“Debts Excluded from an IVA: What You Need to Know” An Individual Voluntary Arrangement (IVA) can be a lifeline for those struggling with debt, offering a structured plan to repay creditors and regain financial stability. However, not all debts are covered under an IVA, and understanding which debts are excluded is vital for making informed financial decisions.
In this blog, we’ll explore the types of debts that cannot be included in an IVA and how knowing these exclusions can help you better resolve financial stress.
What is an IVA?
An IVA is a formal agreement between a debtor and their creditors to repay a portion of unsecured debts over a set period, typically five to six years. This legally binding arrangement is overseen by an Insolvency Practitioner (IP) and provides protection from further creditor action, offering UK citizens a manageable path to debt resolution.
Debts Excluded from an IVA
While an IVA is a versatile tool for managing unsecured debts, certain obligations cannot be included. Here are the key exclusions:
- Secured Debts Secured debts, such as mortgages or car loans, are tied to an asset. These cannot be included in an IVA, as creditors have the right to repossess the asset if payments are not made.
- Student Loans Debts from student loans are specifically excluded from IVAs by law. Borrowers must continue to repay these loans separately under the terms set by the lender.
- Child Maintenance or Support Payments Obligations for child support or maintenance payments cannot be included in an IVA. These payments are considered essential and must be maintained independently.
- Court Fines and Criminal Penalties Fines imposed by the court, such as speeding tickets or penalties for other legal infractions, cannot be included in an IVA.
- Social Fund Loans Loans provided by the government’s Social Fund to assist with essential living expenses are also excluded from IVA arrangements.
- TV License Arrears Outstanding TV license fees cannot be included in an IVA and must be paid directly to the licensing authority.
Why Are These Debts Excluded?
Exclusions are in place to ensure that certain priority obligations, such as maintaining essential payments and legal responsibilities, are fulfilled. This approach helps maintain financial stability while protecting creditors’ rights for specific categories of debt.
Alternative Options for Excluded Debts
If you have debts that cannot be included in your IVA, it’s essential to plan for their repayment. Here are some tips to help:
- Create a Budget: Prioritize payments for excluded debts alongside your IVA contributions.
- Seek Professional Advice: Consult your Insolvency Practitioner for guidance on managing excluded debts effectively.
- Explore Other Solutions: For debts like secured loans, discuss options such as refinancing or negotiating terms with the lender.
How We Can Help
At Apply for IVA, we specialize in guiding UK citizens through the IVA process while providing tailored advice to help you manage your overall financial obligations. Whether you’re looking to tackle unsecured debts or need support with excluded obligations, our team is here to assist.
By understanding the exclusions and proactively addressing them, you can better position yourself to resolve financial stress and achieve long-term financial health.
Take the First Step Toward Financial Freedom
If you’re considering an IVA or need help managing excluded debts, contact us today for a free consultation. Let us help you regain control of your finances and create a brighter, debt-free future.