Can I add Debts to my IVA?
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There isn’t a simple yes or no answer to this question, unfortunately.
An Individual Voluntary Arrangement (IVA) is a legally binding debt solution, and once you’ve agreed to the terms and conditions it can be difficult to add new debts to your IVA. However, you may find you will want to add new debts to your plan and we’re here to talk you through how this could play out.
If you forget to add a debt at the beginning of your IVA, and the debt you want to add to your IVA is less than 10% of your total debt, then you’re in luck. Your Insolvency Practitioner (IP) should simply be able to add the new debt to your IVA without any issues. The law refers to creditors such as these as unknown creditors.
In the case that the debt you want to add is larger than 10% of your total debt, then this is where things can become difficult. The terms and conditions of your Individual Voluntary Arrangement state that a debt this size can’t added without a formal variation of your IVA. Simply put, this means that all of your existing creditors, plus the one that you want to add to your debt solution, must agree to the change.
What if my creditors say no?
Your creditors don’t have to agree to debts being added if they don’t want to – adding a new creditor means the amount you pay each month will be shared between more lenders, reducing the amount each one receives. If they reject your request to add the debt, you’ll have to make other arrangements to pay it (usually after your IVA has finished).
On the other hand, your creditors might agree to add the debt if they’re compensated in some way; this would usually be in the form of an extension to your IVA payments. This means you’ll have longer to wait until your IVA has finished, but all of your debts will have been taken care of.
So I can add forgotten debts, but what about new debts?
If you want to add new debts to your IVA, you’ll have to speak to your IP. They may be able to do this in the case of an urgent debt such as a payday loan you took out in a financial emergency or a mortgage shortfall after a home repossession.
Again, you may not be able to add new debts if your creditors don’t agree to it or if you’re not able to make the repayments. If this happens you may have to fail the arrangement and find an alternative debt solution that allows you to pay off what you owe. Your IP should try their best to ensure this doesn’t happen, but in some cases it may be unavoidable and you’ll have to let the arrangement fail.
All isn’t lost, however. Just because your IVA fails, it doesn’t mean that you won’t be able to find a debt solution that allows you to live comfortably whilst you pay off your debts. To find out more about what debt solutions could work for you, take a look at the debt solutions we offer or call 0800 280 2816.
Get all of your debts in early!
As you might have guessed, adding more debts to your IVA can be a messy process unless the debt you want to add is a debt to an unknown creditor (and is less than 10% of your total debt level).
Because of this, the best thing to do is make sure all of the debts you owe are included in your initial Individual Voluntary Arrangement proposals. Doing this means you’ll have less hassle to deal with further down the line, and won’t have to worry about your IVA lasting longer and having to make more payments.
Get advice today by completing our debt help form or calling 0800 280 2816.