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Debt Solutions

IVA (Individual Voluntary Arrangement) Help & Advice

An Individual Voluntary Arrangement, commonly known as an IVA, is a formal, legally binding debt solution between you and the people you owe money to (creditors), generally over a period of five years.

What is an IVA?

Set up and managed by an Insolvency Practitioner (IP) an IVA is a form of insolvency and offers an alternative to bankruptcy. However, an IVA will affect your credit rating for six years and your information will also be placed on the public Registers of Insolvencies for the duration of the plan.

Once you enter an IVA, creditors can take no further action against you and can’t contact you directly.

In an IVA a single monthly payment is agreed with your current financial situation taken into consideration – this payment is then divided between the unsecured creditors. 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 and you can begin your debt free future.

An IVA is open to residents of England, Wales and Northern Ireland. Scottish residents can find debt support in the form of a Trust Deed from our partner site Carrington Dean.

What debts can be included in an IVA?

Most unsecured debts, meaning debts that are not tied to an asset such as your home, can be included in an IVA.

  • Catalogue and store card debts
  • Credit cards
  • Personal loans
  • Overdrafts
  • Gas, electricity, and water bill arrears
  • Council tax arrears
  • Income tax/ National Insurance arrears
  • Tax credit/ benefit overpayments
  • Payday loans
  • Debts to family and friends
  • Other outstanding bills
  • Joint debts – but the other person must also continue their payments

What debts can’t be included in an IVA?

Secured debts that can’t be included in an IVA are:

  • Mortgages
  • Other secured loans
  • Hire purchase agreements
  • Debts incurred through fraud
  • Court fines
  • TV license arrears
  • Student loans
  • Child support arrears
  • Social fund loans

Living with an IVA

As with any financial matter it’s important to consider how an IVA could affect your day-to-day life.

Career: Other than having a smaller mount of your wages being swallowed by debt, an IVA will usually have no impact on your job. Check your employment contract to find out if you are required to inform your employer of entering an IVA.

However, if you work in the police, fire service, prison service, are a banking clerk or are in a position of financial responsibility such as an accountant or solicitor being in an IVA could affect your role. If you’re self-employed you can continue to operate a business whilst in an IVA, but ongoing credit may be an issue with suppliers.

Home: Owning property will be taken into consideration when you apply for an IVA. The IP will consider the amount of equity available to you if you were to sell your home and pay off your mortgage, checking if the amount would be enough to repay your debts in full.

Typically, all properties are included within an IVA unless there are special circumstances which means that that your share of the equity in the property will be reviewed in the final year of your arrangement.

A further valuation will be undertaken, and an up-to-date mortgage / secured loan balance will be requested to establish the equity available in your property. If your share of the equity available is £5,000 or more, you will be asked to attempt to remortgage your home and put 85% of the available equity into your IVA.

However, it’s important to note you would not be expected to sell your home. If you are unable to remortgage your property, then your arrangement may be extended for up to 12 months.

Possessions: It’s important to note that you retain control of your possessions when entering an IVA. Although all assets of value are detailed within your proposal, you can decide which to include or exclude with advice from the IP.

Creditors may request you sell any items you choose to exclude from the agreement, however, your consent is required. All household goods and domestic goods are excluded from your arrangement by law.

There are certain items which are always deemed essential, and their sale will never be suggested. These include:

  • Electrical items such as computers, phones, televisions
  • Clothing
  • Furniture and fittings
  • Books
  • Cooking equipment and white goods
  • Medical aids (e.g. mobility scooters or wheelchairs)
  • Children’s items

You should inform the IP of any assets you own to help the IP and creditors make an informed decision as to what payments you can afford. For example:

  • Shares
  • Insurance policies
  • Endowments
  • ISAs
  • Investments

Bank accounts, savings and pensions

Bank accounts

Your bank may exercise its ‘right to offset’ by automatically taking payment towards your debt from your account which could leave you unable to meet essential living costs. Switching your accounts protects you from this.

You will need to open a new bank account when starting an IVA if:

  • Your current bank is one of your creditors
  • Your bank owns a company which is a creditor
  • Your bank and the company you owe money to are owned by the same umbrella company.


