Can you borrow money or get a credit card in an IVA?

The IVA is built on a budget that leaves enough to live on and sends the rest to your creditors. New borrowing puts that budget at risk, which is why the terms restrict it. The restriction is not a complete ban: small amounts are allowed, and larger amounts can be approved. But the practical limits, from lenders as much as from the IVA, are tight.

This guide explains the rule, how it applies to the kinds of borrowing people ask about most, and what happens if it is broken. The terms quoted are the standard terms for protocol IVAs agreed from 1 July 2025. Older IVAs and bespoke IVAs can differ, so check your own proposal.

What does the IVA say about borrowing?

The standard terms say: “During the arrangement, you must not obtain any credit greater than £500 without the prior written approval of your Supervisor, except for public utilities, insurance policies or other contractual payments as provided for in your income and expenditure. If you do obtain credit of more than £500 without the consent of your Supervisor, this will constitute a breach of your arrangement.”

Three things follow from that wording:

• Approval comes first. It must be written, and it must come before you take the credit, not after.
• “Any credit” means any credit. Loans, credit cards, overdrafts, car finance, catalogues, store cards and buy now pay later all count, and so does money from friends or family if it is a loan.
• The combined limit is not spelled out. The Breathing Space rules say the £500 limit applies to credit that “collectively exceeds £500” at any one time. The IVA terms do not use that wording. If you have more than one agreement, the safe approach is to treat them as adding up, and ask.

Utilities, insurance and other regular contracts already in your budget are outside the rule. Bank accounts, phone contracts and insurance covers where the line falls for everyday contracts.

Can you get a credit card during an IVA?

Cards you owe money on when the IVA starts are usually included in it, so you stop using them.

A new card is possible in principle, but hard in practice. Experian says it is possible to get some types of credit when you have an IVA, but these “usually have low limits and high interest rates”. Credit builder cards are aimed at people with poor credit files, and Experian says they “usually have low spending limits and high interest rates”.

If a card’s limit is more than £500, ask your supervisor before you apply. Even under £500, think about why you want it. A card used to cover shortfalls in your budget is a sign the budget is not working, and that is a conversation to have with your supervisor instead.

Can you get a loan while you are in an IVA?

Lenders must carry out a reasonable assessment of your creditworthiness before they lend. They will see your IVA on your credit file, and most mainstream lenders will decline.

The lenders that do accept people in IVAs tend to be the most expensive. Some advertise “loans for IVA customers”. Be wary of these. High-cost short-term loans, such as payday loans, are capped by the FCA: interest and fees cannot exceed 0.8% a day of the amount borrowed, default fees are capped at £15, and you can never pay back more in charges than you borrowed. Even within those caps, a loan can end up costing you twice what you borrowed.

If you want to ask for approval, your supervisor will look at what the loan is for, whether you can afford the payments without cutting your IVA payment, and whether there is another way. Our guide to credit checks during an IVA lists what to include in your request.

What if you need money for an emergency?

Before borrowing, ask your supervisor about a payment break or a lower payment. The IVA Protocol lets the supervisor agree payment breaks of no more than 9 months of payments in total over the IVA, and reduce your payment by no more than 20% in total, without going back to creditors. A break extends the IVA by no more than 12 months, unless you make up the shortfall.

If you have no money for essentials this week, emergency money: crisis loans and budgeting advances covers council help and other grants that do not need to be repaid.

Car finance

A new car on hire purchase or PCP is credit, and it will almost always be over £500, so it needs approval. Our guide to IVAs and car finance covers keeping an existing agreement, handing a car back, and getting new finance with your supervisor’s agreement.

Can you borrow from family or friends?

The rule covers “any credit”, and it does not exclude family. A loan of more than £500 from a parent, partner or friend needs your supervisor’s written approval, just like a bank loan.

A gift is different, but it is not a way round the rule. Any asset, windfall or inheritance worth more than £500 you receive during the IVA can be claimed for your creditors, up to what is needed to repay them in full plus costs. See pay rises, bonuses and windfalls. So tell your supervisor before accepting a large sum either way, and be clear which it is.

Money you already owed family or friends when the IVA started is usually one of the debts in it. Close relatives count as “associates” under the Insolvency Act 1986, which affects how their votes are counted when creditors decide on your proposal. Do not repay a relative separately from the IVA without asking your supervisor first.

Is buy now pay later allowed during an IVA?

It is credit, so the £500 rule applies. Since 15 July 2026, buy now pay later has been regulated by the FCA. Lenders must carry out proportionate checks that you can afford to repay, and you can complain to the Financial Ombudsman Service if something goes wrong.

The risk with buy now pay later is how easily it adds up. Five purchases of £120 each are £600 of credit. Treat all of it as borrowing, and ask your supervisor if you are near £500.

What happens if you borrow without permission?

Under the standard terms, when the supervisor thinks you are in breach, they send you a notice giving you one month to put it right. If you do not, the IVA can be terminated. If that happens:

• creditors can chase the full balance of the debts that were in the IVA, and you become liable for the interest and charges that built up during it
• the supervisor or any creditor can petition the court for your bankruptcy, and only the court can make that order
• you get no refund of what you have already paid in

See what happens if an IVA fails for the detail.

If you have just taken out credit

Tell your supervisor now, in writing. For most regulated credit agreements you have a legal right to withdraw within 14 days of the agreement being made (or of receiving your copy of it, if later), without giving a reason. You then have 30 days to repay the money borrowed plus the interest built up in that time, with no other fees. That can be the quickest way to put the breach right. The right does not apply to agreements secured on land.

When can you borrow normally again?

The £500 rule ends when your IVA ends. From then on, you do not need anyone’s permission to apply for credit.

That does not mean lenders will say yes. Your IVA usually stays on your credit file for 6 years from the date it started, and longer with some agencies if the IVA itself ran longer than that. Experian says your score should gradually improve as the IVA ages, because lenders pay more attention to recent history. Our guide to rebuilding your credit after an IVA goes through the steps.

What to do next

1. Before any application, ask two questions: is this credit, and will it take me over £500? If both answers are yes, or you are not sure, ask your supervisor in writing first.
2. If you need money for an emergency, ask about a payment break or a lower payment before you borrow.
3. If you have already borrowed without approval, tell your supervisor straight away and check whether you can still withdraw from the agreement.
4. If an IVA is not working and you want to look at other routes, see debt solutions compared. Free, impartial debt advice is available from MoneyHelper, StepChange, Citizens Advice and National Debtline: see where to get free debt advice.

For more on day-to-day life in an IVA, see life in an IVA. If you use our checker, we may pass your details to a licensed insolvency practitioner or debt adviser.