IVA – Individual Voluntary Arrangement

Get Advice

Please fill in the form below. We will call you back as soon as possible.

Submitting Form...

The server encountered an error.

Form received.

What is an IVA?


An IVA is a popular debt solution used by thousands of people each month. It’s an alternative to bankruptcy that may deal with your assets more flexibly. You contribute what you can afford towards your debts for an agreed period of time. In return, your creditors write-off any debt that remains unpaid when you complete the plan.


The term “IVA” is abbreviated from Individual Voluntary Arrangement. It’s a type of personal insolvency introduced by the Insolvency Act of 1986. These debt management arrangements are legally binding upon you and your creditors. Only licenced insolvency practitioners can set up and manage this debt solution for you.


Get IVA Advice


If you’re considering an IVA, please get in touch. Our friendly advisers can help you. We’re experienced and fully authorised debt advisers. We’ll advise you about all of your debt management options.


This page is a general guide to individual voluntary arrangements. You’ll find a number of links to other pages spread throughout this guide. They’ll take you to more in-depth coverage about important or complex topics.


Do You Qualify For an IVA?


IVAs are a flexible type of debt arrangement. Get expert advice if you’re unsure whether you qualify. You may qualify to use an IVA if:


• You owe money to at least two different creditors

• Your debts total at least £5,000 (at least £7,000 may be more suitable)

• You can pay at least £80 per month (and/or have assets that can be sold)

• You cannot afford your contractual debt repayments

• You cannot repay your debts faster using a debt management plan

• You live in England, Wales, or Northern Ireland


Advantages and Benefits of an IVA


Experts Deal with Your Creditors


Your chosen firm deals with your creditors for you. This may provide relief from the stress and worry that debt collection tactics can cause. It could also save you time that can now be used more productively. If you get debt collection calls, refer the caller to your IVA supervisor. You can also forward debt collection letters and emails to your supervisor. Your insolvency practitioner (IP) sends payment to your creditors for you.


Legal Protection from your Creditors


Once an IVA has been agreed, it’s legally binding upon your creditors. They cannot take legal recovery action against you. Assets (such as your home or car) will become more secure. The courts won’t allow bailiffs to visit you in connection to included debts. Your chosen insolvency firm can also act to stop legal action while your IVA gets set up. If necessary, this involves applying to the court for an “interim order”.


Avoid Bankruptcy


Bankruptcy can cause serious problems for homeowners and business owners. It may also cause employment problems for those working in certain professions. An IVA is an alternative to bankruptcy that may have less impact on your home, business, or career.


Protection for Homeowners


An IVA deals with your assets more flexibly than bankruptcy. Even if there’s some equity in your property, this debt solution could be available to you. This means you could keep your house or flat while dealing with your unsecured debts. You will need to continue making payment for your mortgage and any secured loans. Your home is also protected from creditors that are covered by your IVA.


Light at the End of the Tunnel


An IVA runs for an agreed period of time (usually five or six years). Provided you complete your obligations, you can look forward to a fresh financial start in the future.


A Single Affordable Monthly Payment


You make a single regular payment into your IVA. This payment is usually monthly, but other payment frequencies may be agreed. The provider is responsible for issuing payment (known as “dividends”) to your creditors.


Your payment amount is calculated on the basis of affordability. You receive allowances for your bills and other reasonable expenses. Any surplus income is used to fund the IVA.


Debt Written Off


When you complete the arrangement, the debt you haven’t repaid gets legally written off. This write-off happens when your supervisor issues your “completion certificate”. Creditors (that are included in the IVA) cannot act to recover any payment shortfall from you. Only qualifying debts that existed when your IVA began qualify for debt write-off.


Fees Taken from your Payments


The fees are taken from your IVA payments. You don’t pay an extra sum of money to cover the set up and management costs.


Frozen Interest


Interest isn’t added to your debts during an IVA, so your debt total doesn’t increase. This may not apply if your financial situation greatly improves during the arrangement. Interest may be added if you become able to afford it (from extra income or a windfall).


Protected Pension Funds


Money saved in an approved pension scheme is usually secure. You should not be forced to withdraw these funds to pay into your IVA. However, if you take a lump sum (or income) from your pension, these extra funds get treated as income and may have to be paid over. While some level of pension saving is allowable during an IVA, the amount is likely to be modest.


IVA Disadvantages, Risks, and Costs


Your Credit Rating


Entering an IVA will have a significant impact on your credit rating. The IVA itself gets added to your credit report for six years. This will restrict your access to credit. It is likely to result in any credit you are offered being provided on less favourable terms. You will be subject to a restriction against using credit during the term of your IVA. This restriction varies, but could include a £500 limit for example.


