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Managing an IVA

Individual voluntary arrangement (IVA) and council tax debt

Your council tax is one of the most important household bills. Once your individual voluntary arrangement (IVA) is put in place, your council tax will be included in the IVA payment you make each month.

IVAs aren't available if you live in Scotland. In Scotland, a protected trust deed is a similar solution, but has different benefits, risks and fees associated with it.

IVAs are arranged by StepChange Voluntary Arrangements, part of StepChange Debt Charity.

By including your council tax in your individual voluntary arrangement, your IVA provider can ensure that any council tax arrears you owe are covered while your IVA is active.

Why is council tax a priority?

Council tax is treated as a priority debt, whether it’s your current bill or any arrears that you might owe. Priority debts are of high importance because the consequences of not paying them are more serious than other debts.

Local authorities have increased legal powers to collect council tax if payments are missed. They have the power to collect the debt by:

  • Sending in bailiffs
  • Setting up an attachment of earnings, where the money owed is taken directly from your wages or benefits
  • Issuing a charging order
  • Petitioning to make you bankrupt
  • Threatening imprisonment (although this is rare, and usually only reserved in cases of wilful refusal to pay or ‘culpable neglect’)

Clare Lindley and James O'Carroll of StepChange Voluntary Arrangements are licensed to act as insolvency practitioners in the UK by the Insolvency Practitioners Association.

Is an IVA right for you?

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Thinking about going ahead with an IVA?

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Why is my council tax included in my IVA?

When proposing an IVA (and all other insolvency solutions) your current council tax bill is classed as a debt to include in your list of creditors, if:

  • You live in a household where you’re the only person named on the council tax bill, or -
  • You've entered into an IVA at the same time as your partner

What should I do if council tax is included in my IVA?

The council will normally submit their claim for the council tax bill within the first few months of your IVA.

You should continue paying your council tax as normal until you receive written confirmation their claim has been agreed and that your IVA payments will be adjusted. Once this happens, future payments to the council will stop.

This ruling only impacts you if you’re in the first year of your IVA. Council tax bills issued following the approval of your IVA will need to be paid directly as normal, and at that point it’ll be accounted for in your budget and treated as a priority.

Thinking of an IVA? Get free debt advice

f you already have an IVA, you should always discuss your situation with your insolvency practitioner first.

  1. Use our free online advice tool or call us and speak to one of our expert advisors to find out if an IVA is right for you.
  2. If an IVA is the best solution to your debt problem our specialist company, StepChange Voluntary Arrangements, can help you through the set up process.
  3. We'll review your finances and put forward the IVA proposal to your creditors. 

StepChange Voluntary Arrangements is a registered trading name of Consumer Credit Counselling Service Voluntary Arrangements Limited, a wholly owned subsidiary of StepChange Debt Charity.