Your home and the people you live are not blacklisted if you start an IVA. However your credit rating will be affected.
- Is your home blacklisted if you start and IVA?
- Will your Partner be blacklisted?
- How long will your credit rating be affected?
- Would a different solution better protect your credit rating?
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Is your Home Blacklisted if you start an IVA?
Only individual people have a credit rating. Property does not. If you have a poor credit record it is not linked to the property where you live in any way.
If you start an IVA your credit rating will be affected. In turn your ability to get new forms of credit will be significantly reduced. However this does not have any impact on your home.
As a home owner your property is not blacklisted. If you are renting your landlord’s property is not affected. Neither will your parent’s home be if you are living with them.
If you move your poor credit rating moves with you. The property you leave behind is left unaffected and the property you move to does not become blacklisted.
Will your Partner be Blacklisted by your IVA?
Your credit rating is personal to you. It does not affect anyone else. As such if you are married or living with a partner their credit rating will not be blacklisted if you start an IVA.
The Arrangement is recorded on your credit file. It is not recorded on theirs and will have no bearing whatsoever on their ability to get credit in the future.
Having said that the credit reference agencies can make mistakes. Information about your credit history can be added to another individual’s file in error particularly if you share the same surname. Were this to happen, they might experience short term problems.
Is your partner having issue getting credit after you have started an IVA? They should check their credit file. If there are any mistakes these can be removed using a process called disassociation.
How long will your Credit Rating be Blacklisted by an IVA?
The record that you have been in an IVA remains on your credit file for six years from the start date. This is a legal requirement. Your credit rating is negatively affected during this time.
If you apply for credit during this period and the lender carries out a credit check they will discover that you are or have been in an IVA. As a result they are likely to decline your application.
The record will remain on your credit file for the full 6 years regardless of the length of the Arrangement. It is not possible to remove it before this even if you settle early.
As soon as your IVA is completed there are things you can do to start improving your credit rating. This is the case even if you have settled the Arrangement early.
Would a different Debt Solution better Protect your Credit Rating?
Given the effect on your credit rating you might question whether an IVA is right for you. Perhaps a different debt solution would be less damaging?
Generally speaking this will not the case. With the exception of consolidation all the alternative debt solutions have very similar effects.
You will be no better protected using an informal Debt Management Plan. After agreeing to the Plan your creditors still record missed and late payments on your file. This will have a similar impact on your credit rating as being in an IVA.
Bankruptcy will affect your credit rating in exactly the same way as an IVA. In this regard the two solutions are no different. You may even be able to get a mortgage more quickly after bankruptcy.