Can I apply for credit in an IVA?

Unfortunately, obtaining further credit whilst your IVA is still ongoing may be considered a breach of your IVA and cause your IVA to fail. This is due to the IVA's terms and conditions that we're imposed upon you at the Creditors' Meeting.

But, for some people, learning to live without credit can be very difficult.

Living Without Credit

The objective of an IVA is to help people with severe debt problems to become debt free and, as part of this process, it is hoped that the principle of having a structured budget, introduced through the IVA will help move people away from their reliance on credit.

For this reason the IVA applicant must voluntarily refrain from apply for a loan or obtaining credit during the full duration of the IVA.

The IVA proposal makes particular reference to this point, by specifically mentioning your acknowledgement of this condition.

Your IVA is a legally binding agreement and if your IVA fails, in certain circumstances, your supervisor may have the instruction to file for your bankruptcy.

Damaged credit rating

Then there's the point that even if did decide to apply for credit during your IVA the application is highly likely to be rejected.

This is because your IVA will have been registered on the Insolvency Register, a public record referenced by all the major Credit Reference Agencies.

So by obtaining credit during your IVA you run the risk of breaching your IVA's terms.

Talk to your Insolvency Practitioner

Since the introduction of the IVA protocol in 2008, there have been some significant changes to the levels of assistance your Insolvency Practitioner can offer you, to help keep your IVA on track.

One such change gives your IP the discretion to allow you a temporary payment break should your financial circumstances require it.

The IVA protocol was updated recently and since the introduction of the revised IVA protocol on 1st October 2016, there are now 2 different allowable break terms.

People whose IVA started before the 1st October 2016 can request a payment break of up to 6 months, whereas people whose IVA started after 1st October 2016 can request a payment break of 9 months.

A payment break gives temporary relief from the IVA payments and could completely remove the need to obtain any credit at all.

If you feel this approach might help, you should contact your IP directly and ask for their assistance.

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