Can I get a Loan With an IVA?

If you are looking towards a debt-free future through an individual voluntary arrangement (IVA), you may wonder what restrictions and possibilities that opens to you. One question often on people’s minds when considering the five-year commitment of an IVA is ‘can I get a loan with an IVA?’

Can I get a Loan While on an IVA?

An IVA will allow you to become debt free, and does consider your living expenses. You’ll have what you need rather than any luxury items or services during the life of your IVA. What if other expenses or opportunities become available to you while on your IVA? Are there loans for people with IVA?

It is possible to get loans with an IVA, but there are considerations you need to be aware of. All IVAs must be administered by a nominee, usually an insolvency practitioner who will prepare the IVA proposal and disburse the monthly payments to your creditors. To take out loans with an IVA, you’ll need the approval of your insolvency practitioner for any loans over £500. Any loans with an IVA without the approval of your insolvency practitioner would breach your arrangement.

Your insolvency practitioner may advise it is wiser to try to adjust the monthly repayments to a more affordable amount if the purpose of your loan is because you’re struggling to meet all your financial obligations with your IVA.

Another consideration of seeking loans for people with an IVA is that an IVA will be on your credit score for six years. As an IVA is an insolvency solution, this will affect your credit rating and make it more challenging to be approved for loans with an IVA.

Can I get a Loan to Pay Off My IVA Early?

If you’re hoping to pay off your IVA early, you may wonder if there are loans for people with IVA to do so? In addition to needing the approval of your insolvency practitioner for any loans greater than £500, your creditors will need to agree to any changes to your IVA. If you have money available to pay out your IVA, your creditors will want to know where it has come from and if it already counts as an asset under the terms of your IVA. For example, as this debt charity explains, any windfall, be that an inheritance or financial ‘win’ during your IVA, will likely already be considered an asset that can go directly towards your debt under the IVA.

If you’re considering a loan from a family member or other sources of loans to pay off your IVA early, your creditors and insolvency practitioner will have a legal obligation under the IVA to ensure the money has not come through illegal activity or money laundering.

If your creditors accept your proposal to pay out your IVA early, you can make a lump sum payment that then finalises your IVA.

Professional Advice to Understand Your IVA Obligations and Possibilities

Individual Voluntary Arrangements are commitments that can’t be entered into lightly. Irwin Insolvency has a team of professional insolvency experts who can help you understand all the ins and outs of IVAs, including implications of loans for people with IVA. Contact Irwin Insolvency for peace of mind while you work towards a debt-free future.