Which Debts Go In, Question by Question
What qualifies, what is excluded, and the details that catch people out.
What debts can be included in an IVA?
An IVA covers your unsecured debts, the kind of everyday borrowing most people build up. That includes credit cards, store cards, personal loans, overdrafts, catalogue accounts, payday loans and similar. Once the IVA is approved these debts are frozen, and any qualifying balance left at the end is written off. The general rule is simple: if a debt is unsecured, it can usually go in.
Which specific debts usually qualify?
Most unsecured debts do. Common examples are credit and store cards, bank and personal loans, overdrafts, catalogue and mail-order accounts, payday and short-term loans, buy-now-pay-later balances, and outstanding utility or phone bills. County Court Judgments for unsecured debts can be included too. If you are unsure about a particular debt, your practitioner can confirm whether it qualifies.
Can I include council tax and tax debts?
Usually, yes. Council tax arrears can normally be included in an IVA, as can money owed to HMRC, such as income tax, self-assessment or VAT arrears, and overpaid benefits or tax credits. These often surprise people, who assume they must be dealt with separately. Your current, ongoing council tax and taxes still need to be paid as normal, however.
What debts cannot be included?
Some debts are excluded by law and survive an IVA. These include student loans, court fines and penalties, child maintenance and Child Support arrears, debts arising from fraud, and secured debts like your mortgage. Any new debt you take on after the IVA starts is not covered either. Excluded debts still have to be paid, so it is important to know which of yours fall outside the arrangement.
What about my mortgage, car finance or secured debts?
Secured debts stay outside the IVA. Because your mortgage, secured loans and most car finance or hire purchase agreements are tied to an asset, they cannot be written off through an IVA, and you carry on paying them separately to keep the home or vehicle. Only an unsecured shortfall, if one ever arose, might be included. Your practitioner will explain how yours are treated.
Do I have to include all my debts?
Yes. You cannot pick and choose which unsecured debts to put into an IVA, all of your qualifying debts must be included. That means you cannot keep one credit card outside the arrangement to carry on using it. This is part of what makes an IVA fair to creditors, since they are all treated together, and it is one reason full, honest disclosure at the start matters.
Can I include money I owe to family or friends?
You can, but it changes things for them. Money owed to family or friends is still a debt, so it can be included, but they then become creditors in the IVA and are treated like any other, receiving only a share of what you can afford. Because they are connected to you, their vote is also handled separately. Many people find this difficult, so it is worth talking it through first.
What happens with joint debts?
An IVA only covers your own liability. With a joint debt, both of you are usually responsible for the whole amount, so putting your share into an IVA does not clear the other person's obligation, and the creditor can still pursue them for the balance. This can affect a partner or anyone you have borrowed with, so it is important to understand before you proceed.
How do I know which of my debts qualify?
Get a full picture first. A licensed Insolvency Practitioner, or a free adviser, will list all your debts, confirm which can be included and which cannot, and show you how each would be treated. A credit report can help make sure nothing is missed. Knowing exactly what goes in, and what stays out, is essential to deciding whether an IVA is the right choice for you.
