Can I use an IVA to pay my mortgage arrears?

26 June2009

For people struggling with unmanageable debts, an IVA (Individual Voluntary Arrangement) can offer an alternative to bankruptcy.

However, as with any debt solution, an IVA is not right for everyone. IVAs do not cover all kinds of debt - and it`s possible that bankruptcy (or another debt solution) may be a more suitable solution to your problems.

What will an IVA cover?

An IVA will only cover unsecured debts - debts that are not secured against your home (or other expensive assets). That means your IVA could include the following kinds of debt, for example:

  • Unsecured personal loans
  • Credit cards
  • Overdrafts
  • Store cards

An IVA will not cover secured debts. This is because the terms of a secured debt already set out that if you fail to keep up with your repayments, your home may be sold to recoup the money owed to the lender.

This means that an IVA will not cover the following:

  • Mortgage arrears & payments
  • Secured loan arrears & payments

However, an IVA can cover bill arrears (money that you should already have paid) - but only if you`ve changed provider since then. So this could only apply to cases where you`ve been able to change providers. If there`s only one water provider in your area, for example, you`d owe the arrears to the company you`re still paying, so there`s no way your arrears could be included in your IVA.

Can an IVA help in any way with my mortgage arrears?

Although an IVA won`t help directly with your mortgage arrears, it could help you indirectly.

After all, your IVA payments will be based on what you can afford, after your essential commitments have been taken into consideration. This will include your secured debts - and so long as you can come to an agreement with your mortgage lender on how to repay the arrears, your IVA payments may fit around this. If you approach Think Money about entering an IVA, we may be able to negotiate with your mortgage provider on your behalf.

You must have a certain amount of disposable income available to put towards your IVA each month (in many cases, this works out to be a minimum of 200). If your payments to your mortgage arrears would mean you do not have enough disposable income for an IVA, this isn`t necessarily a barrier - we may be able to negotiate terms that your unsecured creditors and your mortgage provider can accept.

For example, they may agree that the IVA can start with lower payments, which would then increase when your mortgage arrears have been paid off and you can afford to make larger monthly payments to your IVA.

Try our debt solution finder

Answer a few simple questions and find out which debt solutions could help you, based on your circumstances.

Your Situation

Your Details

Please remember, this is just an information tool. We would always recommend you speak to a debt advisor for the most appropriate way to resolve your debt problems.
We'll give you an on-screen recommendation and call you. One of our advisors will be in touch to answer any questions you may have about your results.
Your privacy is important to us. All correspondence is held in the strictest confidence and we will only request information required to find your debt solution.

Related resources:


Tags: iva, mortgage, mortgage arrears, debt, iva mortgage, iva mortgage arrears, iva pay mortgage, can an iva help with mortgage, use iva to pay mortgage, iva pay off mortgage debt, iva remortgage, mortgage arrears debt help

Fees payable when continuing service is provided. Repaying debt over a longer period may increase the total amount to be repaid. Calls are recorded and are usually free from UK landlines. Mobile phone users may be charged and should check with their service provider. Cards are provided by third parties and are subject to eligibility, status and terms and conditions. Applicants must be UK residents aged 18 or over.

All About Money Limited © 2013. All rights reserved. 42 Boston Rd, Sleaford, Lincolnshire NG34 7ER.