What Debts Can Go Into an IVA?

But which debts can actually be included in an IVA?

Most unsecured debts can be included, including credit cards, loans, overdrafts, catalogue debts, payday loans and certain tax arrears. However, some debts cannot be included in an IVA and will need to be dealt with separately.

It is important to understand which debts are covered before entering an IVA, because you will normally still have to pay any debts that are excluded from the arrangement.

Which debts can be included in an IVA?

An IVA can normally include a wide range of unsecured debts.

These can include:

• Credit cards
• Store cards
• Personal loans
• Payday loans
• Catalogue debts
• Klarna debts
• Bank overdrafts
• Council Tax arrears
• Gas and electricity arrears
• Water arrears
• Income Tax and National Insurance arrears
• Tax credit and certain benefit overpayments
• Debts owed to family or friends
• Outstanding bills
• Some professional fees and invoices
• Some mortgage shortfalls
• Certain hire purchase debts

There is no fixed list of every debt that can be included. The treatment of a particular debt can depend on the circumstances and the terms of your IVA.

Can credit card debt go into an IVA?

Yes.

Credit card debt is one of the most common types of debt included in an IVA.

Once your IVA is approved, creditors included in the arrangement are generally prevented from taking action to recover the debts covered by the IVA, subject to the terms of the arrangement.

At the end of a successful IVA, you will normally no longer owe the qualifying debts included in the arrangement.

Can personal loans go into an IVA?

Yes.

Unsecured personal loans can normally be included in an IVA.

This can include loans from banks, building societies and other lenders.

If a loan is secured against an asset, however, it may be treated differently. Secured debts are not generally dealt with in the same way as unsecured debts.

Can payday loans go into an IVA?

Yes.

Payday loans and other short-term unsecured borrowing can normally be included in an IVA.

If you have several payday loans, they can usually be dealt with as part of the same arrangement.

You should provide your Insolvency Practitioner with details of all your borrowing, including short-term loans, so that your debts can be properly assessed.

Can overdrafts go into an IVA?

Yes.

An unauthorised or authorised bank overdraft can generally be included in an IVA if you owe money to the bank.

You may need to open a new basic bank account with a bank that you do not owe money to before your IVA begins.

This is particularly important where your current bank is also one of your creditors.

Can catalogue debts go into an IVA?

Yes.

Catalogue debts can normally be included in an IVA.

This can include balances owed to catalogue and mail-order companies where the debt is unsecured.

If you have several catalogue accounts, they can generally all be included in your IVA.

Can store cards go into an IVA?

Yes.

Store card debts can normally be included in an IVA in the same way as other unsecured credit.

The outstanding balance would form part of the debts dealt with by the arrangement.

Can Council Tax arrears go into an IVA?

Council Tax arrears can normally be included in an IVA.

This can include arrears that have built up before your IVA starts.

However, you must continue to pay your ongoing Council Tax after the IVA begins. Your current household bills are not simply added to the IVA.

It is important to keep up with new Council Tax bills because falling behind again could cause further financial problems.

You can find out more in our detailed guide to "Council Tax Arrears"

Can utility arrears go into an IVA?

Gas, electricity and water arrears can generally be included in an IVA.

For example, if you have fallen behind with your electricity payments before your IVA starts, the arrears may be included in the arrangement.

However, you will normally need to keep paying your ongoing utility bills after the IVA begins.

Your Insolvency Practitioner will take your normal household bills into account when working out what you can afford to pay.

Can HMRC debts go into an IVA?

Certain debts owed to HM Revenue & Customs (HMRC) can be included in an IVA.

These can include certain:

• Income Tax arrears
• National Insurance arrears
• Tax credit overpayments
• Benefit overpayments

The exact treatment can depend on the type and circumstances of the debt.

If you owe money to HMRC, you should disclose the debt when your IVA is being prepared rather than assuming that it cannot be included.

Can benefit overpayments go into an IVA?

Some benefit and tax credit overpayments can be included in an IVA.

You should provide details of any overpayment to your Insolvency Practitioner so they can establish whether it is a qualifying debt.

