Individual Voluntary Arrangement (IVA)

We provide information on Individual Voluntary Arrangements (IVA) Regulated by the Insolvency Practitioners Association (IPA)

An Individual Voluntary Arrangement (IVA) is a formal and legally binding agreement between you and your creditors to pay back all or part of your debts over a period of time at an affordable rate.

Set up and managed by an Insolvency Practitioner (IP), an IVA is a form of insolvency which allows you to write off up to 80%* of unsecured debt and offers an alternative to bankruptcy.

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An IVA is a legally binding arrangement made between you and your creditors to pay off your debts with a repayment plan that suits your circumstances. Over time, they have emerged as a widely used debt solution in the UK.

Those who are eligible can apply for an IVA to regain financial control, write off a percentage of their debts, and move forward with your financial wellbeing.

At MA, we offer a professional, impartial review of your financial circumstances.

What is an IVA?

An Individual Voluntary Arrangement  (IVA) is a legally binding arrangement made between you and your creditors to pay off your debts with a repayment plan that suits your circumstances.

Since it is a formal and legal debt solution; you, as well as your creditors, are obliged to maintain the agreement. Once you enter into an IVA your creditors are unable to take any further action against you.

An IVA is set up and managed by an Insolvency Practitioner (IP).

In an IVA, a single monthly payment and is agreed with your current financial situation taken into consideration to suit your circumstances – this payment is then divided among 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.


How Does an IVA Work?

Before applying for any debt solution, (including IVA) in the UK, it is important you discuss your situation to make sure you are aware of all your options.

An IP will begin the process by working out what you can afford to repay and how long the IVA lasts. You’ll have to give details about your financial situation, e.g. your assets, debts, income and creditors.

If an IVA is right for you, you will work out a repayment plan with an IP. Your IP will draft an IVA proposal with you which details your repayment offer, any assets, and all of your unsecured creditors.

Your insolvency practitioner will contact your creditors and your IVA proposal is then presented to creditors in a meeting. The IVA will be approved if the creditors holding 75% of your debts agree to it. It will bind all your creditors, even those who disagreed with it.

An IVA will stop your creditors from taking any form of legal action against you for your debts.

Once an IVA is approved, you are required to pay back the agreed monthly payment each month, usually for five years (60 months); the duration an IVA lasts can vary based on many factors such as overall debt and any assets in your name.

If you maintain payments throughout your IVA, any remaining balance outstanding on the included debts will be written off upon successful completion of your payment term.

The debt write off amount for each customer differs depending upon their individual financial circumstances and is subject to the approval of their creditors.

In the UK, only residents of England, Northern Ireland or Wales can apply for an IVA. If you live in Scotland, check out Trust Deeds instead.

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Write Off Debt With an IVA

You may be entitled to write off a % of your debts, based on your circumstances, affordability, and the amount of debt. The debt write off amount for each customer differs depending upon their individual financial circumstances and is subject to the approval of their creditors.

IVAs are suitable for people unable to repay their debts in full, in a reasonable time, unable to meet their monthly payments and as such you are only expected to pay back what is reasonably affordable for you in one monthly payment. This usually lasts 5 years, then any included unsecured debt outstanding is written off upon successful completion of an IVA.

Below is an example that shows how an IVA helped a client write off a % of their debt:

example IVA

Debts Included in an IVA

An IVA would cover most of your unsecured debts. Debts covered by IVA include:

  • Overdrafts
  • Personal loans and catalogue debts
  • Council Tax arrears
  • Hire purchase debts shortfalls
  • Credit and store cards
  • Mortgage shortfalls
  • The money you owe to HMRC e-g income tax (unless deemed fraudulent)
  • Gas, electricity, and water bill arrears
  • Benefit overpayments (unless deemed fraudulent)
  • Payday loans
  • Informal debts from family and friends
  • Joint debts, but the other person must also make payments

Debts Not Included in an IVA

An IVA does not cover most secured loans. Debts not covered by an IVA include:

  • Mortgages
  • Student loans
  • Social fund loans
  • Court fines
  • Child maintenance or child support dues
  • TV license arrears
  • Hire purchase agreements
  • Debts accumulated through fraudulent conduct
  • Certain forms of car finances
  • Other secured debts

IVA Pros and Cons

An IVA has its pros and cons, just like other debt solutions.  Weighing up the costs and benefits of an IVA can help you decide if an IVA is worth it.

