What debts can and cannot go into an IVA?

An IVA deals with your unsecured debts, meaning debts that are not tied to your home or another asset. If a debt is unsecured and you owed it before the IVA was approved, it can usually go in. The main exceptions are debts that the law or the creditor treats differently: secured lending, student loans, court fines, maintenance and a handful of others.

IVAs are available in England, Wales and Northern Ireland. Scotland has different debt solutions: see debt solutions in Scotland.

Which debts can and cannot go into an IVA?

The left-hand column is not a promise that every creditor will vote yes. It means the debt can be put into your proposal. Your creditors then vote, weighted by how much you owe each of them.

Which debts cannot go into an IVA, and why?

Secured debts

A mortgage or secured loan is tied to your home. An IVA cannot take away a secured creditor’s right to enforce its security unless that creditor agrees, which is rare. You keep paying your mortgage and any secured loan yourself, and those payments are part of your IVA budget.

Hire purchase and car finance

StepChange lists hire purchase agreements among the debts that are not included. National Debtline also warns that some agreements let the lender end the agreement if you enter an IVA, so check yours carefully. See IVAs and car finance for what usually happens to a car.

Student loans, fines, maintenance and TV licence arrears

These cannot be included. Student loan repayments carry on as normal and are allowed for in your budget. Magistrates’ court fines, Child Maintenance Service arrears, court-ordered maintenance, Social Fund loans and TV licence arrears stay outside the IVA, and the organisations collecting them can keep doing so. The payments you make on them stay in your budget, so they are taken into account when your IVA payment is worked out.

What about the grey areas?

Rent arrears

National Debtline says rent arrears cannot go in unless your landlord agrees. StepChange says you may be able to include old rent arrears, but it is harder for a home you still rent, and doing so could put you at risk of eviction. Citizens Advice adds that an IVA will not stop a landlord taking action to evict you. Keep paying your current rent whatever happens, and treat arrears on your home as a priority debt.

Council tax arrears

Arrears from before your IVA can go in. Council tax for the period after your IVA is approved is a new bill, not part of the IVA, so you must keep paying it. The standard terms only cover creditors whose claim arose on or before the date the IVA was approved.

HMRC debts

Income tax, National Insurance and tax credit overpayments can go in. Under the standard terms, HMRC’s claim includes any tax credit overpayment, self-assessment payments on account for the tax year the IVA is approved in, and any other earlier unpaid tax. But Citizens Advice says that if most of your debt is owed to HMRC, an IVA may not be right for you, because HMRC often will not agree. More on this in owing HMRC money.

Benefit overpayments

Citizens Advice lists benefit overpayments among the debts you can include. If an overpayment is already being taken from your benefits, ask the insolvency practitioner how it will be treated before you sign.

Joint debts

An IVA covers one person only. A joint debt goes into your IVA, but the other person named on it is still responsible for the whole amount, and the creditor can chase them for it. Couples with joint debts sometimes propose linked IVAs: see joint IVAs.

Guarantor debts

If someone has guaranteed one of your debts, the lender can still pursue them. The standard terms say the rights of a creditor who also has a claim against someone else are not affected by your IVA, and your proposal has to say whether anyone has guaranteed your debts. If you have guaranteed somebody else’s borrowing, tell the insolvency practitioner, because you may become liable if they stop paying.

Business debts

Debts from self-employment are unsecured debts like any other, but the IVA Protocol says a sole trader with trade debts is unlikely to suit a standard protocol IVA, so a bespoke IVA may be needed. See IVAs for the self-employed.

Do you have to include every debt?

Yes. You list every creditor in your statement of affairs, which you confirm with a statement of truth. You cannot pick which unsecured debts go in and keep paying one creditor on the side. StepChange points out that paying a CCJ separately, for example, is seen as favouring one creditor over the others. Our guide to CCJs and IVAs explains how judgment debts are treated.

Missing a debt off does not keep it out. Once approved, the IVA binds every creditor who was entitled to vote, including one you forgot. What it can do is cause problems later: under the standard terms, your debts turning out to be 25% or more above the figure in your proposal is a breach, and so is giving misleading information.

What happens to debts taken on during an IVA?

They are yours to pay in the normal way. The IVA only covers debts you owed when it was approved. That is why ongoing bills, such as your rent, council tax and energy for the months ahead, are in your budget rather than in the IVA.

You also cannot take credit of more than £500 without your supervisor’s written approval, apart from normal contracts such as utilities and insurance that are already in your budget. Doing so without consent is a breach.

What to do next

1. List every debt you have, with the creditor, the amount and whether it is secured, joint or guaranteed. Our types of debt guides explain how each kind is usually treated.
2. If much of what you owe falls in the right-hand column, an IVA may not deal with your biggest problems. Compare the other routes in debt solutions compared.
3. Talk it through with a free, impartial adviser at MoneyHelper, StepChange, Citizens Advice or National Debtline, who can look at every option. See where to get free debt advice.
4. For more on how an IVA works and who it suits, go back to IVAs explained.