Can I include an HP (Hire Purchase Debt) debt in an IVA?

A Hire Purchase Debt (HP) is the debt that is taken in exchange for goods. The debtor needs to pay a fixed sum over a period of time in installments towards the cost of the good.

Usually such a debt is taken while purchasing a car. If the debtor is not able to pay the monthly installments then the goods are taken back by the seller.

When a person enters into an IVA, normally the HP debt is not included in it since it is obvious that the debtor would not be able to pay the full amount of the monthly installments and in this case the goods will be taken away from his possession.

However, if the debtor is willing to surrender the goods taken under hire purchase, then the debt is likely to be included in the IVA. But in some cases like the HP debt of a car where it may not be possible to surrender it for work related reasons, the debtor is entitled to keep the car and include its debt in the IVA.

For other hire purchase agreements, normally inclusion is not allowed in the IVA, when is it is considered that a particular good is not contributing in earning of income by the debtor. 

Highlights:

In short, only those HP (Hire Purchase Debt) deals are allowed in the IVA which are very essential for the debtor and which is somehow contributing towards his income. HP of luxury items is strictly not allowed to include in an IVA.

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