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IVA (Individual Voluntary Arrangement)

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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.

IVA Meaning

IVA stands of Individual Voluntary Arrangement. 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.

IVAs are legally binding agreements, which means that once your creditors have agreed to the terms of an IVA, they cannot initiate court action against you, or even continue to contact you.

All contact will go through your Insolvency Practitioner (IP) or debt management company.

After making monthly contributions towards your debts for a period of time agreed with your creditors – most commonly five or six years – any debt left over will be written off.

That means you will no longer be responsible for it, and can move on with your financial life.

What is an IVA?

Set up and managed by an Insolvency Practitioner (IP), an IVA is a form of insolvency which allows you to write off up to 81% of unsecured debt with government legislation, and offers an alternative to bankruptcy.

Once you enter an IVA, creditors can take no further action against you and won’t be able to contact you directly. An IVA will affect your credit rating for six years and your information will also be placed on the public Register of Insolvencies for the duration of the plan, but will allow you to clear your debts.

In an IVA, a single monthly payment is agreed with your current financial situation taken into consideration – 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 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.

Here's an example of how we can help

Let's say you owe...
Bank Loans £11,152
Short Term Loans £2,226
Phone Bills £302
Credit cards £2,395
Store cards £648
Phone Bills £1,408
Overdraft £172
Total amount £18,303

Customer monthly repayments before and after an IVA

Reduced By 72%

* monthly payments are based on individual financial circumstances

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 following criteria:

  • Have £6,000 or more of unsecured debt
  • Owe money to two or more creditors
  • Live in England or Wales
  • Have a steady income and consistently be able to make at payment of at least £90 per month

If you do qualify for an IVA you can stop pressure from the people you owe money to, reduce monthly payments, and write off up to 81% of unsecured debt.

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. This includes:

  • 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 – though 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 licence arrears
  • Student loans
  • Child support arrears
  • Social fund loans

How to apply for an IVA

You shouldn’t apply for an IVA without understanding what’s involved first. Below are the five steps you’ll need to follow in order to apply for an IVA.

1. Seeking debt advice

Before you apply for an IVA you should seek debt advice from a professional, whether that’s a debt charity or a trusted debt relief company like Creditfix. An adviser will be able to look at your financial situation and help you decide whether an IVA is in your best interests.

2. Finding an Insolvency Practitioner

If you decide an IVA is right for you, the next step is to find someone to help you set up the arrangement. An IVA can only be set up by an Insolvency Practitioner (IP), a licensed debt professional whose job it is to set up and manage the IVA for you. Most debt relief companies work with their own in-house IPs, so you shouldn’t have to find one on your own.

3. Working out an IVA proposal

Next, your Insolvency Practitioner will work with you to put together a draft IVA agreement, known as an IVA proposal. They’ll look at both your income and your essential expenses each month, and work out a level of monthly contribution based on what you can afford.

4. Getting the consent of your creditors

When your IVA proposal is ready, your Insolvency Practitioner will share it with your creditors. As long as the majority of your creditors agree to the terms of the proposal, your IVA will be approved, and you’ll enter into a legally-binding agreement to deal with your debts.

5. Making your monthly payments

Once your IVA has been approved, all that’s left to do is make your monthly payments. These will be taken automatically from your chosen bank account at the same each month, and your IVA payment term will usually last either five or six years. At the end of your term, your remaining debt will be written off.

Living with an IVA

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

Your Career

Other than reducing the amount of your pay that’s being swallowed by debt, an IVA will usually have no impact on your job, though it’s a good idea to double-check your employment contract and find out if you do need to let your employer know that you’re entering an IVA.

There are a few exceptions. 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 while in an IVA, but ongoing credit may be an issue with certain suppliers.

Your Home

Owning your own property is something that’s taken into consideration when you apply for an IVA. The IP will consider the amount of equity that would be available to you if you were to sell your home and pay off your mortgage, usually 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 as part of your arrangement.

It is important to say right at the start that you will never be required to sell your home as part of your IVA.

