What sort of debts can be incorporated into an IVA?

Whilst many individuals opt to enter into an Individual Voluntary Arrangement (or “IVA”), it’s important to recognise that not all types of debt can be incorporated into this type of arrangement – and this is a fact many debtors simply aren’t aware of.

What is an IVA?

An IVA is a formal and legally binding agreement which is made between both you and your creditors to repay any debts you might have.  In order to be eligible there are certain types of criteria to comply with and only certain debt types can be incorporated into one.

What type of debts can be included in an IVA?

Whilst it’s fair to say that the vast majority of debts can be incorporated into an IVA they’re more typically used to address the following debt types:

• Unsecured loans or overdrafts
• Credit card debts
• Store cards
• Catalogue accounts
• Charge cards
• Council tax arrears
• Certain tax debts
• Utility bills (such as telephone bills, gas or electricity)

What type of debts can’t be included in an IVA?

There are certain debt types that you can’t incorporate into an IVA, for example:

• Maintenance arrears
• Child support arrears
• Student loans
• Magistrate Court fines

What happens to the debts I can’t include in an IVA?

Even if you pick the best IVA company If there are certain debt types that you can’t include in an IVA, then you need to ensure that you have sufficient funds to pay for these separately.  Consequently, you might be advised to make contact with the creditors who can’t be repaid via any proposed IVA to see what type of repayment terms they might accept by way of settlement. You then need to consider the total amount of these repayments before deciding whether you can enter into an IVA.

I’ve got debts with my partner.  Can these go into an IVA?

If you have joint debts (perhaps with a partner or other family member) then these can’t be incorporated into a “joint” IVA as this type of arrangement can only cover one person.  That said, whilst you can’t do a joint arrangement per se, you might be able to take out individual IVA’s which are then connected together.  These are known as ‘interlocking’ IVA’s and if most of your debts are joint then this is certainly an option you might want to consider.  

Can I include mortgage or rent arrears?

Whilst it’s certainly possible to include mortgage or rent arrears into an IVA, it’s highly likely that your lender (or landlord) will object to this type of arrangement.  This is because mortgage or rent arrears are classed as ‘secured’ lending and mean that your lender (or landlord) can take possession of your property.  In reality, the vast amount of lenders or landlords are unlikely to agree to an IVA for rent arrears since they’ll be more concerned about getting their property back and ultimately, limiting their losses in terms of future income.