Car credit and IVAs
'Can I have car credit whilst 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 car credit when you are in an IVA.
However, there are some practical aspects relating to this issue that you should consider, which could have a bearing on how you may want to proceed.
Existing Car Credit
If you already have an existing Hire Purchase (HP) agreement in place, prior to your IVA, your adviser will ensure you've got sufficient funds allocated in your budget, to enable you to maintain your HP payments as a priority.
Being able to maintain your HP payments will be essential because your HP agreement will not be included in your list of IVA debts.
Many creditors limit the amount being paid to an existing HP agreement to a maximum of £250 per month, as they feel any amount higher than this will reduce your IVA contributions by an unacceptable amount.
You might also want to read this article which covers the question 'Will I Have to sell my car if I enter an IVA?' for further insight into this issue
Increase in IVA contributions
Once your HP agreement has completed successfully, and assuming you're still in the IVA, you'll be required to increase your remaining IVA contributions by the same value as your HP payments.
If you have a 'balloon' payment that falls due at the end of your HP agreement, you would normally be allowed to re-finance the balloon instead of increasing your contributions.
However, you should ensure provision is made for the balloon repayment within your IVA proposal, so that your creditors are aware you will not be able to increase your IVA contributions until the balloon has been repaid.
Obtaining car credit during an IVA
If you are already in an IVA and you are considering applying for car credit, then you'll first need to seek the approval of your Insolvency Practitioner.
They'll check that you have sufficient financial resource available to afford an HP agreement without it impacting on your ability to maintain your IVA contributions.
As you know, it's extremely important to maintain your IVA contributions at the agreed level. Any impact on your ability to maintain your IVA contributions could put your IVA in jeopardy.
If you would like to have a chat with one of team here at My IVA adviser, in order to discuss any aspect of the IVA process, please call 0800 088 7503 or, alternatively, complete the form below and one of our advisers will contact you at your preferred time.