I will have to sell my car(s) IVA Myth
Summary: I will have to sell my car(s) - This article seeks to explain the principles surrounding the way cars as assets are treated in the IVA (Individual Voluntary Arrangement) process.
I need my car for work
Many people do and it's perfectly reasonable to keep such a car and costs of fuel, insurance, tax and servicing will be allowed for in a person's overall outgoings budget. However a car still represents as asset, and the details and value will need to form part of an IVA proposal.
Value of car
There is a balancing act to be achieved here. Creditors may take a dim view of someone owning a valuable, luxury car when unable to repay their debts. Some do need particular vehicles for work - meeting clients etc and when people have high mileage associated with their job, it's in everyone's interests that they own a reliable car. Sometimes employers include a car allowance as part of a salary package as such a car is necessary for their work. All these factors will be borne in mind with each IVA proposal. When a car is valued at around £5000 or less (trade value) it is likely to be fine. When a car value is significantly higher, some questions may be asked.
More than one car
If a household needs a second car (both parties in a couple needs a car for work/school run etc) then again, reasonable provision for this would be allowed. However where an individual owns more than one vehicle, it will be assumed one could be sold with the net proceeds offered to the IVA, unless a very good case could be made for needing two.
The question here is whether the finance or debt is secured on the car. In a HP or similar, the finance is secured and if less than the agreed payment level was made then the car could be repossessed. In this case such finance cannot be included in an IVA as a debt, and if the car was needed and the payments not too high, then the expense would be listed in the debtors' outgoings budget. (It should be noted that in the case of a car on HP, once the repayments have ceased, it will be assumed that more funds may be available for the IVA). Where the finance on the vehicle came from a loan, then the car belongs to the individual who owes the money to the lender. This is an unsecured debt and could (and must) be included in the IVA as a debt, and would be listed as an asset for the debtor.
The reality is that sensible and appropriate provision of a car is accepted within an IVA and you would not be required to sell your vehicle in such circumstances.