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Can I include electricity bills in my IVA?

If you live in England, Wales or Northern Ireland and you have significant unsecured debts you can't afford to repay in a reasonable period, have you considered an IVA?

An IVA - which stands for 'Individual Voluntary Arrangement' - is an insolvency solution that could help you to repay what you can realistically afford over an agreed period (usually five years), and once it's successfully completed, leave you with no further obligation to any portion of the unsecured debt that remains.

Find out more about IVAs here.

Because an IVA is only designed to help you reduce your unsecured debt repayments, e.g. credit/store cards, catalogues and personal loans, you can't include secured debts and priority bills - such as your on-going electricity bills - in the agreement.

However, although you can't reduce your on-going utility bills with an IVA, you may be able to include bill arrears. Note that there may be some conditions applied by your provider. For example, you won't be able to switch energy provider until the arrears have been paid off, and you may be required to have a prepayment meter installed to ensure you only use as much energy as you pay for.

And you'll have to make sure you stay on top of your on-going electricity bills as they come in.

Having said that, entering an IVA could help you to do that, because your payments into your IVA will be calculated to fit around your essential living costs - not just your utility bills, but also mortgage/rent payments, food, etc.

Click here to find out whether you could qualify for an IVA.

How does an IVA work?

The idea of an IVA is that you'll repay what you can afford towards your unsecured debts for an agreed period of time - typically five years.

During this time, you'll make your agreed monthly payments and your unsecured lenders will be prevented from taking any further legal action against you. If you're a homeowner, you may have to release some equity so you can repay more of what you owe (but unlike bankruptcy, you won't be at risk of repossession).

As long as you keep up with your side of the agreement, your lenders will write off any remaining portion of the included debt once your IVA successfully ends - so you can start a future free of unsecured debt.

You should bear in mind that a note of your IVA will be made on your credit file, where it will stay for six years - and is likely to affect your ability to get further credit in this time. You can apply for an IVA on this page.

By Daniel Culpan.

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Subject to eligibility and acceptance. Fees Payable. Debt write off applies to unsecured debts only and on completion of an IVA, alternative solutions may be offered. If your IVA fails, it could lead to Bankruptcy. Your ability to obtain credit will be affected for at least 6 years. Homeowners may be required to release the equity in their property.