If you're worried that an IVA means giving up your car, you're not alone. In most cases you can keep a reasonable vehicle that you need. The detail depends on how the car is financed and what it's worth.
Will I keep my car in an IVA?
Usually, yes. Creditors accept that many people need a car to get to work, take children to school or care for family. Where the car is reasonably priced and needed, its running costs and any finance payments go into your budget as essential costs.
Problems arise if the car is worth a lot or the finance payments are high. Creditors may then ask you to swap to a cheaper model, with any difference going towards your debts.
Hire purchase and PCP
With hire purchase or a personal contract purchase agreement, the finance company owns the car until the agreement ends. These agreements are normally kept outside the IVA. You keep paying them as normal, and the payment sits in your budget. If the payment is very high compared with your income, expect it to be discussed.
Logbook loans
A logbook loan is secured on a car you already own. The lender can take the car if you fall behind. These loans need careful handling and are usually dealt with separately from the IVA. If you have one, mention it early in your conversation with us.
Insurance, MOT and running costs
Insurance premiums, road tax, the annual MOT and servicing all count as essential running costs if you need the car. Use real figures from your last renewal rather than estimates, because premiums vary a lot between postcodes, even within Washington.
Cars you own outright
If you own your car outright and it's of modest value, it'll normally be left alone. A high-value car may need to be sold and replaced with something cheaper.
Why travel costs matter in a car-reliant town
The town's layout of numbered districts and villages linked by main roads works well by car but can make bus journeys long, especially for early or late shifts. Your IVA budget should show what you really spend on fuel, insurance, tax, servicing and parking. If those costs are underestimated, the budget will feel tight within months, and that's when IVAs start to struggle.
Many people commute out of Washington along the A1(M), A19 or A194(M) to jobs in Newcastle, Gateshead, Durham or Sunderland. If your commute is long, make sure the mileage is reflected in your fuel figure rather than a rough guess.
Council tax: Washington is part of the City of Sunderland
For council tax purposes, Washington sits within the City of Sunderland, so your bill comes from Sunderland City Council. Arrears can usually be included in an IVA, but the current year's council tax must be paid as it falls due. If your income is low, ask the council about council tax support before your budget is set.
Renting a home in a Washington village
A large share of homes across the town's villages are rented, either from Gentoo, which manages social housing across the City of Sunderland, or from private landlords. Rent is an essential cost in your IVA budget, so it's paid before anything goes to creditors. If you're in arrears with a social landlord, keep paying your full rent and get advice about the arrears early, because they can put your tenancy at risk in a way most other debts can't.
Working at the car plant or in the supply chain
Nissan's Sunderland plant sits right on Washington's doorstep, and many nearby firms supply it. Jobs in the sector can involve shift premiums, overtime and periods of reduced working. If you work in the sector, your Insolvency Practitioner will usually average your income over several months, and may leave irregular overtime out so your payment isn't based on hours you can't rely on. If you're paid a bonus, check how your proposal treats it. For more on this, see our Sunderland guide.
Other options worth comparing
- A Debt Management Plan if you could repay in full over a few years.
- A Debt Relief Order if your income is low and any car you own is worth less than £4,000.
- A consolidation loan only if your credit rating is still good and the new loan costs less.
Our debt solutions comparison explains each option side by side. If a car is central to your life, a solution that lets you keep it, and keep up the finance payments, will usually matter more than which option writes off the most.
Making an enquiry
We're based in Newcastle, about a twenty-minute drive away, but you won't need to make the trip. Enquiries are handled by phone and email. If you have car finance, have the agreement or a recent statement nearby when we speak so we can talk about it properly. If you own your home in Washington, a rough idea of its value and your mortgage balance helps too. Send the form at the top of the page and choose a time that suits you.
Free advice is also available from Citizens Advice and MoneyHelper.
Car and IVA questions
Do I need to tell my insurer about my IVA?
Some insurers ask about bankruptcy or IVAs when you apply or renew. Answer honestly if asked, because giving wrong information can make a policy invalid. Many insurers will still offer cover.
What if my car has already been handed back or repossessed?
If you still owe money after the car was returned or sold, that shortfall is an unsecured debt. It can usually be included in an IVA like a credit card or loan.
Can I get new car finance during an IVA?
You'll need your supervisor's permission for any credit over £500, and finance will be harder to get. If your car is essential and needs replacing, your supervisor can help you find an affordable way to do it.
What if my car breaks down during the IVA?
Tell your supervisor. Essential repairs can often be covered by a short payment break or by adjusting your budget, which matters in Washington, where getting to work without a car can be difficult.