Creditor Acceptance Required


If more than 25% or more of your creditors (by value) object to your proposal, your IVA will not go ahead. You will need to find a different way to manage your debts


Restricted Spending


Your IVA payment is based upon an affordability calculation. You’ll receive allowances for your household bills and other reasonable expenses. Your discretionary spending will be limited by these allowances. This ensures that your creditors are treated fairly. You may be able to keep part of any extra earnings (like overtime or a bonus) but part will also be payable into your IVA.


Equity Release for Homeowners


An IVA takes account of your assets as well as your income. Your home is an “asset” if it’s worth more than the balance of your mortgage(s). The difference between the valuation of your home and your mortgage(s) balance is known as your “equity”.


In the final year of your IVA (if you have equity) you must attempt to remortgage. The purpose is to release funds to help repay your creditors. Most mortgage lenders don’t accept applications while you’re in an IVA. However, some specialist secured lenders do operate in this niche. Their lending products can be expensive. Some protections are built into this process, including the amount and cost of your new mortgage.


If you have equity but are unable to release it, your IVA payments may be extended by one year. These extra payments are made “in lieu” of the equity in your home. This payment could be made instead by a “third party” such as a relative or friend.




You’ll be able to keep a vehicle if you have a reasonable need for it. A car worth £5,000 or less is unlikely to present a problem, for example. However, if your car is worth considerably more than £5,000, you might be required to downgrade it. The surplus funds would get paid into your individual voluntary arrangement.


You’ll usually be able to keep a car or van that’s subject to secured finance. Secured finance includes hire purchase and conditional sale agreements. You must continue to make the finance payments in full. If your vehicle finance payment is considered excessive, new arrangements may be necessary. A few secured finance providers recover vehicles if their customer enters an insolvency process.


Windfalls – Coming into Money


An IVA includes clauses about windfalls received during your IVA. A common example of a windfall is money (or property) received from an inheritance. If you become entitled to a significant lump sum (or property) during your IVA, you’re unlikely to benefit from it. The money (or asset value) gets used to repay more of the money you owe to creditors. You may be able to keep a modest amount from any windfall you receive, for example £500.


Other Assets


You may be required to use other significant assets to repay your creditors. This could include cash savings, for example. It’s unlikely to include things like jewellery or regular household goods.


Falling into Arrears


When you cease paying your creditors directly, you will fall into arrears.  If you are already in arrears, you will fall further into arrears. Interest and charges could continue being added until your IVA gets approved.


Public Register


When you begin an IVA, your personal details get added to a public register. The Individual Insolvency Register is operated by The Insolvency Service and is available online. It includes the personal details of those using an IVA, bankruptcy, or a debt relief order. Your entry gets removed three months after your IVA ends.


Fees are Payable


All IVA providers charge fees for their work. The fees and costs get taken from your regular payment and will amount to thousands of pounds. Because they’re taken from your payment, it may feel like your creditors are covering these costs. However, if your IVA fails, fees and costs will be taken from the contributions you have already paid. Your creditors may receive little (or zero) payment. You’ll remain responsible for the full amount left owing to your creditors.


Employment Restrictions


Most people can use an IVA without any negative impact on their career prospects. However, some types of professionals, financial services workers, and employees in disciplined types of work, may face restrictions against using this debt solution. See below for further information.


Changes in your Circumstances


An IVA payment amount isn’t fixed. If your income increases, or your expenses reduce, your IVA payment may increase. Regular reviews are held to ensure your payment amount stays fair (for you and for your creditors).


Changing Bank Account


Most people have to open a new bank account before their IVA starts. You’ll need a basic account at a bank you don’t owe any money. The banks should help you to transfer your direct debits and standing orders. You’ll need to arrange for your income and/or benefits to be paid into the new account.


Failed IVA


If you become unable to make your payment (or refuse to make it) your IVA may fail. You’ll become directly liable to repay your debts again. It’s possible that creditors might require your IVA supervisor to petition for your bankruptcy.


Other Important IVA Information


Debts that are Included


You must include all qualifying debts that exist when your IVA begins. It isn’t possible to choose to leave a debt out and continue paying it yourself. Your qualifying debts might include:


• Credit cards

• Bank overdrafts (including joint overdrafts)

• Bank loans

• High cost loans (like 118 118 Money or Everyday Loans)

• Credit union Loans

Guarantor loans (like Amigo, UK Credit, and George Banco)

• Payday loans

• Store cards

• Catalogue accounts

• Purchased debts (debts bought from other lenders)

• Debt collection agencies (collecting debt for other lenders)

• Council tax arrears

• Income tax, national insurance, and other HMRC liabilities

• Tax credits or benefit overpayments

• Mortgage shortfall debts

• Money owed to family and friends

• Unpaid bills (like medical or legal costs)

• Utility arrears (like gas, electricity, and water)


Think carefully if you have any joint debts. Your IVA will cover you, but the other borrower remains liable for repayment of the full amount. It’s a similar scenario with guarantor loans. This type of loan gets included in an IVA, but the lender still requires the guarantor to make the payments.


