IVA Restrictions: What You Can’t Do Whilst on an IVA

Getting an Individual Voluntary Arrangement (IVA) can be a good option. But before getting an IVA, you should know some of the restrictions it brings. This article explains some of the things you can’t do while on an IVA.

Can I discuss my IVA with another insolvency practitioner?

There isn’t any law that prohibits you from discussing your IVA with anyone you wish. You would have to ask an Insolvency Practitioner (IP) directly if they would be willing to discuss this. If you want additional information about the insolvency process you can contact the Insolvency Service enquiry line. But they cannot discuss information on specific insolvency cases. Alternatively, you can use their online tool to locate an Insolvency Practitioner.

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Can I apply for a credit card while on an IVA?

Your IVA will contain clauses about the use of further credit during the term of the IVA and there may be a need to notify of the change of address. At this stage,n it could be best to speak to the IP who is responsible for the supervision of your case and explaining what has happened.

I have a credit card, will the IVA company find out?

It is probable that this will come to light and it may, or may not be, an issue the answer will depend on whether your IVA is already in place or is still in the proposal stage and the reason for the card. If you contact your IVA company and let them know about the card, as you are required to do so, and provide evidence of use they will be able to advise whether this causes any issues or is just something that requires noting. Failing to notify could cause your IVA to be rejected at the meeting of creditors, or to fail if your IVA is already in place.

Does my landlord need to provide proof of their income if I am on an IVA?

You are paying for a room in someone else’s house and there is no requirement for your landlord to provide proof of their personal income to your creditors although they will probably have to provide proof that you pay rent to them. Even if your landlord is a family member, such as your brother or parent – They should not be required to provide proof of income to the IVA company. If you contact your IP they will be able to put your mind at ease and let you know what information they will need.

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Can I get a debit card while on an IVA?

There is nothing preventing you from getting a debit card and bank account. The challenge is finding one that will give you one.  It’s been rumoured that the Co-op or Yorkshire Banks are sympathetic to people in IVA’s.

One important thing to note. You will not be able to have an overdraft or borrow money with an IVA.

Can I change bank accounts whilst in an IVA?

There is nothing stopping you changing your bank account. But just in case your credit file makes it difficult to open an alternative bank or building society account, don’t close the one you have.

Can I open a business bank account?

You need to speak to your IVA supervisor prior to applying for further credit as it depends on the specific details of your IVA as to whether you are allowed to do so or not. If you are entitled within your IVA to apply for further credit you need to be aware that IVAs are a matter of public record so your application for credit could be affected if a creditor chooses not to lend to you.

What happens if you inherit money while in an IVA?

Whilst someone is in an IVA they have an obligation to notify the Supervisor of their IVA (the IP) of any assets they receive. An inheritance of cash or property would be dealt with as an asset of the IVA. A clause in the standard IVA terms and conditions defines the time that the person has available to deal with this.

It is usually to notify the Supervisor within 1 month of receiving and then within 3 months to make reasonable steps to realise the asset. Assets must only be sold or realised to the extent necessary to repay the creditors in full. e.g. inheriting a portfolio of properties would not necessarily mean that all would have to be sold. It may only take the sale of 1 property to settle all debts so this would be the requirement.

If you have spent the inheritance money, you might still have to declare it. Perhaps the best advice is to be prepared for the worst i.e. to repay the inheritance, but hope for the best.

What happens to my IVA if I get pregnant and don’t work?

Your IP would need to communicate your change of circumstances to your creditors and organise a payment holiday for you. Any missed payments would be added on to the end of the arrangement. 

If you needed to take a long period of time off a variation of your IVA may need to be proposed, and variations are not always accepted. For more information take a look at our article on IVA and employment restrictions

Can I still claim benefits when on an IVA?

It would certainly be a good option to discuss this with your IVA supervisor. With IVAs being an insolvency procedure you should notify them anyway. We don’t know much about benefits but we can’t see how it would be a problem given the fact that IVAs are legal and binding.

Can I move abroad during my IVA?

It would be advisable for you to contact your IP and discuss this directly with them.

Can I go on holiday during my IVA?

Going on a holiday does not exclude you from being able to enter into an IVA in principle. However, as an IVA is a voluntary agreement your creditors are not forced to accept the arrangement. This means that if the creditors discovered that you went on holiday with money that could have been used to pay some of your debts they could, in theory, reject a proposal.

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Can I get a mobile phone contract with an IVA?

There is nothing to say that you cannot take a mobile phone contract during your IVA, although you may need to think carefully about the cost of this and whether it will impact your ability to make payments to your IVA. Mobile phone contracts are usually subject to a search of your credit reference agency files and each individual supplier may have different views about who to allow a contract based on credit history. You could call a few on their customer care lines and ask the question before making an application.

Can an IVA take my pension?

This would be treated as a windfall if you decided to draw it, which means that it would be included in the IVA. However, you would not normally be expected to release a pension payment unless there’s an explicit stipulation contained within your IVA agreement stating you must do so. You need to get advice from your IP before you do anything.

I am getting an IVA, can I continue to pay my child’s private school fees?

It’s extremely unlikely you’ll be able to continue paying school fees unless you can put a very persuasive case to the Official Receiver or IP. If there is only one year to go before secondary school it might be possible. Speak to some local IPs about your case, most of them will give an opinion or free.

If you include your school fees in an IVA proposal you are in effect asking your creditors to fund your children’s education!

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