What Happens To my Home And Car In An IVA?

Your home:
In an IVA you can keep your home, although you may need to release some of the equity for creditors as part of the agreement.  If you are a home owner, the level of equity (difference between the value of your house and any loans secured on it) is estimated at the start of the IVA and then confirmed 6 months before the end of the IVA.  The equity, if applicable, has to be realised for the benefit of your creditors but this is normally done without having to sell your home – it is extremely unusual to sell your home in an IVA, unless you want to do so.  Your IVA expert will fully explain the effect entering into an IVA has on your home prior to you signing any documentation.

Equity, if applicable, can be realised by the following methods:

  • Third party payments e.g. family, friend, business associate etc.
  • Extending the payment period of the IVA, normally by one year
  • Re-mortgage or secured loan
  • Sale by private bargain or open market

Equity release is subject and/or limited to the following conditions:

  • De minimus level of equity where no funds would be released is £5,000.
  • The maximum equity to be released is based on a limit of 85% loan to value.
  • Your ability to obtain a re-mortgage.
  • Increase in mortgage payments being no more than 50% of IVA payments.
  • Affordability
  • If you are unable to re-mortgage, you are required to extend the length of your IVA (maximum 12 months) to introduce an amount equal to the equity in your property.
  • If your property is jointly owned, it is only your share of the equity that creditors can look to be released (unless both owners are in an IVA).

Your car:
In almost all cases you will be able to keep your car, especially if it is required for work purposes or family commitments.  If the car is brand new and/or worth a significant amount then you may have to trade it in for a less expensive car, releasing either income or a lump sum to the IVA.  If the car is subject to a Hire Purchase agreement or another type of secured finance agreement, you will be allowed the contractual repayment within your monthly expenditure (provided it is not excessive) and, in most cases, you will be able to keep the car.

For more information regarding your home, car and all other assets please click here to read our FAQs.


Do I need to be a homeowner to sign an IVA?
No.   You can be a homeowner, live in your partner’s home, private/council/housing association tenant or live with your parents.

Will I lose my home?
Very unlikely.  If you are a home owner, the property will be valued and the equity calculated (difference between the value of your property and any mortgages/loans secured on it).  If equity exists then this would need to be realised for the benefit of your creditors.  The process for calculating and realising equity will be discussed in detail prior to you entering into an IVA.

Would I need to sell my home to realise any equity?
This would be very unlikely, unless there is significant equity in your property.  Equity can be realised using the following methods:

  1. 3rd party making payments e.g. family, friend, business associate etc
  2. Extending your payment period, normally by 12 months.
  3. Mix of the above
  4. Re-mortgage or secured loan
  5. Sale by private bargain or public sale

What happens if I have minimal or no equity in my home?
In an IVA, if there is negative or minimal equity (less than £5k) then your Supervisor and creditors will have no interest in the property.

Are my mortgage arrears included in my IVA?
Unfortunately they are not.  As the arrears are in relation to a secured debt, they can pursue you for any outstanding amount and may take action to repossess the property.  If you have not already done so, you should contact your mortgage provider to discuss the arrears and try and come to an agreement to repay them.

Would an IVA defeat a charging order on a property?
The charging order will remain in place if it has been lodged prior to an IVA being approved.  The creditor who placed the charging order can apply to court to force the sale of the property, however, this is very rare and it is likely another solution will be found before the court grants an order to sale.

What happens if my home is subject to shared ownership?
If your property is owned partly by a housing association or other organisation then any equity will be calculated taking account of the shared ownership agreement.  If you have to pay rent for their share you would continue to do as an essential expenditure.

If I apply for an IVA will I lose my personal possessions in my home?
You are allowed to keep all essential household items such as your furniture, electrical goods etc.  It is unlikely your Supervisor would sell your non-essential items unless they were of significant value. 

What happens to household goods on HP if I apply for an IVA?
Assuming the HP payment is not excessive, it is likely your creditors would allow you to continue with the payments.  Depending on the Agreement the HP Creditor may require the return of the goods.  You should always check the terms of your HP agreement(s) prior to entering into an IVA.

What happens if my house is repossessed while I am in an IVA?
If your house is repossessed while you are in an IVA, then any shortfall from the sale would be included as a debt in the IVA.  If this is not possible due to the level of additional debts then your Supervisor would consider terminating your IVA or petitioning for your bankruptcy.  If the sale results in a surplus of funds, then it is likely your share of the sale proceeds would be paid to your Supervisor and held for the benefit of creditors.

Are rent arrears included in my IVA?
Yes, rent arrears can be included but it is best to contact us for advice sooner rather than later to discuss the level of rent arrears and what agreement you have in place with the landlord, if any.