An Individual Voluntary Arrangement (IVA) is an agreement made with your creditors to pay all or part of your debts. As part of the agreement, you make regular payments to an insolvency practitioner, who then divides it up between your creditors.
It is a formal, legal debt solution and so must be approved by the courts. You make your contracted payments, and your creditors won’t contact you to chase your debt. At you won’t find debt advice but you will find details that should help you make an informed decision.

What is an Individual Voluntary Arrangement (IVA)

An IVA a form of insolvency;  is managed by an Insolvency Practitioner. It’s a legally binding arrangement between you and your creditors and both parties must adhere to it.

How does an IVA work?

An Individual Voluntary Arrangement usually freezes your debts and allows you to consolidate your monthly debt repayments into one monthly payment, affordable to you. You pay that amount over a fixed period of time (usually five to six years), and debts owed after this time are written off.

An IVA is a form of insolvency that can only be set up by an Insolvency Practitioner (IP). It’s a legally binding agreement between you and your creditors, approved by the courts, and both you and your creditors must stick to it.

Can I get an IVA?

Not everyone can get an Individual Voluntary Arrangement; you have to meet certain criteria.

Most debts can be included in an IVA however they’re normally for the following debts:

  • Bank and building society loans and overdrafts
  • Credit cards
  • Personal loan
  • Store cards
  • Catalogues
  • Charge cards

These are all called non-priority debts, but you can also include priority debts such as:

  • Council tax arrears
  • Tax debts
  • Electricity and gas debts

Mortgages, rent and secured loans are secured against your home. This means if you can’t pay the debt your home can be taken from you. Sometimes they can be included in an IVA but the creditor has to give permission for you to do so and this is unlikely.

Any amount of debt can be included in an IVA as there are no minimum limits set by law; however your creditors are unlikely to agree to an IVA unless the debt is more than £9,000.  If you have more than three debts with two different creditors an Individual Voluntary Arrangement is more suitable.

If you have debts that can’t be included in the IVA, you’ll have to deal with those separately.

Debts that can’t be included in an IVA include:

  • Maintenance arrears that have been ordered by the court
  • Child support arrears
  • Student loans
  • Magistrates’ court fines

Is an IVA right for me?

An Individual Voluntary Arrangement may be right for you if:

  • You have at least £100 spare income each month
  • You have at least two debts with two creditors
  • If your debts total over £9,000
  • You don’t want to have to deal with your creditors

Remember an Individual Voluntary Arrangement can be flexible, so if you don’t quite match all these criteria, you may still be able to get an IVA.

Benefits of an IVA include:

  • It’s legally binding, so this means your creditors have to stick to it and can’t chase you for money
  • An Individual Voluntary Arrangement is time limited and you only repay for the period of five or six years
  • Creditors will usually accept that only part of the debts will be repaid and the rest are written off

How do I apply for an IVA?

You can’t set up an Individual Voluntary Arrangement  by yourself; you need to find an Insolvency Practitioner to take a proposal of an IVA to your creditors on your behalf.

It is always best to talk through things with an experienced debt advisor before you decide to take out an IVA. You can find more information at the Money Advice Service.

A debt advisor can help you make the right decisions so that most of your money will go to paying off your debts – meaning you could be debt free sooner.

You can go directly to an Insolvency Practitioner; they are often qualified solicitors or accountants. You could also go to a debt management company who will talk through your income and expenditure and offer you debt solutions that you may not have thought of such as a Debt Management Plan (DMP), Debt Relief Order (DRO) or others.

Things to consider before applying :

  • An IVA may impact your employment; we always recommend checking your employment contract. Until you have successfully completed your IVA, you will not be permitted to hold certain public offices. If you have concerns regarding the specifics of your employment contract please seek independent advice on this matter.
  • An IVA is a legal agreement
  • IVAs do not cover mortgages and other secured debts, magistrate court fines, debts payable after personal injury claims and debts to a student loans company.

A full list is available here

What happens at the end of an IVA?

Approaching the end of the Individual Voluntary Arrangement term (usually 6 months) your creditors may ask you to release equity of your property if it is reasonable to do so. If you are unable to do so you may be asked to continue with your IVA payments for another twelve months.

Your IVA is complete once you make your final payment, once you have complied with all your obligations, such as the realisation of assets you will be sent a “certificate of completion”. On receipt of the certificate you should send a copy to each of the three major credit reference agencies, so that they can update your credit file to show your Individual Voluntary Arrangement as completed and any outstanding balances are marked as “Satisfied in Full”.

Three months after your IVA has completed you should make sure that your name has been removed from the Insolvency Register, you can do this by visiting the Government’s Insolvency Service’s website.

Want to know more about your options?

An IVA isn’t for suitable for everyone. At you won’t find debt advice, but here are some of the organisations that can help identify the best debt solution for you, and help you apply. If you need help with debt, you can speak to the Money Advice Service or the Citizens Advice Bureau for free.


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“Disclaimer: No information on this website shall be construed as advice and content is offered for information purposes only. You should always seek advice from an appropriately qualified solicitor on any specific legal enquiry, an appropriately qualified Independent Financial Advisor on any specific financial matter, or an appropriately regulated and qualified debt management company. Full terms of use

Debt Free Direct is a trading name of Clear Start Partnerships Limited and is authorised and regulated to issue debt advice by the Financial Conduct Authority.

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