Your Car in an IVA, Question by Question
When a car is safe, when it is questioned, and how to protect it.
Will I lose my car if I enter an IVA?
For most people, no. An IVA does not set out to take a car you genuinely need. A vehicle of reasonable value, used for work or family life, is normally treated as an excluded asset, so it sits outside the arrangement and stays with you. The worry that an IVA strips you of your car is largely a myth, in practice, ordinary cars are usually kept.
What kind of car can I keep?
A reasonable, necessary one. The test is broadly whether the car is sensible for your needs rather than a luxury. A modest car you rely on to get to work, take children to school or manage caring duties is normally fine. It does not have to be old or basic, just not extravagant. A genuinely high-value or luxury car is where questions are more likely to arise.
What if my car is worth a lot?
You might be asked to downsize. If you own a high-value car outright, your supervisor may suggest selling it, buying a cheaper but still suitable car, and paying the difference into your IVA for your creditors. The aim is not to leave you without transport, but to release value you do not need tied up in an expensive vehicle. A modest car avoids this entirely.
What about the running costs?
They are allowed for in your budget. If you need a car, the cost of running it, fuel, insurance, road tax, servicing and maintenance, is treated as an essential living cost when your IVA payment is worked out. So keeping your car does not come out of nowhere; it is built into the affordable budget your IVA is based on, just like your other necessary household costs.
What if my car is on finance?
Then it is the finance company's car for now, and you keep it by keeping up the payments. With hire purchase or PCP, the lender legally owns the vehicle until the agreement ends, so it is not your asset to lose. The finance is kept outside the IVA, and the monthly payment is treated as a priority cost, provided it is reasonable. Our car finance guide covers this in detail.
How do I make sure my car is protected?
Get it confirmed in writing. The safest step is to make sure your car is clearly listed as an excluded asset in your IVA proposal, and to ask your provider to confirm in writing that you will not have to sell it. This avoids any confusion later. A good adviser will go through this with you before anything is signed, so you know exactly where your car stands.
Is this different from bankruptcy?
Yes, an IVA is more protective. In bankruptcy, a trustee can take and sell assets, and a valuable car may be at risk. An IVA instead works from your income and is designed to let you keep essential possessions, including a reasonable car. For people who need their vehicle, this protection is one of the reasons an IVA is often preferred over bankruptcy.
Should I get advice?
Yes, especially about a car that matters to you. A free, impartial adviser can confirm whether your particular car would be kept, excluded or questioned, and make sure it is properly protected in your proposal. It costs nothing, and getting clarity up front means no nasty surprises about your transport once the IVA is under way.
