Are you considering an IVA as a debt management option? Discover what debts can and can’t be included.
If you’re drowning in debt you can’t handle, you need to find a debt management solution to suit your particular needs. Everyone’s situation is unique and individual, and there are a number of avenues open to you when it comes to managing your debt. Regardless of how hopeless your situation may seem, remember that there are always alternatives to explore and that you are not alone. In fact, the average Briton is struggling to pay their monthly bills. There are professionals out there who can help you get on a secure financial footing so you can move on and enjoy life.
How do I know which debt management solution to pick?
Navigating the confusing world of debt management might feel like an intimidating task, but there are Insolvency Practitioners who are happy to help you to make the critical decision between pursuing an IVA, Debt Management Plan or bankruptcy. These professionals have ready access to intuitive insolvency software that can automatically generate payment plans using your information, quickly determining which debt management option is best for you.
What is an IVA?
An Individual Voluntary Arrangement (IVA) is a formal and binding agreement between you and your creditors. IVAs generally afford you far more control over your assets than bankruptcy, and upon the completion of an IVA, the remainder of your debt is written off. More and more people are opting for IVAs, but before you proceed it is best that you get to grips with the ins and outs of what can actually be included in an IVA.
Non-priority debts can generally be included in an IVA
Non-priority debts are defined as debts where creditors have no extra powers to force you to pay. These debts will not usually result in you losing your home or serving prison time. Regardless of this, they are still to be taken seriously and have an effect on your credit rating for six years. Non-priority debts can usually be included in an IVA. Examples include:
- Personal bank loans
- Payday loans
- Personal credit cards
- Bank overdrafts
- Store cards
- Shopping catalogues
Certain priority debts can be included in an IVA
Priority debts are those that can lead to serious legal action if you fail to repay them as planned or promised. Certain priority debts may be includable in your IVA, including:
- Council tax arrears (excluding unpaid tax bills from the current year)
- Gas and electricity debts, or other utility bills
- Tax Debts
- Personal Guarantees
- Mobile telephone bills
- Overpaid benefits
What can’t be included in an IVA?
Although many of your debts may be included in your IVA, there are certain debts that simply can’t be included for a number of reasons. Remember that these debts will still need to be repaid, so you and your Insolvency Practitioner need to have a conversation about your IVA budget for the next six years to ensure that you can keep up repayments.
Examples of debts that can’t be added to an IVA include:
- Student loans
- Magistrates’ court fines
- Secured loans
- Child support arrears
- Court-ordered maintenance arrears
Keep in mind that it is not generally advisable to include joint debts, such as those shared with a partner, in an IVA. This is due to the fact that upon completion of your IVA, the other party will still be responsible for the remaining debt. This is an important area to cover with your Insolvency Practitioner should you decide to press on with an IVA. If you have a substantial number of joint debts, then an IVA might not be advisable for your circumstances, as you can’t take out a joint IVA.
