Can you add a Debt to your IVA

Can you add a Debt to your IVA

You may need to add debt to your IVA which you forgot about at the start. This can be done. But it is important to understand the consequences.

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Can you add a forgotten debt to an existing 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, the creditors will have to agreed for it to be added using what is known as a variation of your IVA. All the creditors including the new one must agree to the addition.

In exchange for adding a new debt, your IVA company will extend your payments for at least an extra 12 months. They may also require you to increase your monthly payment.

A payment break might give you time to pay the new debt

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 have borrowed a new debt during your 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 add the new debt.

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