You can add utility bill arrears to an IVA. This includes debts from a previous property as well as the home where you currently live.
- Can utility bill arrears be included in an IVA?
- What about arrears from previous properties?
- Will an IVA protect against future arrears?
- Is an IVA the best solution for utility bill arrears?
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Can Utility Bill Arrears be included in an IVA?
Utility bill arrears are unsecured debts. As such they can almost always be included in an IVA. This includes gas, electricity, water, phone and and even Council Tax arrears.
You do not have to include them. If the amount you owe is relatively small you could agree to resolve the issue by making an overpayment to your provider each month. The amount required for this can be included in your living expenses budget.
However if your arrears are significant it is usually better to add them to your Arrangement. The provider will normally accept this. You will not be at risk of your service being cut you off or having a payment meter installed.
Once your IVA has started you must maintain your ongoing utility bill payments. A sufficient amount is included in your living expenses budget to allow for this.
Can you include Utility Bill Arrears from Previous Properties?
If you have utility bill arrears from a previous property these must be included in your IVA. They are no longer priority debts and are treated in the same way as any other unsecured creditor.
Even a CCJ (County Court Judgment) against you for these type of debts will be overturned when you start the Arrangement. The utility company concerned cannot take any further action against you.
Any payments you are already making towards these arrears have to stop once the Agreement is in place. You only remain liable for bills relating to ongoing usage.
Council Tax debt incurred due to fraud cannot be written off using an IVA. If fraud has been proven by the Council you should speak to us for more advice.
Will an IVA protect against future Utility Bill Arrears?
An IVA allows you to reduce the payment you make towards your unsecured debts to an affordable amount. You are then left with enough cash to pay your ongoing expenses.
Sufficient amounts will be included in your living expenses budget to ensure you can always pay your ongoing utility bills on time. The Arrangement therefore protects you from getting into arrears again in the future.
If you are overpaying to reduce your arrears a provision for this is included in your budget. Once they are gone the cash you were using to make the overpayment must be added to your IVA. It will not be available as extra cash for you to spend.
Is an IVA the best solution to resolve Utility Bill Arrears?
Whether or not an IVA is the right solution for you depends on a number of things. One of these is the amount of debt that you owe.
Generally speaking the Arrangement will only be suitable if you have unsecured debts including any utility bill arrears of at least £6000-8000. If the total amount you owe is less than this the solution may not be right for you.
Another important factor is the amount you can afford to repay each month. If this is little or nothing you might be better considering an alternative solution such as a Debt Relief Order.
If you live in rented accommodation you have no property to lose. As such bankruptcy might be a better solution for you. Your payments would last just 3 years compared to 5-6 in an IVA.