Your monthly payment is based on what you can reasonably afford.
  • Legal Protection: Once agreed, creditors can’t take further action against you or add more interest and charges.
  • Debt Write-Off: Any remaining unsecured debt is written off at the end of your IVA term.
  • Single Monthly Payment: Simplifies your finances and reduces stress.

Understanding which debts can be included in an IVA is crucial when considering your debt help options. Most unsecured debts qualify, but some important exceptions apply. Always seek professional advice from a licensed insolvency practitioner or a reputable debt advice charity before committing to an IVA. Taking the right steps now can put you firmly on the path to a debt-free future.

If you’re ready to take control of your finances, reach out for debt help today your fresh start could be just around the corner.

Credit Score

Credit Score Pop Up Wording : An Individual Voluntary Arrangement (IVA) is a formal agreement with creditors to repay a portion of your debts over time, but it does have an impact on your credit score and it will be difficult to obtain further credit whilst on an IVA. Once an IVA is approved, it is recorded on your credit report and will typically remain there for six years from the date it starts.
However, it’s important to note this is the case for most debt solutions and your credit score will likely already have been affected by being in debt in the first place.
Once your IVA is complete you will get a fresh start to begin rebuilding your credit rating.

Fees

IVA costs are charged for the preparation of your proposal and the administration of the arrangement for the full term (usually 5 years) these costs are charged from the monthly contributions you make into the IVA and are not in addition. Costs will only be recovered on approval of your arrangement and once you commence making payments to it. The fees for preparation of the proposal to creditors and calling the meeting for creditors to vote on its approval are called nominees fees, the fees for running the arrangement once approved are called supervisors fees. There are also some expenses incurred in the running of the arrangement such as the registration fee and the statutory insurance that needs to be taken by law, these are called disbursements. For our arrangements, the total of all of these is £3,650 although this may be adjusted by creditors when they vote on whether to accept. No matter what the end total of costs come to, you can be rest assured that these will be taken from the monthly payment we agree with you.