If you’ve had an Individual Voluntary Arrangement (IVA) before and you’ve found yourself with more unsecured debt, you may be wondering if it’s possible to deal with your debts the same way again.
The answer is that it can be, but it’s not guaranteed. No rule limits you to one IVA, though a second arrangement still needs to go through a licensed Insolvency Practitioner and be accepted by your creditors.
Can you get an IVA twice?
Having had an IVA before doesn’t automatically stop you from applying for another one. There’s no fixed legal limit on the number of IVAs a person can have. What matters is if a second IVA is suitable for your current situation and if your creditors are willing to accept the proposal.
To get an IVA a second time, your Insolvency Practitioner will need to review your total debt, income, living expenses and assets, as well as what happened with your previous IVA, before determining if another one is a realistic option.
The proposal must be affordable, credible and in the interests of your creditors for it to stand a chance of being accepted. IVA payments are typically made over a 5 or 6 year term, and any proposal needs to reflect what you can genuinely afford.
Creditors will look closely at why you need a second IVA. Checking your IVA eligibility is the right first step, as the same criteria apply. If your first arrangement completed successfully, they’re likely to be more receptive than if it failed.
A failed IVA doesn’t rule out a second attempt, but creditors will want to understand what’s changed and why a new arrangement would be more sustainable.
When might someone need a second IVA?
You Completed Your First IVA but Later Fell Into New Debt
Some people complete an IVA, clear their debts and rebuild their finances, only for a significant life event to push them back into difficulty. A redundancy, a health problem or a relationship breakdown can unravel financial stability quickly, and unsecured debts can build up again before there’s any realistic way to repay them.
Your First IVA Failed
If you couldn’t keep up with IVA payments and your creditors wouldn’t agree to changes, the IVA agreement may have been terminated. When that happens, your Insolvency Practitioner issues a certificate of termination, your original debts remain, and creditors are free to take action again. The failure of your IVA doesn’t mean a second one is off the table, but what’s changed since will need to be clearly demonstrated.
Your Previous IVA Was Rejected
A rejected IVA proposal isn’t the same as a failed or completed IVA. If creditors voted against your original proposal, you may be able to submit a revised one, depending on the feedback and whether the terms can be adjusted to better reflect your circumstances.
Your Circumstances Have Changed
Sometimes an IVA becomes unmanageable not because of poor planning, but because of changes that couldn’t have been anticipated. Common reasons include:
- Reduced income
- Redundancy
- Serious illness
- Separation or divorce
- Increased rent or mortgage costs
- Business difficulties
- Changes to benefits.
If you previously held a joint IVA (also known as an interlocking IVA) with a partner and the relationship ended, that can also bring the arrangement to an end and leave both parties needing to consider their options separately.
Will creditors accept a second IVA?
There’s no guarantee, but creditors will consider a second IVA if the proposal makes financial sense to them. Their primary concern is if they’re likely to recover more through an IVA than through bankruptcy or another route. If the answer is yes and the proposal is realistic, many creditors will engage with it.
Creditors will want to know:
- If you completed your previous IVA or if it failed
- What caused any missed payments and if that was down to genuine hardship
- If your debts have built up recently
- If your proposed monthly payment is one you can actually sustain.
If your first IVA failed within the first year, creditors will want to understand what’s different this time before committing to a new arrangement.
Can you start a new IVA while you’re still in an IVA?
If you’re currently in an IVA and struggling to keep up with payments, the right step is to contact your Insolvency Practitioner rather than look to set up a separate arrangement. Your existing IVA may have more flexibility than you realise.
Depending on your situation, your IP can arrange a payment break, reduce your monthly payments or call a variation meeting to formally amend the terms of your IVA.
Receiving a windfall like an inheritance during your IVA may also open the door to early settlement via a lump sum payment. In some circumstances, it may also be possible to change your IVA company if you’re unhappy with how your case is being managed.
Tell your Insolvency Practitioner if your circumstances change during an IVA, as failing to do so could put the arrangement at risk.
If none of those options are viable and your IVA is at serious risk of failing, your IP will talk you through what happens next and what alternatives may be open to you at that point.
What debts can be included in a second IVA?
The rules on eligible IVA debts are that only unsecured debts can be included, and the same types of debt that qualified the first time around will qualify again. Debts that can typically be included are:
- Credit cards and store cards
- Personal loans and payday loans
- Buy now, pay later debt
- Overdrafts
- Council tax arrears
- Utility arrears and HMRC debts
- Catalogue debts
Some debts can’t be included in an IVA regardless of how many times you’ve had one. These are:
- Mortgages and secured loans
- Student loans
- Court fines
- Child maintenance arrears
- TV Licence arrears
If you have a mix of eligible and ineligible debts, your Insolvency Practitioner will help you understand which can be brought into the arrangement and how to manage those that can’t.
Is a second IVA always the best option?
A second IVA may be appropriate for some people, but it won’t be the right fit for everyone.
A second IVA will affect your credit rating for six years from the start date, just as the first one did, so depending on your situation, other formal debt solutions such as a Debt Management Plan, a Debt Relief Order, an informal arrangement with creditors, or a Breathing Space period may be relevant. Each has different eligibility criteria, implications and outcomes, and what worked, or didn’t work, the first time around doesn’t necessarily determine what’s right now.
How To Improve Your Chances Of A Second IVA Being Accepted
Transparency is the most important factor. Be honest about how your previous IVA ended and why. Creditors are more likely to engage with a proposal when they can see the full picture and feel confident the person applying has been straightforward with them.
Accuracy matters just as much as honesty. Before speaking to an Insolvency Practitioner, gather details of all your debts, creditors, income, assets and household bills. Your income and expenditure figures need to be realistic, and the monthly payment you’re proposing must be one you can genuinely afford to maintain for the full term of the arrangement.
Avoid taking on any further credit before getting debt advice, as this can complicate your financial picture and affect how creditors view your application – the stronger and more credible your proposal, the better the chance of it being accepted.
How NDH Financial Can Help
We’re personal insolvency specialists with experience in helping people work through complex debt situations, including those who’ve been through an IVA before. If you’re considering a second IVA, an insolvency practitioner will be able to review your circumstances and give you a clear picture of where you stand.
If a second IVA isn’t suitable, we’ll explain why and talk through what other options may be worth considering.
