An Individual Voluntary Arrangement, also known as an IVA is a
debt solution for people based in England, Wales and Northern
Ireland. The Scottish equivalent is a Protected
Trust Deed Scotland. An IVA enables people with debts above
£12,500 to put a proposal to their creditors, which if accepted,
will mean you only repay what you can afford.
An IVA is an alternative solution to Bankruptcy.
An IVA is a regulated solution requiring an Insolvency
Practitioner to administer the arrangement. You would make an
affordable monthly repayment usually for 5 years. After which, any
remaining debt will be cleared (as long as you have complied with
the terms of your agreement).
Take the debt analyser today to find out if an IVA is suitable
Benefits of an IVA
- Your IVA would be legally binding meaning no further charges or
interest could be added. It also means your creditors are not able
to change their mind if they agree to your proposal
- You will only be asked to make affordable repayments
- An IVA enables a professional person (doctor, accountant,
solicitor etc) to continue to practice whilst resolving their debt
problem. Bankruptcy may affect their professional status. You may
have to check your employment contract to ensure you can enter an
- You are likely to be able to keep your home within an IVA,
usually the Insolvency Practitioner will only be interested in any
- You would face fewer restrictions entering an IVA compared to
Negatives of an IVA
- Any available equity in your house or other asset would be
- An IVA is legally binding so defaulting on the agreement would
result in your IVA failing, which could mean your creditors will
proceed with bankruptcy
- Your income and expenditure will be reviewed on a frequent
basis which can mean your monthly contribution could fluctuate up
as well as down
- Your IVA would be noted within your credit file. The default on
your credit file will last for 6 years in total from the date it
- An IVA usually lasts for 5 years, whereas Bankruptcy would only
last for 1
year. An income payment order in Bankruptcy could last for 3
- A remortgage is likely to be on less favourable terms and if
you are unable to gain a remortgage your IVA may be extended for up
to 12 months
- An IVA will affect your credit rating for six years.
Criteria to enter an IVA
- Unsecured debt must be £12,500 or
- You must have a monthly disposable income of £200 or
- You must live in England, Wales or Northern Ireland
Fees associated to the IVA
An IVA is administered by a licensed Insolvency Practitioner and
their team. An Insolvency Practitioner will receive a fee for
acting as your nominee and supervisor. These fees are paid
separately. The insolvency practitioner will also charge
for additional expenses.
If an IVA is the correct debt solution for you and you wish to
proceed, we can introduce you to one of our panel reviewed
companies. If we help gather your documentation and complete the
fact find pack to send to the insolvency practitioner we would be
acting as their agent, completing work on the insolvency
practitioner's behalf. The fee we would receive from the insolvency
practitioner is 50% of the nominee fee if your case was accepted at
the creditors meeting.
The fees charged by the insolvency company are outlined
The nominee fee is paid to cover work carried out to put your
proposal to your creditors. A licensed insolvency practitioner is
required to review your IVA proposal prior to presenting it to your
creditors. The insolvency practitioner will provide a report to
advise whether they believe the IVA will be successful.
The nominee fee will cover this work and drafting your IVA
proposal, collating information regarding your creditor claims and
giving notice of and holding a meeting of creditors.
The insolvency practitioner will be paid the nominee fee from
the first payments you make into your IVA. This means your
creditors will not be paid immediately and your account will go
into arrears. If your account was in arrears already then you will
go further into arrears.
The supervisor's fee will typically last for 5 years and cover
the ongoing costs to maintain and support your IVA until it has
concluded. This would involve completing annual reviews of your
IVA, providing reports to your creditors, distributing payments to
your creditors and resolving any issues that arise during your IVA
as a result of your financial situation changing.
Each insolvency practitioner will have their own fee structure
for an IVA and it is typically decided on a case by case basis
depending on the complexity of the IVA.
Once your insolvency practitioner has made the proposal to your
creditors, they will have to vote on the agreement, including the
fee charged by the insolvency practitioner. 75% of the people
voting at the meeting must approve it before it is accepted.
An example of fees charged by a licensed insolvency practitioner
- Nominee fee - £1,250
- Supervisor fee (over 60 months) - £2,475
- Expenses - £290
- VAT - £750
- Typical monthly payment - £300
- Total paid by individual - £18,000
- Amount owing at the beginning of the IVA - £31,000
- Net paid to creditors - £13,235 (43%)
- Amount written off at the end of the IVA - £17,765 (57%)
Example based on a typical client - with unsecured debts of
around £31,000 who has no equity in any property and completes a 5