IVA Pros

  • You do not need to give up ownership of your home. The IVA will provide protection for your assets.
  • There are no upfront fees.
  • You make only a single payment each month, which is distributed to creditors on your behalf.
  • You only pay what you can afford to (*based on your income and expenditure)
  • Interest and charges are frozen on bound debts by law, provided you maintain your monthly payments.
  • Upon completion, your included creditors agree to write off any outstanding balances
  • If your IVA is approved, creditors who vote against your proposal or who do not vote at all are still bound by it.
  • Stop your creditors chasing you for payment and stop any legal action being taken against you
  • Only 75% of your creditors (by debt value) need to approve your IVA proposal for it to become

IVA Cons

  • If you are a homeowner, you may have to release equity in the final year of the IVA through re-mortgaging. If you can’t re-mortgage, your arrangement could be extended for up to 12 months in lieu of the equity available in your property.
  • Details of your insolvency will be recorded in the Individual Insolvency Register
  • Spending restrictions are put in place during an IVA
  • An IVA will negatively affect your credit rating for six years
  • If your IVA fails this could lead to bankruptcy.
  • No further borrowing should be obtained during an IVA without prior permission from your IP.

Who is Eligible for an IVA?

You need to meet the following criteria to qualify for an IVA in the UK:

  • You must owe at least £5,000 of unsecured debt
  • You owe money to 2 or more creditors
  • You should have a stable source of income (employment, benefits, or pension)
  • You should be able to afford to make a minimum monthly payment of at least £80
  • You must be a resident of England, Wales, or Northern Ireland

How Much Does an IVA Cost?

To set up an IVA, you need to instruct the services of an IP so there are some costs involved. An IP is a licensed professional (usually a lawyer or an accountant).

There are three main costs associated with an IVA. All these costs are already included in your monthly IVA payments, so you do not have to go through the hassle of arranging money or making multiple payments throughout the term of your IVA.

These costs include:

1. Nominee’s Fee

Normally a minimum of £1000.

This covers the preparation of your IVA proposal, which includes assessing your current financial situation and repayment offer to creditors. It also covers admin and facilitation costs during the process up to and including the approval of your IVA.

2. Supervisor’s Fee

A supervisor’s fee usually ranges between 15 to 20% of payments made under an IVA but in some cases, a fixed fee may be charged.

The supervisor’s fee covers the expense incurred while implementing your IVA. This includes the cost of collecting your monthly payment and disbursing it to creditors, handling any queries from yourself or creditors, managing creditor relations as well as undertaking annual reviews.

3. Disbursements

Disbursements may vary from case to case but on average, they cost £1,100 per case.

Disbursements usually cover expenses paid to third party companies for software licenses, insurances, or any regulation that is required. They could also include the cost of additional services hired to offer the best returns to creditors.


How Long Does an IVA Last?

An IVA usually lasts for five or six years. However, in some cases, it can be extended by another 12 months to give borrowers a chance to repay their debt according to the agreed terms.

Conversely, you also have the option of repaying your IVA earlier if you have a lump sum that can fully or partially cover your IVA payments.


What Happens at the End of an IVA?

As long as you have successfully complied with the terms of your IVA, once it is completed, the remaining balance of the included debts is written off and these creditors cannot take further action against you.

The IVA Experience: Life During an IVA

Individual Voluntary Arrangements provide many people with a chance to face their debt problems head-on – but before you make up your mind, it is vital to consider how an IVA can impact your everyday finances as well as your personal and professional life.


In most cases, an IVA will not impact your job. There are exceptions to this rule are professionals who hold a position of financial responsibility like accountants, solicitors or bankers, and those employed in the police force, prison facilities, or fire services.

Make sure you check your employment contract to find out if you need to disclose any information about your IVA to your employer. While most employers do not require people to inform them before entering an IVA, some may. That is why it is always a good idea to double-check your terms of employment.

Self-employed individuals who set up an IVA can continue operating their businesses as usual. However, they may find it more difficult to deal with their suppliers on an ongoing credit basis during their IVA.


Before you agree to an IVA, your IP will take into account any property you own. They will calculate the amount of equity available if you were to sell your house and pay your mortgage to check if it is enough to fully repay your debts.

Generally, all properties will be included in an IVA to establish your total share of equity unless there are exceptional circumstances. This share is then reviewed as part of your IVA.

In some circumstances you will also be asked to provide an updated record of your mortgage and secured loan balance to calculate your share of the equity, there are limits to how much we calculate known as ‘available equity’.

The available equity in your property will be calculated by taking the value of your property, discounting it to 85%, and then deducting any mortgage and borrowing secured on it.  If that figure is less than £5,000, you will not be required to undergo any further review, your IVA will last for 60 months.

