If you have rent arrears, an IVA can help. You might be able to include the debt in your Arrangement. Where this is not possible, it will help you free up the cash you need to put a suitable repayment plan in place with your landlord.
Included in this article:
- Can your current rent arrears can be included in an IVA?
- Arrears from a previous property
- How can an IVA help you pay your rent in the future?
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Can your current rent arrears can be included in an IVA?
Whether or not rent arrears owed to your existing landlord can be included in an IVA depends on the type of landlord you have.
If you are renting privately, the landlord might take action to evict you if you don’t pay the arrears you owe them. Given this, it is not likely that you will be able to include these in your IVA.
By reducing your other debt payments, an IVA can free up some of your cash. This may then give you what you need to put a suitable repayment plan in place with your landlord.
Where you rent from the council or housing association, any current rent arrears you have can be included in your IVA. Providing you maintain the normal rent payments going forward and don’t get into more arrears, you are unlikely to be evicted.
Your rent is a priority payment. When calculating what you can afford to pay into your IVA, your rent payments should always be fully covered in your living expenses budget.
Struggling to get your head round this? We can help. Give us a call (0800 011 4712) or complete the form at the bottom of the page. The advice is free and confidential.
Rent arrears from a previous property
So, arrears for the property you currently rent are kept out of the IVA. This stops you from getting evicted. However if you have arrears from a previous property then these are just another unsecured debt.
All unsecured debt you have should be included in an IVA. So previous rent arrears, however far back they go, can and will be included in your IVA. As with your other debts, once the IVA is finished the remainder of these debts will be written off.
The only situation where arrears from a previous property might block an IVA is if they are a large portion of the overall debt. For an IVA to be accepted 75% of the value of the debt has to agree to the proposal. If they do then it is legally binding on all of the creditors.
If the rent arrears from a previous property are more than 25% of the total debt and the landlord refuses, the IVA would not be accepted.
How can an IVA help you pay your rent in the future?
An IVA takes control of all of your expenditures. The budget at the heart of it ensures that all of your priority expenditures are covered; your home, food, council tax and utility bills – all accounted for. The budget even allows for the periodic expenses so you don’t get any nasty surprises.
One of the problems with spiralling debt is that priorities get confused. Not paying bank loans, credit cards or payday loans can be scary. These companies are quick to employ debt collection agencies who can feel intimidating. So what happens? They go to the front of the pile and they get paid first.
What next – you run out of money and start to use your credit cards for normal living costs. Rent and mortgage payments move further down the queue when in reality the should be at the top!
An IVA allows you to take control of your finances. If you follow the budget it will ensure that you can not only pay your rent on time every month, but all your other bills and living costs too.
Get started with your IVA application. Give us a call (0800 011 4712) complete the form at the bottom of this page. Our advice is free and confidential.