Debts related to gambling are included. For your own protection, IVA providers may require you to demonstrate that you have stopped gambling for a period of time before going ahead.


Debts that are Excluded


An individual voluntary arrangement does not usually cover the following types of debts:


• Debts secured on property (like a mortgage or secured loan)

• Rent arrears (unless your landlord agrees)

• Debts secured on vehicles (like hire purchase or logbook loans)

• Other hire purchase agreements

• Student loans

• Court fines

• TV licence debts

• Child support or child maintenance debts

• Social fund loans


You must continue to pay your “priority debts” (like those listed above) after you enter an IVA.


How Much Will You Pay?


There is no fixed amount that you have to pay into an IVA. Your payment isn’t based on how much you owe or how much you earn. The payments are based upon an affordability calculation.


Affordability is calculated by subtracting your costs (your bills plus reasonable expenses) from your total income. The amount left over is known as your “disposable income” or “surplus income”. Common types of spending are subject to expenditure guidelines. This includes spending on things like food, clothing, and social activities. The allowances are somewhat flexible, depending upon your family size and priorities.


How Long Does an IVA Last?


Most IVAs are scheduled to run for a period of five years. Some homeowners complete a six year plan instead. This term can get extended if you miss payments, fail to declare extra income, or don’t disclose a windfall.


A less common type of IVA includes the contribution of a single lump sum. This might be an option if you have an asset you can sell but no disposable income. This type of “full and final” IVA can be completed once the promised lump sum has been paid.


Can I Finish an IVA Early?


It might be possible to end an IVA sooner than the agreed term. One scenario is that you clear your debts (plus the IVA costs) in full. This could happen if you come into money during your IVA. Another possibility is a third party offering a sum of money to complete the arrangement. A relative or friend could offer a lump sum to bring your IVA to an early end. An IVA supervisor can offer this option to your creditors if a reasonable offer is made.


In recent years “IVA Early Settlement Loans” have become available. These are unsecured loans you can take out if your supervisor/creditors agree to end your arrangement early. The money you borrow gets paid into your IVA. These loans may become available in the third year of your arrangement. The interest rates are high, with one firm quoting an APR of 39.9%. For most people this makes little financial sense; completing the IVA would cost less and get you out of debt sooner.


Employment Risks


Most people can enter an IVA without causing any workplace problems. Check your contract of employment for clauses about personal insolvency or bankruptcy. Check also for clauses referring to “entering into arrangements with creditors”.


An IVA may not be suitable or viable for some types of professionals. This applies to solicitors and accountants for example. You may face restrictions if you work for a bank or another type of financial institution. Independent financial advisers and mortgage brokers could find their ability to work restricted by using this debt solution.


People working in disciplined environments may have to disclose their plans in advance to their employer. This applies if you work for the police, prison service, or in the military.


Select a provider carefully if you are self-employed or a company director. Managing your case can be much more complex for the IVA provider. Some larger firms may not be prepared to take on your case.


Joint IVA


Couples can enter into an “interlocking” IVA arrangement. Each of your plans will take the other into account. This could enable you both to deal with your debts while managing household bills and other expenses.


You work with the same adviser in order to put together your payment proposals. Though this is technically two IVAs, it will feel like a joint arrangement.


Can You do an IVA Twice?


It’s possible to enter a new IVA if you have completed one in the past. It may also be possible if you previously had an IVA that failed. Your adviser will want to check that an IVA is your best debt solution option on this occasion. They’ll also want to check that you have a good prospect of completing it.


The Process


Individual Voluntary Arrangements work in four broad stages:


1. Advice. An adviser reviews your situation and confirms whether this debt solution is suitable for you. They should also explain the alternative solutions you qualify to use.


2. Nominee. You work with the insolvency practitioner (IP) to create your payment proposals. They’re presented to your creditors and their support is requested.


3. Supervisory. If creditors accept your proposals, the IVA gets underway. Periodic reviews are completed to ensure the arrangement remains fair to both you and your creditors. Your IP sends payments (“dividends”) to your creditors in line with the agreement.


4. Completion. Once you have completed your obligations, your IP can issue your completion certificate. Creditors receive their final dividend. Any included debt that isn’t repaid gets legally written off.


