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Individual Voluntary Arrangement (IVA)

A UK formal debt solution that may let you repay an affordable amount and write off what remains. Eligibility applies — speak to a regulated insolvency practitioner.

Home IVA

What is an IVA?

An Individual Voluntary Arrangement (IVA) is a legally binding agreement between you and your unsecured creditors. Supervised by a licensed insolvency practitioner (IP), it sets out how much you can realistically afford to repay each month. At the end of the agreed term — typically five to six years — any remaining qualifying unsecured debt may be legally written off.

IVAs are available only in England, Wales, and Northern Ireland. Scottish residents should consider a Protected Trust Deed as the equivalent.

An IVA is a formal insolvency solution governed by the Insolvency Act 1986. It is not the same as a Debt Management Plan (DMP), which is informal. Once accepted by the required majority of creditors, an IVA binds all creditors included in it, even those who voted against.

How does an IVA work?

1. Free assessment

An insolvency practitioner reviews your income, outgoings, assets, and total debt to determine whether an IVA is suitable.

2. Proposal is prepared

The IP drafts a formal proposal outlining what you will repay monthly and how long the arrangement will run.

3. Creditors vote

Creditors holding 75% of the debt by value (of those voting) must agree for the IVA to be approved.

4. Monthly payments begin

You make one affordable payment per month. The IP distributes funds to creditors.

5. Remaining debt cleared

On successful completion, any remaining qualifying debt covered by the IVA is legally written off.

IP supervision

Your insolvency practitioner monitors the arrangement throughout and acts as the legally appointed supervisor.

Who typically qualifies for an IVA?

There is no legally fixed debt threshold for an IVA, but in practice most insolvency practitioners will look for the following criteria:

  • You have two or more unsecured creditors (e.g. credit cards, personal loans, overdrafts)
  • Your total unsecured debt is typically £6,000 or above (varies by provider)
  • You have a regular income sufficient to make monthly payments
  • You live in England, Wales, or Northern Ireland
  • You cannot realistically repay your debts in full within a reasonable timeframe
  • You have disposable income of typically £80+ per month (exact figure depends on circumstances)

Eligibility is always assessed individually by a licensed insolvency practitioner. These are typical indicators only, not guarantees.

IVA advantages and disadvantages

Potential advantages

  • One fixed monthly payment based on affordability
  • Legally binding — all included creditors must comply
  • Interest and charges on included debts are typically frozen
  • Remaining qualifying debt may be written off on completion
  • Protection from unsecured creditor legal action (in most cases)

Important risks to consider

  • Recorded on the Individual Insolvency Register (public)
  • Will negatively affect your credit rating for 6 years
  • Home equity may be reviewed — you could be required to release equity
  • Can affect certain employment roles (especially licensed or regulated professions)
  • IP fees are included but must be factored in — can be significant

IVA vs other debt solutions

Feature IVA DMP DRO Bankruptcy
Legally binding
Debt potentially written off
Income needed Yes Yes Low/limited Not essential
Asset risk Possible (equity) Lower Limited Higher
Credit file impact 6 years While active + some time after 6 years 6 years

This table is a simplified comparison. Individual circumstances and provider terms vary. Always seek advice from a regulated provider.

Debts typically included

  • Credit cards
  • Unsecured personal loans
  • Overdrafts
  • Store cards and catalogues
  • Payday loans
  • HMRC tax arrears (in some cases)

Debts that cannot be included

  • Mortgage or secured loans
  • Student loans
  • Court fines and confiscation orders
  • Child maintenance arrears
  • Social fund loans

IVA frequently asked questions

In most cases, once an IVA is approved, included creditors are legally bound by it and must stop pursuing you for those debts. During the proposal stage (before approval), you may still receive contact.

Usually yes — many people keep their existing bank accounts. However, if your bank is also a creditor included in the IVA, they may choose to close your account. Your IP can guide you on this.

Your monthly payments are reviewed periodically (usually annually). If your income increases, creditors may expect higher payments. If it decreases significantly, your IP may be able to apply for a payment break or variation.

Homeowners are usually required to have their property valued in the final year of the IVA. If there is available equity, creditors may require you to release some of it. If equity release is not possible, the IVA may be extended by up to 12 months instead. Exact terms depend on the IP and creditor agreement.

A typical IVA lasts five years (60 months). Homeowners may see this extended to six years. The exact term is set out in the IVA proposal agreed with your creditors.

If you cannot maintain your IVA payments and no variation can be agreed, the IVA may be terminated. In that event, creditors regain the ability to pursue you for the original debts. In some cases, bankruptcy may follow. It is important to communicate with your IP if you are struggling to keep up payments.

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Your first conversation is free, confidential, and no-obligation. Debt solutions are not right for everyone. Always seek advice from a regulated provider before proceeding.

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DebtClearPlans is a debt introducer/lead generation service and is not authorised to provide regulated debt advice. We introduce enquiries to FCA-authorised and regulated debt solution providers and/or insolvency practitioners. We may receive a fee for introductions made.

Debt solutions are not suitable for everyone and may have a significant impact on your credit file, ability to obtain credit, and in some cases your assets. Always read all documentation carefully. Free, impartial debt advice is also available from MoneyHelper, StepChange, National Debtline, and Citizens Advice.