In some circumstances you may be asked to attempt to release some of the equity in your property but there are limits on how much you will be asked to release.  We call this the “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 ther borrowing secure don it.  If that figure is less than £5,000 at the outset of your IVA you will not be required to undergo any further review during your IVA and your IVA will simply last for 60 months..

If the available equity in your property is more than £5,000 at the start of your arrangement but you have less than £100 of disposable income left each month or are over 60-years-old (regardless of disposable income), or, then your arrangement will last 72 months with no further review of your equity.

If the available equity is more than £5,000 at the beginning of your IVA, 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 remortgage your home and introduce all or part of that available equity, subject to further safeguards.  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 72 months.

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Can I get a mortgage with an IVA?

If you’ve had an IVA, it can make it challenging to get a mortgage straight away. Your best chance of getting a mortgage is waiting six years, until it’s no longer recorded on your credit file.

There are some specialist lenders out there who may consider you before then, but you won’t be guaranteed better rates on the market until you rebuild your credit score and prove to lenders you’re a good candidate.

Even so, taking out an IVA can be an important first step in taking back control of your credit.

Do creditors have a right to my possessions?

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 Insolvency Practitioner.

Creditors may ask you to 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 that are always deemed essential, which you’ll never be asked to sell. 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 and wheelchairs)
  • Children’s items

You should inform the Insolvency Practitioner of any assets you own to help them and your 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’ll 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 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 to pay the amount to them instead.

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

Advantages of an IVA

  • There are 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 with 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. Using government legislation, an IVA could help you write off up to 81% of unsecured debt.

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, 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 have to release equity in the final year of the IVA through remortgaging. If you can’t remortgage, 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 money over and above £500 during the term of the IVA, these funds will have to be introduced into the arrangement.
  • If you fail to make the payments due under the terms of your IVA, your arrangement could fail.
  • If your circumstances change, the insolvency practitioner can ask creditors to agree to 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.
  • IVAs are recorded on the Insolvency Register, which is a public register.
  • An IVA remains on your credit file for six years after it is accepted and may have a negative effect on your credit score for up to six years.

You could write off up to 81% of your unsecured debt today

Managing your IVA

Your Insolvency Practitioner

During your IVA, your Insolvency Practitioner will manage the arrangement on your behalf, taking on a variety of duties including managing monthly payments and sharing those monthly payments among your creditors.

It’s important you keep the Insolvency Practitioner 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.


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

  • Pay contributions on time: Falling behind or missing a payment could breach your agreement and could risk your IVA being terminated by the insolvency practitioner.
  • 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.
  • Making your IP aware of any changes in circumstances: That includes income, employment status, moving home, debts that may have been forgotten, and windfalls such as a lottery win or inheritance pay-out.

How much does an IVA cost?

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% of 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.

Types of IVA

There are different IVAs available for a range of different circumstances:


An IVA for a self-employed person works in the same way as an IVA for an employed individual. The insolvency practitioner 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 cash flow statement will need to be prepared to enable the insolvency practitioner to understand how much you can contribute.
  • Business credit: If you need to obtain credit to continue running your business throughout the agreement this can be pre-agreed with the creditors included in your 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 the household to make one affordable payment to all creditors through the IVAs.

Full and final IVAs

An option for those who want 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.

It’s 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 finishes, however this is something that should be given serious consideration. If you’re thinking of cancelling your IVA, the first step is to speak to your IP about your circumstances. They may be able to help with any problems you are facing.

To cancel your IVA, you must contact your IP 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.

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.


Getting credit will be a challenge when you’re 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. While assets like your home are usually not included in arrangements, you may be asked to remortgage depending on the amount of equity you have.

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.)

Yes, 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.

While you won’t be able 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 must be offered to the companies listed in your arrangement. 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, they will become fully liable for the account in question.

Your insolvency practitioner 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.

Here's an example of how we can help

Let's say you owe...
Bank Loans £11,152
Short Term Loans £2,226
Phone Bills £302
Credit cards £2,395
Store cards £648
Phone Bills £1,408
Overdraft £172
Total amount £18,303

Customer monthly repayments before and after an IVA

Reduced By 72%

* monthly payments are based on individual financial circumstances