It may be possible to add new debt to an existing IVA. You might need to do this if you forgot about a debt or have borrowed more during the Arrangement.
- Can a forgotten debt be added to an IVA?
- The alternative to adding new debt to an IVA
- What if you borrow more?
Can a Forgotten Debt be added to an IVA?
Only debts listed in your original IVA are included. If you forget one or were unaware of a debt at the time you applied you remain liable to pay it.
Rather than struggling to pay the new debt it may be possible to add it to your Arrangement. If the amount is no more then 10% of the total already included your Insolvency Practitioner (IP) should be able to do this without going back to the original creditors.
If the new debt is is larger than 10% of the original it cannot be added without a formal variation of your IVA. All the creditors including the new one must agree to the addition. In exchange they will normally require you to extend the length of the Arrangement.
Your creditors do not have to agree to add new debt to your IVA. If they say no you will have to make an arrangement to pay it or consider failing the Arrangement and using a different solution.
The alternative to Adding New Debt to an IVA
If you are struggling with a new debt adding it to your IVA is only one way of dealing with the problem. An alternative is to take a payment break to give you time to pay it.
A payment break means your standard payments are put on hold. You can then use the money you save to repay the new debt in full. The missed payments are added to the end of the Arrangement.
This option will work if the amount you save by stopping your IVA payments is enough to repay the new debt within the break allowed. However you cannot continue on a payment break indefinitely. The maximum is normally 9 months.
If a break from your payments does not allow you sufficient savings to pay off the new debt it will need to be added to your IVA. If this is not possible failing the Arrangement and chosing an alternative solution may be the only option.
What if you borrow more during an IVA?
You may have faced a financial emergency during your IVA and borrowed from a Payday or Doorstep lender. The issue you now face is that you are struggling to repay both the new debt and your IVA payments.
If you stop paying your Arrangement it will be at risk of failure. As such in this situation you must speak to your IVA company.
They are likely to be unhappy that you have borrowed more but equally they will not want the agreement to fail. If this happens their fees will be reduced. As such they should work with you to find a solution.
Your IVA Company may initially refuse to help you with a new debt. If so ask about adding it or taking a payment holiday. If they remain unhelpful explain that you may then have no other option than to let your IVA fail. Faced with this risk they may become more helpful.