If the available equity is more than £5,000, you are under the age of 60 and have more than £100 of disposable income each month, your arrangement will last 72 months and there will be a review of your equity in month 54.

At this point, a further valuation will be undertaken, and an up-to-date mortgage/secured loan balance will be requested to establish the available equity in your property, again based on the 85% limit.

You will be asked to attempt to re-mortgage your home and introduce all or part of that available equity, subject to acceptance.  The monthly payment for any additional borrowing cannot be more than 50% of your IVA contribution and the length of the loan cannot exceed the end of any existing mortgage or your state retirement age.

If you are able to release some of the available equity at that point then your IVA will end when that money is received.  If you cannot obtain a remortgage then your IVA will simply continue for the original 6 years (72 months)

It is worth noting that you will not be required to sell your home to repay your debts. If you fail to remortgage your property, your IVA will simply be extended for 12 months.


Can You Get a Mortgage With an IVA?

If you have been subject to an IVA, getting a mortgage right away can be difficult. The best way to get a mortgage is to wait for six years until your IVA is complete and no longer showing on your credit report.

Some specialist lenders may consider you until then but you will not get better market rates until your credit score improves and creditors consider you a reliable candidate.

Setting up an IVA is the first step towards assuming financial wellbeing.

Possessions & Savings

When you enter an IVA, all household goods and domestic goods are excluded from your arrangement by law.

This means that while creditors can request you to sell certain possessions to repay them, your consent is a prerequisite and they cannot force you to do so if you do not want to.

Some essential items you will never be asked to sell include:

  • Electrical appliances like computers, televisions, and phones
  • White goods like refrigerators and washing machines
  • Cooking items and kitchen equipment
  • Clothing
  • Books
  • Children’s items
  • Furniture, fixtures, and fittings
  • Medical aids like mobility scooters and wheelchairs

It is vital to tell your IP about any valuable assets you own so they can come up with a realistic estimate of how much you can afford to pay into your IVA every month. Let them know if you have any:

  • Shares
  • Endowments
  • Insurance policies
  • Investments
  • Windfalls
  • ISAs
  • Savings


Bank Accounts, Savings, and Pensions

Bank Accounts in an IVA

Banks can exercise their ‘right to offset’ by automatically deducting payment towards debt from your bank account. This could lead to financial difficulty and leave you with insufficient funds to meet essential living expenses.

The only way to prevent this from happening is to change your bank accounts. You need to open up a new bank account if:

  • You have outstanding debts to your bank
  • Your bank owns a company that is a creditor
  • Both your bank, as well as the company you owe money to, are owned by the same umbrella company

Savings in an IVA

Any savings you have will also be included in your IVA. Your savings can also help you decide what type of IVA is available to you.

Pension in an IVA

Your IP will review records of any pension contributions or payments, including the state pension, before drafting your IVA offer. If you are making personal pension contributions, your lenders can ask you to stop making payments during the term of the arrangement and pay the amount to them instead.

If you are aged 55 or above and you have a ‘defined contribution’ pension that you have not started withdrawing, you will not be expected to include it in your IVA, though you can if you want to.


How to Manage an IVA

Both you and your IP have duties to fulfil during the term of the arrangement.

Your core responsibilities include:

  • Paying your monthly contributions on time: failure to make payments could result in the IVA being terminated.
  • Submitting your documents: You will be required to submit relevant documents for an annual review. This can affect your monthly contributions, payments may go up or down during the term of the arrangement based on your circumstances.
  • Keep your IP updated: You must inform your IP if your financial situation changes. This includes but not limited to; income changes, employment status, change in address, forgotten debts, or windfalls like lottery wins or inheritance.

Types of IVA

There are different types of Individual Voluntary Arrangements. The type depends on a range of factors such as your debt level and profession. IVAs broadly fall into three main categories:

  • If you are Self-employed
  • Sole or Joint (interlocking) IVAs
  • Full and Final IVAs

Let’s examine each one in detail so you can work with your IP to pick the right solution for yourself:

1. Self-Employed

IVAs set up for self-employed borrowers work the same way as IVAs for employed people – except there are a few key differences:

a. Seasonal Income:

Self-employed IVAs are typically more flexible. This helps accommodate businesses and individuals with seasonal income. Your IP will prepare a cash flow statement to figure out your earning patterns and determine an affordable monthly sum.

b. Business Credit:

If you need credit to run your business throughout the term of your IVA, a clause explaining your situation can be included in your IVA proposal which your creditors would need to approve. Normally, most lenders would allow business credit if it is repaid within 30 days.

c. Trade Creditor Exclusion:

A self-employed individual may need to procure goods and services from an unsecured creditor. Including such creditors in an IVA can severely undermine business relationships, which is why a self-employed IVA offers borrowers the option of excluding them from their arrangement and continuing making payments to them as before.

