You can start an IVA if you are already a student. You can also use this debt solution if you have decided to become a student and will no longer be able to pay your debt.
Included in this article:
- Is a student allowed to start an IVA?
- Can you get a student loan during an IVA?
- Can you become a full time student if you already have an IVA?
- Is an IVA the best debt solution for students?
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Is a student allowed to start an IVA?
If you are already a student, you can to start an IVA to manage debt you can’t afford to pay.
That said, the main thing you will need to consider is whether you can make a reasonable payment into the Arrangement each month.
Generally speaking’ you will need to be able to pay a minimum of £100/mth into an IVA for it to be sustainable. This will cover all of the debts included in the agreement. Clearly, this could be a massive help where your standard minimum payments add up to a lot more than this.
Some IVA companies will suggest that they can help you start for as little as £75/mth (sometimes even less). The risk is that at this level, the agreement is unlikely to be financially viable. As such, you will certainly be forced to increase your payment during the IVA.
Remember, if you already have Student Loans, these debts can’t be included in an IVA. You will still have to repay them once you start work and meet the relevant income criteria.
Struggling to get your head round all of this? We can help. Give us a call (0800 011 4712) or complete the form at the bottom of this page. The advice is free and confidential.
Can you get a student loan during an IVA?
Starting an IVA will mean your credit rating becomes poor. As a result you will find it difficult to get new credit facilities from main stream lenders such as banks and credit card companies.
However, your IVA will not prevent you from getting a student loan.
The reason for this is that your ability to get student loans is not dependent on you having a good credit score. You can apply for and will be awarded these funds purely on your eligibility.
As a student, given you meet the criteria to receive these loans, the fact you are currently in an IVA will not have any affect on your application.
Your IVA will normally last 5-6 years. After 6 years, the record will come off your credit file and your credit score will dramatically improve. You will then be able to borrow from high street lenders again and even get a mortgage if you wish.
Can you become a full time student if you already have an IVA?
You may already be in an IVA but now want to start studying either full or part time. The fact that the Arrangement is in place does not prevent you from doing this.
You can be a student and have an IVA.
The only issue is whether you will still be able to keep up your agreed monthly payments. Maintaining your IVA at its current level if your income falls could put you under a lot of financial pressure.
If you won’t be able to keep paying the same amount, you should ask your IVA company for a reduction. It may be possible for them to help as long as the amount you can pay doesn’t fall below £100/mth.
In return for reducing your payments, you will normally have to accept an extension. This will add an extra 12-24 months of payments to your agreement.
Instead of trying to reduce your IVA payments, it might be better to cancel the agreement and go bankrupt. The advantage – you would no longer have to make any monthly payments and be debt free in 12 months.
Is an IVA the best debt solution for students?
As a student, whether or not an IVA is the best solution for you will ultimately depends on your circumstances.
If you can comfortably maintain a monthly payment of at least £100/mth (from either part time work or student loans and grants), then it is certainly a very good option to consider.
The main downside of course is the burden of the monthly payment. If you are studying and your income is low, this has to be a major consideration. As such, before making any decision, you should also take a look at the option of going bankrupt.
Understandably this sounds far worse than an IVA. But the reality is that this is not the case for most people. Given you are not a home owner, you will likely have little or nothing to lose.
The massive advantage over an IVA is that you are only bankrupt for 1 year and will probably not have to make any further monthly payments towards your debt at all. Both solutions have exactly the same impact on your credit rating. You can get a mortgage after going bankrupt just as easily and in the same timescales as after an IVA.
If you are already a student or thinking about stopping work to study, call us for more information about starting an IVA (0800 011 4712). The advice is free and confidential.