Your normal benefit payments are not debts and are treated separately when your income and expenditure are assessed.

Can debts owed to family and friends go into an IVA?

Yes, debts owed to family members or friends can potentially be included.

For example, if a family member lent you £5,000 and you have not been able to repay it, the debt should be disclosed when your IVA is prepared.

You should not leave a debt out simply because the creditor is someone you know.

All debts and creditors should be disclosed accurately to your Insolvency Practitioner.

Can joint debts go into an IVA?

Joint debts can be included in an IVA, but there is an important point to understand.

An IVA only applies to the person who enters into it.

If you have a joint loan with your partner and you enter an IVA, your partner remains responsible for the debt. The creditor can still pursue the other borrower for payment.

For this reason, couples with joint debts should consider both people's circumstances before deciding on an IVA.

It may sometimes be possible for both people to have linked or interlocking IVAs, although these are still separate individual arrangements.

Our guide to Joint IVAs explains the rules in more detail.

Can mortgage arrears go into an IVA?

Mortgage arrears require particular care.

A mortgage is a secured debt, and your mortgage lender has rights over the property that are different from those of an unsecured creditor.

Mortgage arrears should not simply be assumed to be covered by an IVA.

If you are behind with your mortgage, you should obtain specialist debt advice before entering an IVA to establish how the arrears will be dealt with and whether the IVA is appropriate.

You must continue to maintain your ongoing mortgage payments.

For a detailed guide, read An IVA and Your Home: What Happens to Your House? It explains the rules in more detail.

Can rent arrears go into an IVA?

Rent arrears can be more complicated than ordinary unsecured debts because your home may be at risk if your landlord takes possession action.

You should not assume that including rent arrears in an IVA will prevent eviction.

If you are behind with your rent, it is particularly important to get advice about your housing position as well as your debts.

Citizens Advice recommends dealing with mortgage or rent arrears separately where necessary to help protect your home.

Can car finance go into an IVA?

This depends on the type of car finance you have.

A vehicle purchased using certain types of hire purchase or other secured finance may not be treated in the same way as an unsecured personal loan.

The finance company may retain rights over the vehicle until the agreement has been completed.

If you have car finance, your Insolvency Practitioner will need to know:

• The type of finance agreement
• The outstanding balance
• The current value of the vehicle
• The monthly payment
• How much remains to be paid

Do not stop making your car finance payments simply because you are considering an IVA.

Our guide to IVA and Car Finance: Can You Keep Your Car? explains the rules in more detail.

Can a mortgage shortfall go into an IVA?

A mortgage shortfall can potentially be included in an IVA.

A shortfall can arise if a property is sold for less than the amount owed to the mortgage lender, leaving an outstanding balance.

Once the debt becomes an unsecured shortfall, it may be treated differently from the original secured mortgage.

The exact circumstances should be discussed with an Insolvency Practitioner.

Can debts from a business go into an IVA?

Business debts require careful consideration.

If you are self-employed or operate as a sole trader, business debts can potentially be relevant to an IVA, but a standard consumer IVA may not be suitable in every situation.

The current IVA Protocol specifically identifies sole traders with trade debts as an indicator that a standard protocol IVA may not be suitable. A bespoke IVA or another debt solution may need to be considered instead.

If you are self-employed, make sure your Insolvency Practitioner knows about all your business and personal debts.

Which debts cannot be included in an IVA?

Not every debt can be included in an IVA.

Common debts that cannot normally be written off through an IVA include:

• Student loans
• Magistrates' court fines
• Certain child maintenance arrears
• Certain Child Support arrears
• Social Fund loans
• TV Licence arrears

What happens to debts that cannot go into an IVA?

If a debt cannot be included in your IVA, you remain responsible for paying it.

This is important because an IVA payment is calculated based on what you can reasonably afford after taking your essential expenditure into account.

If you have debts that must be paid separately, you need to make sure your budget allows you to keep up with them.

For example, if you have a court fine that cannot be included in your IVA, you will still need to make arrangements to pay it.

This is one reason why a full assessment of your finances is important before entering an IVA.