Debt solutions · 6 min read
What is an IVA? A plain-English guide to Individual Voluntary Arrangements
An Individual Voluntary Arrangement (IVA) is one of the most common formal debt solutions in the UK. If you owe more than you can realistically repay, it can turn many separate debts into a single affordable monthly payment. Here is how it works, in plain English.
How an IVA works
An IVA is a legally binding agreement between you and the people you owe money to. It is set up and supervised by a licensed insolvency practitioner, who looks at your income, essential outgoings and debts, then works out what you can afford to pay each month.
Your creditors vote on the proposal. If creditors holding at least 75% of the debt (by value) who vote agree, the IVA is approved and becomes binding on all of the unsecured creditors included in it — even those who voted against it.
How long does an IVA last?
Most IVAs last five or six years. You make one monthly payment to your insolvency practitioner, who shares it between your creditors. If you are a homeowner, you may be asked to try to release equity from your home towards the end, which can extend the arrangement by up to a year.
When the IVA ends successfully, any remaining debt included in it is written off.
Who might an IVA suit?
An IVA tends to suit people who:
- Live in England, Wales or Northern Ireland (Scotland has a Protected Trust Deed instead)
- Owe several thousand pounds or more to two or more creditors
- Have a regular income and some money left over after essential bills
- Want to protect their home from bankruptcy
What are the downsides?
An IVA is recorded on your credit file for six years from the start date and appears on the public Insolvency Register while it is active. Getting credit will be difficult during that time. If your circumstances change and you can no longer keep up payments, the IVA can fail, and your creditors could then take further action.
Not all debts can be included. Student loans, court fines, child maintenance and some benefit overpayments usually fall outside an IVA. Secured debts like your mortgage continue as normal.
Is an IVA right for you?
An IVA is a big commitment, so it is worth comparing it with alternatives such as a debt management plan, a Debt Relief Order or bankruptcy. Our friendly UK team can talk through your situation and introduce you to an authorised provider who can explain your options in full.
This article is general information only and may not reflect your circumstances. Rules and limits can change, so always check the details with an authorised provider before making a decision.
Let's see if we can help
Safe, secure, confidential
- Step 1
- Step 2
- Step 3
- Step 4
- Step 5
Why do we ask this?
Your total debt amount helps us match you with solutions designed for your level of borrowing.
