People with IVAs are precluded from taking out loans during the IVA process.
Individual Voluntary Arrangements are legally binding ‘fixed term’ repayment plans, that allow people with unaffordable loan repayments an opportunity to reach a new arrangement with their loan companies.
The whole principle that underpins an IVA, is that the debtor voluntarily agrees to refrain from taking out further unsecured loans or credit whilst the IVA is active.
This is because of the very real likelihood that the original loans that are listed as creditors in the IVA will not actually be fully repaid, meaning that the loan company in the IVA as a creditor will legally be obliged to write off the unpaid part of the loans when the IVA finishes.
Should a debtor take out credit whilst in an IVA, they run the very real risk that their creditors will become aware of it, and as a consequence they could fail the IVA instantly, which in turn creates the very real prospect that they may then file for the bankruptcy of the debtor.
To make sure people in an IVA don’t apply for a loan whilst in an IVA the credit reference agencies add a remark to the IVA candidate’s credit file. Once the IVA has commenced, the IVA is noted on the file and effectively any further loans or credit are blocked.
Quite simply, without this assurance of no more borrowing, the IVA would not be agreeable to the creditors.
If you are in an IVA and looking for a loan because you are struggling with your IVA budget, or if you are thinking about an IVA and can’t imagine learning to live without credit , then take a look at our other IVA articles, where you’ll find pointers on ways you can change your lifestyle to enable yourself to adapt to an IVA’s fixed budget.
If you need more information about IVAs call 0800 088 7503 and ask to speak to one of our IVA specialist advisers or complete a quick contact form at the side of this page .
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