“Can I have car credit in an IVA?” is a question we are asked regularly here at My IVA Adviser.
Well, the simple answer to this question is Yes, you can have a car credit when you are in an IVA.
However, there are some things that you must bear in mind which could have a bearing on how you proceed.
If you are asking this question because you are considering entering into an IVA and you already have a Hire Purchase agreement in place, then you will need to be able to maintain your HP agreement payments as well as afford the IVA repayments.
This is because your HP agreement is a secured debt and as such it will not be absorbed into your IVA.
An IVA only deals with unsecured debts.
Also, you should be aware that once the HP agreement has finished you will be required to contribute the equivalent of the HP payments into your IVA fund for the remainder of your IVA. This will only be expected once the HP agreement has come to a conclusion.
If you have a ‘balloon’ payment that falls due for payment at the end of your HP agreement then, under normal circumstances, you will be allowed to restructure the finance agreement to pay off the outstanding balance of the loan. You should make sure this provision is included in your IVA proposal at the outset, so that your creditors are aware you will not be able to raise the size of your IVA payments.
If you are already in an IVA and you are considering APPLYING for CAR CREDIT, then that is a different proposition.
You should seek the approval of your Insolvency Practitioner, for they will be keen to make sure you have sufficient resources to afford the HP agreement without it impacting on your IVA.
It is very important that you maintain your ability to afford your IVA contributions, whilst still having the necessary funds required to tax, insure and maintain the vehicle as well. Any impact on your ability to keep up the IVA could put the IVA in jeopardy and at risk of failure.
Read our IVA article which covers the question “Will I Have to sell my car if I enter an IVA?” for further insight into this ‘Car Credit in an IVA’ issue
Alternatively call 0800 088 7503 and ask to speak to one of our advisers about car credit.
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