It’s important to be aware that any savings you have will affect the type of IVA available to you and any savings must be included in your arrangement.


Pensions, including state pensions, are considered when IVA payments are being calculated. If you’re paying into a personal pension, creditors could ask you to stop doing so for the duration of your arrangement and pay the amount to them instead.

If you are over 55 and have a ‘defined contribution’ pension, which you have not started taking money from yet, your creditors will not expect you to use it towards an IVA, though you might choose to do so.

How much does an IVA cost?

Setting up an IVA comes with a cost to cover payment for the IP. However, any costs and fees associated will be included in your monthly payments and taken from the creditors rather than being responsible for the payments yourself.

Creditfix will never ask for upfront fees before beginning the IVA process and will only charge a fee if an IVA is approved by creditors.

Your proposal will also offer the possibility to start distributing a percentage of the payments by you as early as month three, which means the balances owed to your creditors are reduced from the outset of the agreement.

In some cases, creditors amend the terms of the IVA so that we are not required to make payments to them from month three.

In an IVA there are three different types of fee to be aware of, however, all will be taken from your monthly payments with no surprise charges at the end of your arrangement.

Nominees Fee: Normally a minimum of £1,000. 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.

Supervisor’s Fee: Ranges from 15-20% off payments made, however, in some cases a flat fee may be charged. This covers the ongoing administration of the IVA – including collecting and distributing your monthly repayments, handling any queries and annual review and managing creditor relations.

Disbursements: Typically £1,200 per case. These are costs paid to third party companies for software licenses, insurances and regulations that are required. This fee could also include payments made for the provision of additional services to provide the best return for your creditors.

Advantages of an IVA

  • No upfront fees.
  • If your IVA is approved, creditors who vote against your proposal or who do not vote at all are still bound by it.
  • Creditors whose lending is unsecured can’t take any further action against you once the IVA is approved.
  • Interest and charges are frozen by law provided you keep up your payments.
  • The IP will help you prepare your proposal, including agreeing the level of your household and personal spending.
  • You make only a single payment each month which is distributed to creditors on your behalf.
  • If your circumstances change a payment break could be authorised or the terms of your agreement could be varied.
  • You will never be forced to sell your home in an IVA.
  • All remaining debts will be written off at the end of your IVA.

Disadvantages of an IVA

  • Spending restrictions are put in place during an IVA.
  • Not all debts can be included in an IVA, for example student loans, child support and maintenance, magistrate court fines and social fund loans are excluded from an IVA, but an allowance can be given to enable you to continue repaying these.
  • Creditors may not approve your IVA.
  • If you are a homeowner, you may be required to release equity in the final year of the IVA through remortgaging. If you are unable to remortgage then your arrangement could be extended for up to 12 months in lieu of the equity available in your property.
  • If you become entitled to any windfalls or inheritance over and above £500 during the term of the IVA these funds are to be introduced into the arrangement.
  • If you fail to make the payments due under the terms of your IVA, then your arrangement could fail.
  • If your circumstances change, the IP can ask creditors to agree an amended offer, however if creditors refuse to accept amended terms, the IVA may fail. You may then still owe your creditors the amount that you owed at the outset of the IVA.
  • If your IVA fails, it could lead to you being made bankrupt.
  • IVA’s are recorded on the Insolvency Register, which is a public register.
  • An IVA remains on your credit file for 6 years after it is accepted and may have a negative effect on your credit score for up to six years.

Managing your IVA

Although an IVA is managed by an IP and creditors can no longer contact you directly, it’s important to remember you have an important role to play too.

  • Pay contributions on time: Falling behind or missing a payment could breach your agreement and could run the risk of it being terminated by the IP.
  • Submit the necessary documentation for an annual review of your circumstances: This may affect the amount you pay into your IVA as payments can go up or down.

Keep the IP up-to-date with your situation: If your financial circumstances change you must inform the IP as soon as possible so they can review your arrangement and apply any necessary changes.

This includes income changes, employment status, moving home, debts that may have been forgotten and ‘windfalls’ such as a lottery win or inheritance pay-out.

Will an IVA work for me?

