Individual Voluntary Arrangement

An IVA can freeze your debts and allow you to pay them back over a set period. Debt still owed after this period is written off.

What is an IVA?

Set up and managed by an insolvency practitioner (IP) an IVA is a form of insolvency which allows you to write off up to 81% of unsecured debt with government legislation, and offers an alternative to bankruptcy.

However, an IVA will affect your credit rating for six years and your information will also be placed on the public Register of Insolvencies for the duration of the plan.

Once you enter an IVA, creditors can take no further action against you and can’t contact you directly.

In an IVA a single monthly payment is agreed with your current financial situation taken into consideration – this payment is then divided between the people you owe money to.

During the course of your plan all interest and fees associated with your debts are frozen.

At the end of the IVA the remaining debts are written off and you can begin your debt-free future.

Will it work for me?

An IVA can be a positive way to manage your debts, however, to be eligible you must meet the following criteria:

  • Have £6,000 or more of unsecured debt
  • Owe money to two or more creditors
  • Live in England or Wales
  • Have a steady income and consistently be able to make at payment of at least £85 per month
  • If you do qualify for an IVA you can stop pressure from the people you owe money to, reduce monthly payments and write off up to 90% of unsecured debt.

What debts can be included?

Most unsecured debts, meaning debts that are not tied to an asset such as your home, can be included in an IVA. This includes:

  • Catalogue and store card debts
  • Credit cards
  • Personal loans
  • Overdrafts
  • Gas, electricity, and water bill arrears
  • Council tax arrears
  • Income tax / National Insurance arrears
  • Tax credit / benefit overpayments
  • Payday loans
  • Debts to family and friends
  • Other outstanding bills
  • Joint debts – but the other person must also continue their payments

What debts can't be included?

Secured debts that can’t be included in an IVA are:

  • Mortgages
  • Other secured loans
  • Hire purchase agreements
  • Debts incurred through fraud
  • Court fines
  • TV licence arrears
  • Student loans
  • Child support arrears
  • Social fund loans


  • There are no upfront fees.
  • If your IVA is approved, creditors who vote against your proposal or who do not vote at all are still bound by it.
  • Creditors whose lending is unsecured can’t take any further action against you once the IVA is approved.
  • Interest and charges are frozen by law, provided you keep up your payments.
  • The IP will help you prepare your proposal, including agreeing the level of your household and personal spending.
  • You make only a single payment each month, which is distributed to creditors on your behalf.
  • If your circumstances change a payment break could be authorised or the terms of your agreement could be varied.
  • You will never be forced to sell your home in an IVA.
  • All remaining debts will be written off at the end of your IVA. Using government legislation, an IVA could help you write off up to 90% of unsecured debt.


  • Spending restrictions are put in place during an IVA.
  • Not all debts can be included in an IVA, for example student loans, child support and maintenance, magistrate court fines and social fund loans are excluded from an IVA, but an allowance can be given to enable you to continue repaying these.
  • Creditors may not approve your IVA.
  • If you are a homeowner, you may have to release equity in the final year of the IVA through remortgaging. If you can’t remortgage, your arrangement could be extended for up to 12 months in lieu of the equity available in your property.
  • If you become entitled to any windfalls or inheritance money over and above £500 during the term of the IVA these funds are to be introduced into the arrangement.
  • If you fail to make the payments due under the terms of your IVA, your arrangement could fail.
  • If your circumstances change, the insolvency practitioner can ask creditors to agree to an amended offer, however if creditors refuse to accept amended terms, the IVA may fail. You may then still owe your creditors the amount that you owed at the outset of the IVA.
  • If your IVA fails, it could lead to you being made bankrupt.
  • IVAs are recorded on the Insolvency Register, which is a public register.
  • An IVA remains on your credit file for six years after it is accepted and may have a negative effect on your credit score for up to six years.

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