Can student loans be included in your IVA?

There is a lot of confusion about this particular topic and it’s not as straightforward as you may think.

Much of the confusion arises from the differences between an IVA and bankruptcy. Here we’ll give you an insight into the key issues surrounding student loans when it comes to IVAs and bankruptcy:

• You can include your student loan in an IVA – However, if the amount of your student loan debt totals more than 25% of the value of your overall debt then it may not be a simple process. This is due to you requiring 75% of your creditors by value to agree your IVA proposal and typically they would want a return of at least 40p for every pound owed. The Student Loans Company have a policy to request 70p in every pound so they can insist that all creditors be paid back this amount.
• You cannot include your student loan in your bankruptcy – Changes to the Enterprise Act in 2004 changed the position regarding student loans and bankruptcy. This was due to the volume of students declaring themselves bankrupt and including their student loans.
• Forgetting about your student loan – If you’ve not started paying back your student loan after graduating or are having it taken directly from your monthly pay, it can be easy to forget about it when compiling a list of creditors for your IVA proposal. This can jeopardise your whole IVA agreement as it means you’re making preferential payments to one of your creditors at the expense of all the others.
• Student loan duration – Depending on the amount you owe it could take considerably longer than the five year duration of an IVA to pay back your student loan in full. Also, the interest on your loan will be frozen once your IVA has been accepted.
• Student loan creditor – When you include your student loan in your IVA and your proposal is accepted by all of your creditors then The Student Loans Company will be legally bound to stop all collection and legal action. This is the same for all of your creditors, so you can make one monthly payment that will be distributed amongst them by your Insolvency Practitioner.
  

If you’re considering an IVA as a debt solution and have a student loan then it’s definitely worthwhile to bear the points above in mind.

Call now on 08000 43 43 47 to discover if an IVA could be the solution to your debt problems or complete our IVA Wizard and see if you qualify for an IVA