What constitutes credit on an IVA?

posted by in Living with debt

This page contains information about debt solutions available in England, Wales and Northern Ireland. Debt advice in Scotland involves similar but different solutions. If you are considering an IVA as a debt solution, please ensure that you fully understand the risks involved when entering an IVA.

What counts as credit?

Are these “credit”?

We all know that as part of the terms and conditions of your IVA proposal you should avoid taking out further credit.

We’d discourage any form of borrowing at all, but you can’t borrow more than £500 without your supervisor’s permission in writing.

But what constitutes “credit”? Let’s investigate…

Gas and electric

We sometimes get calls from people who worry that because they’re in debt to their utility provider for their gas and electricity that this is against the terms of their IVA.

This isn’t the case. While being indebted to your utility provider is a form of credit it isn’t against the terms of your IVA as long as you maintain the payments as agreed.

So what credit aren’t you allowed on an IVA?

The credit you’re not allowed to take out include credit cards, store cards, loans, payday loans, guarantor loans or any consumer credit act debts. These are against the terms and conditions of your IVA and frankly, they defeat the purpose of your IVA.

Loans from family and friends

Whilst it may seem like a good idea to borrow from your family or friends they will still need to be paid back and this could affect your ability to make your IVA payments. Its OK to accept a gift from them but do not take a loan – contact you IVA supervisor instead.

The dangers of the catalogue

Alongside these debts, another to consider is catalogue debt. People sometimes don’t see a catalogue debt as a real debt, and often people in IVAs find that they can get approved for some catalogue transactions. This is against the terms of your IVA.

While catalogue debts might be small they’re a form of credit which can quickly build up and affect your ability to maintain payments into your IVA.

Needing items from catalogues suggests that your IVA budget might not be working. We’d prefer you call us to discuss your IVA budget before you decide to take on catalogue debt and risk breaching your arrangement.

Payday panic

Payday loans are an increasingly popular credit product but if you take one out you’re in danger of breaching the terms of your IVA and having it fail.

Payday loans normally don’t last longer than 30 days and are sometimes seen as a short term fix to a temporary cash flow problem. However if you’re on an IVA they’re not really worth the worry they can cause.

If you do have a sudden unexpected expense or bill to pay and you can’t afford it, we’d prefer if you called us to discuss how we can help you through this without relying on further credit.

We’re here to help

There’s a risk of bankruptcy if your IVA fails, so we’re here to help you make sure your IVA completes its course. We’re also here to listen to you and help you stick to the terms of your IVA the whole duration of the arrangement.

If you’re tempted to take new credit you should speak to us first, to see if we can arrange an alternative solution which will keep you and your IVA on the straight and narrow.

Matthew worked as an IVA drafter prior to working in social media. In a former life he wrote scripts for Eastenders, Emmerdale and Hollyoaks. He has 3 chickens, 2 dogs and a rabbit.

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Tags Living with debt
  • moneyaware

    Hi there,

    It’s best that you speak to your IVA provider. They may be
    able to vary the terms rather than letting it fail – especially if it’s for a
    small amount.


  • Glen

    Hi I’m thinking of taking a loan, I’m 2 years into my IVA. Is there any
    way the company that is looking after my IVA can find out? I will be ok
    to keep the IVA payments going. I just dont want it effecting my

    • moneyaware

      Hi there Glen

      It’s not a good idea to take out more credit while in an IVA without discussing the matter thoroughly with your Insolvency Practitioner to find out how it will affect your arrangement. You will be in breach of the terms of your IVA if you borrow more money without getting your supervisor’s permission first.

      If you feel that you are struggling with the current terms of your IVA, it would be wise to talk to your IP about it and see if something can be done to make the payments easier to manage. You have the
      right to review your IVA terms should you find these restrictions unrealistic for your living costs.

      Hope this helps

      Best regards


  • Robert Mcnaughton

    My partner is in debt and been advised by her solicitor and an IP to enter an IVA. Stating it will cost about £3000 for the services of the solicitor to fend off creditors. The Solicitor then encourages my partner to pay his fee up front on a credit card. Is this legal to take credit from the card company knowing your insolvent ?

    • moneyaware

      Hi Robert,

      Thanks for posting.

      In general we wouldn’t encourage you to take out more credit to cover the costs of paying off another debt.

      If she hasn’t already I’d strongly encourage your partner to get in touch with us for free debt advice.

      As a charity, all of our advice is free and impartial. We’ll be able to have a look at your partner’s situation and one of our advisors will be able to recommend a debt solution that’s suited to her. We offer a range of debt solutions including IVAs which you can read about here: http://www.stepchange.org/Howwecanhelpyou.aspx

      If we recommend an IVA for your partner, our advisors will be able to talk her through the process and answer any questions she may have about the fees involved with an IVA.

      You can find out how to get in touch with us here: http://www.stepchange.org/Contactus.aspx

      I hope this helps and if you’ve got any more questions please let us know.


  • Carmen Klammer

    When you have an IVA can you choose to keep one credit card active (and keep making the minimum payments)?

    • moneyaware

      Hi Carmen,

      Thanks for your question.

      An individual voluntary agreement (IVA) is an agreement between you and your creditors to help you pay off your debts at an affordable rate.

      When you are setting up an IVA your practitioner will ask you about all of your debts and perform a check to calculate the total of how much debt you have. All of your debts would then be included in the IVA proposal to the creditors which sets out what your monthly budget is, and what you can afford to repay to your debts.
      You can read about the process here: https://www.stepchange.org/debt-info/getting-an-iva.aspx

      If you are already in the process of setting up an IVA, or have an IVA speak to your practitioner. If you have a particular set of circumstances that you believe mean you need to have access to credit during your IVA you can tell them, they can give you advice based on your particular circumstances. It is unlikely that you will find it easy to access credit during an IVA and your IVA could fail if you take out more than £500 without their permission.

      You can read about credit on an IVA here: https://www.stepchange.org/debt-info/credit-and-loans-on-an-iva.aspx

      If you are in debt, and are simply considering an IVA use our debt remedy tool to look at your finances and see if it may be the right debt solution for you: https://www.stepchange.org/Howwecanhelpyou/Debtadvice.aspx

      An IVA is a form of insolvency and you should make sure you understand all the benefits and risks involved with this debt solution.

      If you have any further questions please let us know.


      • Carmen Klammer

        Thank you very much, Becca. Why do the credit card companies keep calling – IVA started 5 months ago?

      • moneyaware

        Hi Carmen,

        We have a page on our blog about creditors contacting you while you’re on an IVA:


        If you’ve been receiving the letters/calls for a while now, it might be worth telling the company that are managing your IVA for you. They’ll be able to offer advice on what to do.

        Kind regards,


      • Carmen Klammer

        Thank you Jen. They said to ignore them and the calls will finish as it takes a while for them to update their system. 5 months seems a very long time though.

  • Helena ‘H’ Fayyazi

    I am requiring surgery which is not available through the NHS so I would have to go private for the procedure. There is a 3 year finance options available for this and I am only in my first year of my iva. Am I able to take out this finance options you enable me to have said surgery?

    • moneyaware

      Hi there Helena, thanks for getting in touch.

      As an IVA is a legally binding agreement, we’re unable to give you advice on your options regarding this. You would need to get in touch with the insolvency Practitioner who put your IVA together to find out what they would recommend. Alternatively, the Insolvency Service may be able to help.

      Kind regards


      • Helena ‘H’ Fayyazi

        Will do. Thank you for your advice.