2. Joint IVAs

Joint (interlocking) IVAs enable couples to make one payment per household. Under a joint IVA:

  • Couples can set up two separate IVAs that are administered as one, once they are approved by creditors
  • Joint debts are included in both agreements
  • Households make one affordable payment to all creditors

3. Full and Final IVAs

Full and final settlement IVAs allow people to pay a portion of their IVA in the form of a reduced lump sum payment. Full and final IVAs work for borrowers who:

  • Want to offer a one-off payment to their creditors to settle their debts
  • Have substantial savings or are selling a valuable asset to repay unsecured creditors
  • Have family or friends who are willing to provide funds to cover their IVA

You could write Off Your Unaffordable Debt

Applying for an IVA

Before applying for any debt solution, (including IVA) in the UK, it is important you discuss your situation to make sure you are aware of all your options.


Cancelling an IVA

While it is possible to cancel an IVA, the decision to cancel before the pre-agreed duration ends should not be taken lightly. If you plan on cancelling your IVA, you should first contact your IP and inform them of your reasons. Your IP may be able to offer guidance and help you out. If you do not complete your IVA you could be in a worse position than when you started.

To terminate your IVA, you need to reach out to your IP in writing. Your IP will then send you a notice of cancellation stating that your IVA has failed. Once this happens, you need to:

  • Get in touch with all your creditors and negotiate repayment
  • Create a repayment schedule for all your creditors because you still owe them the outstanding amount. If your arrangement fails, you will not be able to write off your remaining debt.
  • Pay your IP for any services they may have offered thus far

If your IVA is nullified, your creditors or Insolvency Practitioner can petition for you to be made bankrupt. If your creditors file for bankruptcy, they do not need to send you a ‘statutory demand’ beforehand.


Get Debt Help

We are committed to providing the best possible service to all those who need help with their finances.  If you are struggling to make ends meet or perhaps have experienced a change in circumstances that have affected your ability to manage your finances, speak to us. 


Need more info? Here are a few of our most frequently asked questions on this topic. If you don’t see the answer you’re looking for here, give us a ring – we’d love to help.

What does IVA stand for?

IVA is short for individual voluntary arrangements.

Will setting up an IVA keep me from getting credit?

An IVA may make it harder for you to obtain credit. You will need written permission from your IP if you want to apply for credit. An IVA also affects your credit score.

Are IVAs Recorded Publicly?

While the details of your IVA will not be disclosed, your IVA will be added to the Individual Insolvency Register, which is a public register. It will be removed 3 months after your IVA finishes.

What is the IVA register?

The IVA register is a part of the Individual Insolvency Register, a public register that records different types of insolvencies like IVAs, DROs, and bankruptcies.

Can I repay my IVA early?

Yes. If you have a lump sum amount that could repay your debt in full, you can make a one-off payment and settle your debts early.

When are interest and other charges on my debt frozen?

Interest as well as all other charges on your debt will be frozen once your IVA is approved.

How badly would an IVA affect my credit rating?

Setting up an IVA will negatively affect your credit rating but not forever. An IVA will show on your credit file for six years before it is removed – but it’s worth noting that this is the case for most debt solutions and being in debt also affects the credit score.

Will my IVA damage my partner’s credit rating?

Your creditors cannot mark your partner’s file for your financial activities so your partner’s credit rating would remain unaffected.

Can someone else pay my IVA?

Nobody is responsible for your IVA but you. However, if third parties want to pay for it out of their own accord, they can.

What can I do if I missed an IVA repayment?

If you miss a payment, you should contact your IP as soon as possible, explain why you were unable to make the payment, and ask if you can make a late payment. If your circumstances have changed, you should inform your IP: they may be able to renegotiate the terms of your IVA and make it even more affordable.

If you do not have or reach out to your IP, your IVA could be terminated. Your creditors or IP can also approach the court to file a bankruptcy order against you.

Who can go for an IVA?

An IVA can be set up by all UK residents in England, Wales or Northern Ireland. They can be:

  • Single individuals
  • Couples
  • Business owners
  • Homeowners
  • Tenants

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