An Individual Voluntary Arrangement (IVA) can have many different effects on your life which you didn’t initially anticipate.
One aspect that many debtors tend to overlook is the effect that an IVA may have on their rented property.
In this post, I’ll be discussing IVA and renting as well as what you can do to ensure your IVA doesn’t interfere with your rent payments, etc.
Will Entering into an IVA Affect My Current Rent Agreement?
In most cases, an IVA has no effect on a rent agreement that is already in place.
That being said, you should still check your contract to ensure there isn’t any clause which states that you cannot be insolvent while you reside at that address.
Please note that your landlord won’t be informed about your IVA and your rented property won’t be considered to be a part of your IVA either.
It’s important to keep in mind that your IVA won’t affect your living situation in most cases either.
This is because when you are devising a payment plan with your Insolvency Practitioner (IP), they will take into account the payment you have to make towards your rent each month; This will be considered to be a part of your essential living expenses.
Furthermore, if you’ve fallen behind on your rent payments and have rent arrears, then you will be allowed to put some money aside each month in order to pay back these arrears. These will be separate from your IVA payments.
Is it Possible to Move to Another Rented Property While an IVA is in Place?
It’s definitely possible to move to another rented property when you have an IVA in place but it can definitely be more difficult as your options will be limited.
The reason for this is that an IVA is recorded in your credit file and as a result, has a severely negative impact on your credit rating.
If your potential landlord performs a credit check on you before approving you for the rented property, then the mention of the IVA in your credit record may make them apprehensive about approving your application.
Credit checks can also be a problem when renewing letting agreements. If credit checks are required for renewing your letting agreement, then this may raise concerns with your landlord as well.
If you’re having trouble acquiring a rented space because of your poor credit rating, there are a couple of options you can explore:
Firstly, you’ll have a much easier time finding a space to rent if you choose to rent it along with another person.
Secondly, if you can’t find another person to rent a space with, you can opt to produce a guarantor for the rent agreement. A guarantor is a person that will be responsible for your rent payments if you ever fail to make them; This could be a close friend or a family member of yours.
Having a guarantor for your rent agreement does wonders when it comes to alleviating the concerns of a landlord or letting agent regarding your ability to pay your rent.
It’s important to be honest and upfront with landlords and letting agents when you’re looking to acquire a space to rent. Landlords and letting agents will be more willing to help you when they are assured that you’re being sincere about your finances.
IVA and Moving
If you’re considering moving to another rented property, you’re going to have to assess your ability to do so.
In most cases, you’re going to have to save up for a rent deposit as well as the money for the first month’s rent (you have to pay the first month’s rent upfront for a majority of rented spaces).
Saving up money for such a payment when you have an IVA in place can prove to be quite difficult.
If it’s absolutely necessary for you to move, you’re going to have to discuss this and get advice from your IP.
If your requirement to move is not time-sensitive, then your IP may allow you to put some money aside each month which would contribute towards your rent deposit and the first month’s rent.
If you have to move immediately, then you may need to get advice from your IP. In most cases, they may be able to authorise a payment break from your IVA for you so that you can make payments towards your new rented property.
You can also consider to pay the rent deposit of your new potential rented space by using the rent deposit you’ll be getting refunded from the one you’re leaving. You have to keep in mind, however, that may you not receive your rent deposit from your old rented space until you’ve emptied it and handed over your keys.
Of course, the terms of your payment break such as its duration will depend on many different aspects such as your income, expenditure, how much debt you owe, etc.
Will an IVA have an Effect on My Ability to Rent a Home After it has Finished?
An IVA stays in your credit file for six years after the date on which it was registered. Please note that it stays in your credit record for six years even if it ended in five years (or even earlier than that).
If your IVA takes longer than six years, then the mention of it is removed from your credit report once it ends.
As I said earlier, when you’re looking to rent a property, it’s highly likely that the landlord will perform a credit check on you.
The mention of an IVA in your credit report during a credit check, even if it has ended, will severely lower your chances of being approved for a space to rent.
I highly recommend that once your IVA ends, you should spend at least 6 months (or up to 12) rebuilding your credit rating.
I would highly advise you not to look for a rented space until the mention of your IVA has been removed from your credit report. This is because in today’s day and age, almost every landlord you go to is going to perform a credit check on you.
You’ll stand a much better chance of getting approved for a rented space if you’ve rebuilt your credit rating to a point where it’s decent.
Can Rent Arrears be Written Off if I Include them in My IVA?
Rent arrears are classified as unsecured debt, so technically, they can be included in your IVA.
However, in most cases, you’ll only be able to include rent arrears from properties which you may have rented previously.
If you’re trying to include rent arrears from a property that you currently reside in, this could cause problems.
While it’s technically possible for you to include rent arrears from a property you currently reside in within your IVA, it makes much more sense for your landlord to just evict you and find a new tenant rather than agree to your IVA proposal.
Hence, while you may try to get your current rent arrears included within your IVA, chances are that your landlord is not going to accept it.
That being said, you can definitely discuss this with your IP and they can help you develop a payment plan where you can set some money aside each month which will contribute towards your rent arrears; These would be separate from the payments you make towards your IVA.
After some time (6 months or more, depending on how much rent arrears you have), you’ll have enough money to catch up on your rent.
For more advice on this, you should talk to your IP.
If you’re having trouble managing your debt and payments while you’re in a debt solution, you can also opt to contact a debt charity such as National Debtline or Stepchange for more advice. Always make sure that any agency you contact for professional debt advice is authorised and regulated by the Financial Conduct Authority.
While an IVA does not have an effect on renting in most cases, it’s one of those aspects which you definitely should be aware of.
You don’t want to be one of those individuals that end up losing their homes while trying to take care of their debts.