An Individual Voluntary Arrangement, or IVA, is a formal insolvency procedure that allows you to agree a structured repayment plan with your creditors. Rather than paying each creditor separately, you make a single affordable monthly payment to an insolvency practitioner, who distributes it according to the agreed terms. At the end of the arrangement — usually five or six years — any remaining eligible debt is written off. It is a legally binding process, which means creditors who are included cannot pursue you for additional money once the IVA is in place.
Who an IVA is typically suitable for
An IVA is generally considered appropriate when you have significant unsecured debt — typically ten thousand pounds or more across multiple creditors — and a regular income that allows you to make meaningful monthly contributions, but not enough to realistically repay the full amount within a reasonable period. If your debt is smaller or largely with one creditor, other options such as a debt management plan or a direct arrangement with the creditor may be more appropriate.
The impact on your credit and wider finances
An IVA will appear on your credit file for six years from the date it is approved. During this time, accessing new credit will be difficult and any credit available to you will likely come at a higher rate. If you own a home, you may be required in the fifth year of the IVA to attempt to release equity from the property to pay toward the debt. If you cannot release equity, the IVA is typically extended by a year instead. These are significant considerations and worth discussing in detail with an adviser before proceeding.
How an IVA is set up
IVAs are arranged through a licensed insolvency practitioner, who assesses your income, outgoings, assets, and total debts to determine what you can afford to pay. They put a proposal to your creditors. If creditors holding 75 per cent of the debt by value agree to the terms, the IVA is approved and becomes binding on all creditors included. You do not negotiate directly with your creditors once the IVA begins — the insolvency practitioner manages the process.
Free advice before you decide
An IVA is one of several formal debt solutions available in the UK, and it is not right for everyone. Debt Relief Orders, bankruptcy, and debt management plans each suit different situations. Before committing to any formal insolvency arrangement, it is worth speaking to a free, qualified debt adviser who can assess your full picture and explain all the options without any obligation. StepChange and National Debtline both offer free, impartial advice.
Secure payment via Stripe. Cancel anytime.
Ask Fin provides general guidance only, not regulated financial or insolvency advice. If you are struggling with serious debt, please speak to a free qualified debt adviser such as StepChange or National Debtline before making any decisions.