An IVA can be a positive way to manage your debts, however, to be eligible you must meet the criteria below:

  • Have £6,000 or more of unsecured debt
  • Owe money to two or more creditors
  • Live in England or Wales
  • Have a steady income to consistently make at least a minimum payment of £85 per month

Types of IVA

There are different IVAs available to suit people in a range of situations and circumstances.


An IVA for a self-employed person works in the same way as an IVA for an employed individual. The IP will put together an agreement of affordable monthly payments based on your income and expenditure. However, there are some differences to be aware of:

Seasonal income: Self-employed IVAs are typically written to be more flexible which is particularly helpful when it comes to businesses with a more seasonal income. A cashflow statement will need to be prepared to enable the IP to understand how much you can contribute.

Business credit: If you require to obtain credit to continue the running of your business throughout the agreement this can be pre-agreed with the creditors within the proposal. This will be subject to agreed criteria and parameters. Creditors will normally allow business credit provided it is repaid the sooner of 30 days or the invoice terms.

Excluding trade creditors from the IVA to allow future trading: A self-employed individual may require the ongoing supply of goods or services from an unsecured creditor and including this creditor in the IVA may severely impact the ongoing business relationship. Under these circumstances, it’s possible to propose that certain trade creditors are excluded from the IVA and will receive ongoing payments towards their debts.

Joint IVAs

  • Couples can set up two IVAs that are administered as one, once they have been accepted by creditors.
  • Joint debts will be included in both arrangements.
  • This allows household to make one affordable payment to all creditors through the IVAs.

Full and Final IVAs

  • An option for those who wants to offer a one-off payment to creditors as a full and final settlement.
  • This could be a viable option if you have sufficient savings or are in the process of selling an asset which will release funds for your unsecured creditors.
  • Also open to those who have a family member or friend who is prepared to provide funds to cover the total amount of the IVA.

Cancelling an IVA

It is possible to cancel your IVA before it finished, however, this is something that should be given serious consideration. The first step when thinking of cancelling an IVA is to speak to your practitioner about your circumstances first and they may be able to help with any problems you are facing.

To cancel your IVA, you must contact your practitioner in writing. You will then receive a notice of termination, and your IVA will be failed. When this happens, you will need to:

  • Organise repayment of your debts to each of your creditors. You will still owe them the remaining amount. Your debts are not written off if your IVA is ended early.
  • Pay your IVA provider for the service they had provided thus far.

Your practitioner or your creditors could now choose to make you bankrupt. If your creditors do this, they no longer need to serve you with a ‘statutory demand’ to warn you of their intentions as a failed IVA is sufficient grounds.

To avoid bankruptcy, the best thing to do is to contact all your creditors as soon as possible after your IVA fails, and negotiate repayment directly.

Frequently Asked Questions

Getting credit will be difficult when you are in an IVA as it will show on your credit report. Your arrangement will also be entered onto a public register during the IVA term.

Whilst assets such as your home are usually not included in arrangements, you may be asked to remortgage depending on the amount of equity in your home.

In order to qualify for an IVA, you need to be a resident of England, Wales or Northern Ireland. You will also need to have a minimum debt level of £6,000 and owe money to at least two companies.

(This is set by Creditfix, other IVA providers may differ)

An IVA will affect your credit rating as it will show on your credit file/report for six years after it has been approved. However, it’s important to note that this is the case for most debt solutions and your credit score will likely already have been affected by being in debt in the first place.

Whilst you ae unable to pay extra and end your IVA early, it is possible to pay it off with a lump sum. This has to come from a third party and has to be offered to the companies listed in your arrangement and they have to agree for it to be paid in exchange for the IVA to be closed.

The amount needed will depend on your circumstances, how much you have and the amount left to be paid into your IVA.

The IVA allows the debts to be written off for you, not for your partner, so they will remain responsible for any joint debts you have. If they are a guarantor, then they will become fully liable for the account in question.

We will also need to generate your income and expenditure based on your full household to show that you are paying a fair share of expenses. Your partner will not have to pay anything to your IVA (unless is it’s a joint one) and it is unlikely to affect their credit score.

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