Another regular question we are asked by our visitors. Can I change cars whilst in an IVA?
The answer to which is quite simply yes, your IVA does not prohibit you from changing your car.
Creditors recognise the importance of maintaining a working, serviceable vehicle and understand that most people would be lost without their car.
So, if you’re in an IVA and your car breaks down, you’re going to need to replace it. But the difficulties of changing your car will revolve around paying for another car whilst in an IVA, and it’s obvious this will be an unwelcome new expense in an already fixed IVA budget.
The good news is that since the introduction of the IVA protocol, it is now possible to request upto a 6 month payment break from your IVA. With your IP’s permission you could divert your IVA payments into the cost of a new vehicle.
If you believe this would help you, you should discuss this option with your IP.
Hire Purchase Agreements
If you’re buying your car through a Hire Purchase Agreement and have been allowed to continue with the agreement as part of your IVA, you may find it a little more difficult to replace your car..
This will be due to your credit score. Since the 2008 credit crunch, HP finance houses have really taken a dim view of people with poor credit scores, so you may find it difficult to find a lender who’s prepared to offer you another HP loan.
But, in principle, with the consent of your IP, you should be allowed to change your agreement for a new one of a similar sized monthly payment. Bear in mind your IP will be keen for you to refrain from increasing your HP contributions as it would impact your ability to afford your IVA payments.
When your car HP Agreement comes to an end and assuming your car is still serviceable and that your IVA is still active, you will be expected to increase your IVA Contribution using the money you’d been paying towards the HP loan.
The creditor’s expectation of a scheduled increase to your IVA payment could cause an issue for you if you intend to apply for another HP agreement perhaps to pay off a ‘balloon payment’, rather than pay the money into the IVA as originally agreed.
If there are strong enough reasons to justify it, the IP could decide to call a variation meeting to request a change to the terms of the original IVA, which would allow you to start another finance agreement. But this wouldn’t be guaranteed and it’s, therefore, very important to discuss your intentions with your IP before you engage in committing yourself to a new agreement.
If you are unsure of the points discussed in this article and would like to chat to one of our specialists call 0800 088 7503 or download one of our IVA guides designed to help people with serious debt problems.
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