Borrow More during an IVA - IVA Advice and Help

There are times when you may feel you need to borrow more during an IVA. This is particularly common in a financial emergency.

Can you Borrow More during an IVA?
The alternatives to borrowing more.
Are you allowed to borrow from friends and family?
Can you have a Mobile Phone contract?

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Can you Borrow More during an IVA?

During your IVA you may have a financial emergency. Perhaps you are facing an unexpectedly high car repair bill or need a new washing machine. Alternatively you may need to travel.

In these circumstances you might look to borrow more. It is unlikely that a high street bank will lend to you due to your poor credit rating. However a Payday or Doorstep lender will probably give you a loan.

You should avoid this. The reason is you will struggle to repay the new debt as well as maintaining your IVA. Eventually you have to tell your IVA Company what has happened.

The terms of your IVA will will state you are not allowed to borrow more without getting agreement from your Insolvency Practitioner (IP). If you do they are within their rights to fail the Arrangement.

The alternatives to Borrowing More

Once you have started an IVA you should plan for the fact that you could face financial difficulties during the Arrangement. As such try to put money aside every month to cover these.

However saving during the Arrangement will be easier said than done due to your restricted living expenses budget. So what happens if you have a financial emergency but have not been able to save enough to cover it?

In these circumstances you must speak to your IVA company. It is likely they will be able to offer you a payment break. You stop paying your IVA and use the money to pay for the emergency instead. Depending on the amount you are paying this can work very well.

You should try and avoid borrowing more during your IVA. If you are facing a financial emergency speak to your IP about the option of a Payment Break first.

Are you allowed to Borrow more from Friends or Family?

It might be possible to borrow more from a friend or family member during an IVA. If they can help you in a financial emergency it will mean you avoid the need to take a payment break.

However it is important that the person lending to you understands and agrees that you will not be able to repay them until after your Arrangement is over.

It will be impossible for you to pay them back at the same time as paying your IVA. If they understand this and accept it then borrowing from friends and family can work well and is not uncommon.

Before borrowing money in this way you should still discuss your intentions with your IP so they are fully informed of what you are doing.

Can you have a Mobile Phone contract in an IVA?

There are some forms of borrowing which can continue after you have started an IVA. These include a mobile phone on contract or car insurance where the payments are spread over a number of months.

If you have a mobile phone contract you will normally be allowed keep this while your Arrangement is running. The monthly payments can be included in your living expenses budget as long as they are reasonable.

The only issue is if you want to change mobile providers. A new provider will carry out a credit check which you will fail. As such the only way to change providers is normally by using their pay as you go option.

Monthly car insurance payments can continue during an IVA. However if you want to change your insurer getting a new pay monthly deal with them could be an issue due to your credit rating.

6 thoughts on “Borrow more during an IVA”

Carl says:

20/02/2018 at 12:15

Hi. Can you get a guarantor loan when you are in an iva scheme?

James Falla says:

20/02/2018 at 12:29

Hi Carl

It might be possible to get a guarantor loan during an IVA. However I would definitely not advise it. First of all you would be breaking the terms of your IVA. You are not allowed to take new credit during the Arrangement unless you first agree it with your IVA company and they are likely to say no.

In addition given you are paying all your disposable income into your IVA how would you afford the new loan payments? It is likely you would struggle to do this. As a result you would either default on the loan thus leaving the guarantor liable to pay the debt or you would start missing your IVA payments thus putting that Arrangement at risk of failing.

Given borrowing more during an IVA is not a good idea if you are facing a financial emergency the better option is to speak to your IVA company about taking a payment break. This would allow you to temporarily stop paying your IVA and instead use the money to cover the emergency. You then start paying your IVA again and the missed payments are added to the end. I suggest discussing this option with your IVA Company.

Nicklas says:

26/04/2021 at 18:39

Is an Iva Practicioner obliged to authorise a car finance HP agreement as long as i can afford it and I need it for travelling too and from work ?

26/04/2021 at 18:50

Hi Nicklas

Whether or not an IP will allow you to borrow more during your IVA (including taking on new car finance) is a matter which is left entirely at their discretion. They are certainly not obliged to authorise it. However, if a vehicle is required for work and taking on the agreement would not affect the ongoing payments, then I would have thought they would be inclined to agree as long as the additional expenditure was reasonable.

That said, there are a number of factors which would have to be considered. First whether the new agreement is replacing an existing one or whether it is brand new expenditure. Secondly how the finance is being funded and whether this would reduce the payment amount available for creditors.

Breen629 says:

15/09/2023 at 15:26

I’m currently in a Iva and I am also in receipt of DWP benefits. Would I be permitted to taking a £350 budgeting advance out over the course of 2 years. The repayments will be automatically deducted each month from my statment

15/09/2023 at 15:31

Hi Breen629

In theory, an advance from DWP is not credit. As such, I believe that technically you could take the money. BUT, the major problem is that for the next two years your income will be reduced due to the repayment deductions. As a result it is likely to be more difficult for you to maintain the IVA payments.

If you struggle to maintain your IVA payments as a result of this, it is very unlikely that your IVA company would agree to help you by reducing the them.

I would suggest that you have a chat to your IVA company and gauge their reaction before taking the money. Also you should explore all other possible options first. For example, could you get together the £350 you need by taking a payment break from your IVA?