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Car finance in an IVA: HP, PCP and keeping the car

The car usually survives an IVA. The finance agreement is the part that needs understanding before you propose.

Written by The My Debt Cleared editorial teamLast reviewed 23 August 2026Jurisdiction England, Wales & Northern IrelandEditorial policy
Hire purchase and PCP agreements are secured on the vehicle and sit outside the IVA: you keep paying them from your budget and keep the car, provided the payment is reasonable and the vehicle is needed. Any shortfall debt from an earlier terminated agreement is unsecured and goes in. An owned car of modest value is normally retained as a reasonable domestic asset.

HP and PCP during the arrangement

The finance payment is a budget line, allowed where the car is necessary — work, dependants, no realistic alternative — and the cost is proportionate. An extravagant agreement invites modification at the creditor vote: expect pressure to swap it for something defensible at the end of its term. What happens at a PCP balloon during the arrangement needs planning with your supervisor, not improvisation. If payments are already unaffordable outside any arrangement, what happens if you can’t pay car finance covers the one-third and half-paid protections.

Cars you own outright

A modest owned vehicle is a reasonable domestic asset and stays. An unusually valuable one is equity creditors will expect addressed in the proposal — sale and replacement with something sensible, or its value reflected in contributions.

Old agreements and shortfalls

Debt left over from a repossessed or voluntarily terminated agreement is unsecured and goes into the arrangement like any other. Related: the exclusions list and how the budget sets the payment.

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