Paperwork and Information Needed


To set up an IVA, you’ll need to provide your adviser with some documentation. Requirements vary, but the following documents may be needed:


• Three months of bank statements

• Three months of payslips

• Award letters for benefits and tax credits

• A mortgage redemption certificate (for homeowners)

• Vehicle finance agreements

• ID (like a passport or driver’s licence)


Your IP will also ask you to provide information about your debts. Keep any letters or emails you receive, because debts sometimes change hands. For example, a credit account in arrears could get sold to a debt purchaser. Your credit report can provide extra information about your debts, for example the current balances on each account.


Alternative Debt Solutions


An IVA is just one of the effective debt solutions you can use. Many people find that other solutions can get them out of debt faster and at a lower overall cost. Your other options include:


A debt management plan (DMP) is a less formal type of debt solution. It’s not insolvency and no public register exists. You pay a regular amount you can afford towards your debts each month. No debt gets written off, so a DMP continues until your debt is fully repaid.


A debt relief order (DRO) could help if you have little disposable income and own few assets. Your total debt cannot be more than £20,000. The application fee is just £90 and there is no regular payment afterwards. You’ll get discharged from the DRO and your debts after a year.


Bankruptcy is another type of personal insolvency. The application fee is £680. Any assets you own may be treated less flexibly than they are in an IVA. A regular payment may be required for three years, but only if it’s deemed affordable for you to pay it.


Coronavirus Factors


An IVA is a debt solution that relies upon making a regular payment. Before going ahead, consider whether your income could be affected as a result of coronavirus. Are you at risk of being furloughed or having your working hours reduced? Would an IVA payment remain affordable if this happened to you?


There are other ways to manage your finances during this time of uncertainty. Banks and credit card companies may offer you a temporary payment break. Many homeowners have taken a temporary mortgage payment holiday. Covid-19 has caused much financial disruption, but banks and other lenders are providing unprecedented levels of support.




Some aspects of how IVAs are marketed and managed are considered controversial. The firms that provide this debt solution (and their introducers) receive significant fees. The same firms and introducers earn little (or nothing) for providing advice on bankruptcy or debt relief orders. Many IVA providers aren’t even authorised to provide advice about, or to deliver, debt management plan services. Their clients may therefore be insufficiently informed to make an educated choice.


IVAs are heavily marketed in comparison to other debt solutions. Some observers contend that many people entering IVAs were actually better suited to using different debt solutions. Critics point to examples of poor advice, poor service, and high case failure rates at certain insolvency practitioner firms. Case failure is often prompted by IVA proposals based upon unaffordable monthly payments.


You can help to protect yourself using several basic steps:


• Don’t respond to cold-callers

• Beware of sales-led adverts in the paid-for search engine results

• Only use an FCA authorised and regulated debt adviser

• Compare the benefits of the other debt solutions

• Get a second opinion about your options

• Only agree to a monthly payment you’re sure you can afford

• Don’t commit until you’re certain this is your best option


Getting Out of an IVA


An IVA is a formal legal agreement. You cannot easily exit this debt solution if you don’t feel it’s working. You cannot choose to switch provider if you’re receiving poor service. This is why you should take enough time to find high-quality debt advice and a suitable provider.


Your supervisor may agree to release you in some circumstances. For example, discharge may be appropriate if you become unable to afford a regular payment. This will not happen immediately and you’ll need to find a new way to deal with your debts.


You could choose to stop making your payment without agreement from your IP. Your supervisor may fail your IVA after several months of non-payment. This course of action isn’t risk-free. For example, your creditors might request that your IP petitions for your bankruptcy.


Complaining About an IVA


If you’re unhappy with your insolvency practitioner, you can lodge a complaint with them. Complaints are usually reviewed by senior staff and are reportable to the firm’s regulators. If you’re unhappy with the response to your complaint, you can escalate the matter. IPs are members of regulatory professional bodies. These organisations deal with complaints about their members. You can submit a complaint via the insolvency complaints gateway. Insolvency work and insolvency practitioners are not covered by the Financial Ombudsman Service.


Contact Us for Expert IVA Advice


If you’re considering an IVA, please get in touch. Our friendly advisers can help you. We’re experienced and fully authorised debt advisers.



Author: Andrew Graveson

Qualified Debt Adviser & IVA-Guide.co.uk Founder


Page Last Updated: 15/04/2020



Free-To-Client Debt Advice

The Money Advice Service provides details of organisations that offer free debt advice and services.

(c) Bright Oak Limited. Company Number: 06774006.

Data Protection Registration: Z1657982.

Telephone calls may be monitored or recorded.

Authorised and regulated by the Financial Conduct Authority.

Cardiff House, Priority Business Park, Barry, CF63 2AW. Tel: 02920 435423.

More Reading