People often ask whether they can keep a savings account or build up a rainy-day fund while they’re in an IVA. The answer depends on when the money arrives and what it’s for.
The short answer
- Savings you have before the IVA are usually offered to creditors.
- Your monthly budget can include an allowance for unexpected or irregular costs.
- Building large savings instead of paying your IVA isn’t allowed.
- Windfalls such as inheritances usually have to be paid into the IVA.
- Tell your insolvency practitioner about all savings accounts, including ones in joint names.
What happens to savings when you start an IVA?
When your proposal is prepared, you list your assets as well as your debts. Cash savings are an asset. Creditors will usually expect a meaningful lump sum to be paid into the IVA, because it reduces what they lose. Small balances needed for day-to-day living are treated differently, and your insolvency practitioner will explain what applies to you.
Can I save money while the IVA is running?
Your IVA payment is worked out from your income and essential spending. The budget used to set it can include a contingency for costs that don’t come every month, such as car repairs, school uniforms or replacing a broken appliance. Putting aside money for those is expected and sensible.
What you can’t do is pay less into your IVA so that savings build up. If your income goes up and you have more spare money, your annual review may increase your payment.
What about windfalls and lump sums?
Money that arrives unexpectedly, such as an inheritance, a large bonus, a compensation payment or a lottery win, usually has to be reported and paid into the IVA. Our guide to IVAs, windfalls and inheritance covers this in detail.
Common questions
How much savings can I have in an IVA?
There’s no single fixed figure. Your budget can include a contingency for irregular costs, but large savings at the start are usually paid to creditors. Your insolvency practitioner will explain what your IVA terms allow.
Can I keep a savings account open during an IVA?
Usually yes, as long as you’ve declared it. What matters is what’s in it and where the money came from.
What if my savings came from a gift?
Gifts received during the IVA may count as a windfall. Tell your insolvency practitioner before spending or saving any significant gift.
Can I save for a house deposit during an IVA?
Building a large deposit while in an IVA isn’t usually possible, because spare money goes towards your payments. Many people save after the IVA ends.
How IVA Advice Online can help
Every situation is different, and an IVA isn’t right for everyone. We can look at your income, spending and debts with you and set out the debt solutions you could qualify for, including options other than an IVA. To talk it through, get in touch.