For free and impartial money advice and guidance, visit MoneyHelper, to help you make the most of your money.


Loans for People with an IVA

For free and impartial money advice and guidance, visit MoneyHelper, to help you make the most of your money.

Loans for People with IVA – A-Z Guide, Steps & More

IVAs are a worthwhile solution for many people who find themselves in debt.

However, as you can probably expect, entering into an IVA does mean that you’ll have to accept certain conditions.

Some of these conditions involve heavy restrictions being placed on whether or not you’ll be allowed to take out any further loans or not.

These restrictions are put in place to ensure you don’t worsen your situation and are able to stay in a position where you can consistently make your regular monthly IVA payments.

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Am I Allowed to Take Out Loans During an IVA?

During the period in which your IVA is ongoing, you will not be allowed to take out a loan larger than £500. This includes all kinds of formal as well as informal loans. This restriction is put in place to ensure you don’t dig a deeper hole for yourself and also to ensure that your IVA runs smoothly.

If you run into an unexpected expense such as a health crisis or a critical vehicle repair that you need for your profession, then you can opt to contact your IP. You will have to explain your situation to them and discuss it thoroughly. After that, if your IP feels that it’s appropriate, they will grant you permission to seek a loan. Note that it is against the terms of your IVA to seek a loan larger than £500 without your IP’s permission. If you are caught, this could not only lead to the termination of your IVA but also towards legal action against you.

Even if your IP gives you permission to seek a loan, you will find that you’ll have a hard time finding a lender willing to lend money to you. This is because of the fact that your IVA will be visible on your credit file and lenders will be hesitant to give you a loan considering your financial situation. Applying to a high-street lender is definitely a bad idea as you’ll definitely fail their credit check and they’ll refuse to give you a loan.

You can opt for a payday loan or a doorstep loan but we must stress that you must do so with thorough planning and caution. If taking out this loan would mean that you would fall behind on your regular IVA payments then we strongly recommend against this. Jeopardising the success of your IVA for a short-term loan is definitely a very bad idea.

There are some cases in which you could add that loan into your IVA but this is often not possible for all cases so you should definitely be cautious.

iva loans

Is It Legal to Borrow Money from Friends or Family During an IVA?

As we mentioned before, the loans you’re not allowed to take out include both formal and informal loans. Hence, you are not allowed to borrow money from friends or family if the amount exceeds £500. The same rules apply, however. If you feel that you absolutely need the loan in order to survive or for your IVA to be successful, then you can talk to your IP about it and seek their permission.

However, this is generally not a good idea either because it definitely could impede the progress of your IVA. For example, if you show your friends or family preferential treatment and pay them back first, this might upset your IVA creditors. Thus, it could definitely cause your IVA to fail.

IVA Early Settlement Loans

Your IVA may have seemed suitable to you when it first started out but there’s a chance that during the course of it, you may have started to have doubts about it. In that case, one of the options you have is to opt for an IVA early settlement loan. This loan would be used to pay your creditors a large lump sum of money that you owe to them. As a result of this, your IVA would be considered complete and you would not have to make any more monthly IVA payments.

While this type of loan is definitely something that has worked out well for a lot of people, there are certainly some things that you should consider:

  • Although you’ll be able to pay off your IVA early, you must keep in mind that the mention of the IVA will still remain in your credit file for six years after your IVA commenced. Hence, while you will be free of your monthly IVA payments, your credit file will still have a blemish in the form of the mention of the IVA for six years since the start of your IVA.
  • The mention of your IVA in your credit file will mean that you’ll still have trouble securing credit even after your IVA has ended completely.
  • You will still have to pay back your early settlement loan that you took out to complete your IVA early.

Once you’ve decided to end your IVA early, you’ll have to contact your IP and discuss your situation with them. If they feel that your request is reasonable and justified, they will contact your creditors with your proposal. You’ll have to be clear and transparent in your proposal about where the money is coming from so your creditors can be assured that they are getting it from a legitimate source. Just like the original proposal, 75% of your creditors will have to agree to it for it to pass.

There are several companies such as Sprout Loans that offer IVA early settlement loans. You can get in contact with them once you’ve gained permission from your IP and creditors to get it set up. Keep in mind that these companies also have criteria that you need to achieve in order to be eligible for their loans. Some examples of these criteria are:

  • Your IVA has to have been running for a certain amount of time. Normally, this time period is 30 months.
  • You’ve missed only a certain amount of your IVA payments. Normally this is two or less.
  • You have no current arrears.

How Hard will it be to get a Loan after my IVA has Finished?

Note that an IVA stays in your credit file for six years after the commencement of your IVA. Thus, if your IVA finishes within 5 years, the IVA will still say in your credit file for another year and during this time, it will be very difficult for you to secure a loan. Even if you do manage to secure one, it will most probably be at a high interest rate.

We recommend that you hold off on acquiring a loan (unless it is absolutely necessary) until your IVA has been erased from your credit file. This is because not only will finding a loan be extremely stressful but it could also negatively impact your credit score.

However, once the IVA has been removed from your credit file, you can start acquiring loans but be sure to make your repayments on time. This will help you rebuild and improve your credit score and thus, you will be right on track towards a bright financial future.

If you’re having trouble securing a loan for yourself, you can try and seek help from an independent debt charity such as Payplan. They could turn you onto lenders you may not have known about.

IVA or Debt Consolidation?

Sometimes, opting for a debt consolidation loan instead of an IVA can be a worthwhile option to consider.

You can gain value of opting for a debt consolidation loan if the loan is at a lower interest rate than what your current debts are at.

That being said, if you enter into an IVA, your charges and interest are completely frozen.

Whether an IVA or a debt consolidation loan would be appropriate for you depends entirely on your financial circumstances.

For a detailed comparison between an IVAs and debt consolidation loans, click here.


Securing loans during an IVA can be very stressful and in many cases, near impossible. While it’s definitely not recommended but sometimes, one’s situation dictates the need for a loan. For such cases, you can definitely contact your IP and they will definitely help you figure something out in a way that is effective and relatively stress-free.

Are you struggling with debt?
Are you struggling with debt?
  • Affordable repayments
  • Reduce pressure from people you owe money to
  • Stop interest and charges from soaring