What is an IVA?

An IVA (or individual voluntary arrangement) is a legal procedure for people in financial difficulties with unsecured debts in England, Wales and Northern Ireland. It is a legal agreement between you and your creditors to only pay what you can actually afford to pay off your debts.

The arrangement will stop any further interest and charges being added to your debts, and normally lasts 60 months (although occasionally 72). You will be legally required to pay the agreed monthly payment, and at the end of five years anything remaining (up to 80%!) will be legally written off.

Please Note: Debt Assist UK only provide debt advice; we do not directly provide any financial solutions ourselves. We will talk you through your available options and if appropriate, we can offer you a no-obligation referral to a regulated debt solution provider, from whom we may receive a referral fee. Some debt solutions involve fees to you – these fees may differ based on the circumstances of your individual situation, but will always be explained to you by your chosen solution provider in writing before you decide to take up their service(s).

In Short

An individual voluntary arrangement (IVA) is a legal agreement between you and your creditors in which you repay your debts at an agreed, affordable rate, for a period of five or six years. All remaining debts are written off.

  • You can write off up to 80% of your debt.
  • It is legally binding.
  • It has a strict time frame of five (or occasionally six) years.
  • You can keep your assets.
  • Protect your home.
  • One affordable, monthly payment.
  • Stops creditors chasing payment.
  • An IVA will affect your credit rating for six years.
  • Your expenditure is restricted.
  • Creditors do not need to approve an IVA.
  • Any debts not included still need to be repaid in full.
  • It could affect your job.
  • You may need to release equity in your home, which may attract higher interest rates.
  • Your name will appear on the public Insolvency Service website.
  • It may lead to bankruptcy if you break the terms of the IVA.
    • This may lead to lenders chasing you for previously suspended debts.
    • Any frozen interest may be reapplied.

Individual Voluntary Arrangement FAQs

Do My Creditors Have to Agree to my IVA?

In order for your IVA to go ahead there will be a meeting of creditors (MOC) where your creditors will decide whether or not to accept your IVA.
Creditors covering at least 75% of your debt – of those that actually take part in the vote – must agree for your IVA to go ahead. As long as you get this 75%, the others must go along with it.

What Debts can be Included in an IVA?

The majority of people’s troublesome debts are unsecured debts, and these are the types of debt which can be included on an IVA. These include;

Which Debts Cannot be Included on an IVA?

Secured debts, and a few other specific cases, cannot be included in an IVA, and must be paid as agreed. These include;

  • Mortgage
  • HP agreements
  • Court fines
  • TV licence arrears
  • Student loans
  • Child support arrears

What Can Happen to my Home in an IVA?

This depends on whether you own or rent your home;
If you rent, this should be the end of it. The IVA should have no effect on your home, and it’s is extremely unlikely that you will be asked to move.
If you own your home, you may be asked to remortgage it in the final six months of an IVA in order to repay more of your debts. If you are unable to do this, a further 12 months could be added to your IVA.

What Can Happen to my Car in an IVA?

As long as you own a ‘moderately priced’ car (or motorbike), you will usually be able to keep the car. However, if there is a lot of value in the vehicle, you may be asked to sell it.

Can I go on holiday while on IVA?

Going away on holiday whilst on an IVA is technically possible, although it may be difficult to find the extra finances in order to pay for the holiday.

How an IVA works

You must use an insolvency practitioner to get an IVA. They will establish how much you can afford to repay as well as how long the IVA will last. You’ll need to provide information about your financial situation, including details about your debts, creditors, income, and assets. Honesty is important when discussing your income and expenditure. This will help ensure that the plan you agree on is affordable for you. 

Your insolvency practitioner will communicate with your creditors and will continue doing so throughout the duration of your IVA. You won’t need to deal with them yourself and they must not chase you for payment for any of the debts included in the UK. There will be no more letters, phones calls, or threats of legal action. If at least 75% of your creditors agree to the repayment terms, the IVA can begin.

Do insolvency practitioners charge fees?

Yes, your insolvency practitioner will charge you fees for the IVA. These fees are based on the amount you’ll pay back through the IVA and can often be high. If you decide to get an IVA through a debt management company, keep in mind that fees are likely to be more expensive. The reason for this is you’ll be paying fees to them as well as the insolvency practitioner. To reduce fees, you may want to consider avoiding using a debt management company and finding an insolvency practitioner yourself.

How do IVA repayments work?

When you take out an IVA, you’ll agree on a repayment plan with your insolvency practitioner. You might agree to pay in monthly payments, with a lump sum, or using a combination of both. Keep in mind that if you choose monthly payments, you can expect the IVA to last for around five to six years. Your creditors will need to agree to the repayment plan. Your insolvency practitioner will receive the repayments directly from you. Once they have taken some of the money for their fees, they will distribute the rest to your creditors.

If you haven’t repaid your debts in full at the end of the IVA, you won’t need to pay the rest. Once you’ve made your last IVA payment, your insolvency practitioner will carry out a final review. As long as you’ve adhered to the terms of your IVA agreement, your remaining debts will be written off and you’ll be debtfree. For further advice on IVAs or other debt solutions, get in touch with Debt Assist UK.

Alternatives to an IVA

Debt Management Plan (DMP)

A debt management plan (DMP) is an informal way to repay your creditors by making a single, affordable payment every month. As DMPs are flexible, the amount you pay can change depending on your financial circumstances.


If your debt has reached an unmanageable level, bankruptcy is one way of managing it, especially if you are in no position to pay off your debts in a reasonable time frame.

Protected Trust Deed (PTD)

Only for resident of Scotland, a protected trust deed (PTD) is similar to an IVA in that it is a legally-binding agreement between you and your creditors, whereby you make one, affordable monthly payment.