An Individual Voluntary Arrangement, also known as an IVA, is a debt solution where you agree to repay what you can afford to your debt each month, usually for 5 years. The solution is only available to people living in England, Wales and Northern Ireland. The Scottish equivalent (although there are differences) is a Protected Trust Deed. An Individual Voluntary Arrangement can enable a representative to put a proposal to your creditors on your behalf, which if accepted, will mean your creditors can’t take further action against you, you’re able to protect and retain assets, such as a house or car, and you’ll be debt free, once the solution is complete.

An IVA is a contract between yourself and your creditors which helps you repay what you can afford and write off debts (along with interest and charges) that are unaffordable. You make one monthly payment to all of your debts once the agreement is approved and no longer need to speak directly with your creditors.

Once you complete your Individual Voluntary Arrangement the remaining debt is cleared and you are debt free.

To find out if an IVA is applicable for you, please call one of these charities:

StepChange: 0800 138 1111
Debt Advice Foundation: 0800 043 40 50
Citizens Advice Bureau: 0808 223 1133
National Debtline: 0808 808 4000

Entering an Individual Voluntary Arrangement

An IVA is a regulated solution requiring an Insolvency Practitioner to administer the arrangement. There are positives and negatives to the solution and a charity adviser will make sure you are aware of what these are and how they may impact your personal circumstances. One negative that’s important to consider is that your credit rating would be impacted and the solution would remain on your credit file for 6 years.

If you qualify for an IVA it’s unlikely you’ll repay all of your debt, however if you come into a windfall, inherit money or earn more money from employment during the term of the solution, then it’s expected you would pay this towards your debts.

Most people entering an Individual Voluntary Arrangement would not repay all of their debt and would experience an element of debt write-off. 

You may qualify for more than one debt solution and it’s important you have all the facts to make an informed decision. 

IVA Individual Voluntary Arrangement

What debts are included in an IVA?

Most unsecured debts are included, but a qualified adviser would be able to explore which debts would be included. An unsecured debt means a debt which is not tied / secured against an asset. For instance, a mortgage is secured against a house.

Unsecured debts which can be included in an IVA include:

  • Credit card debts
  • Personal loans
  • Payday loans
  • Catalogue debts
  • Store cards
  • Council tax arrears
  • Most overpayment of benefits
  • Utility debts, like gas / electricity / water bills
  • Debts owed to friends/ family
  • Overdrafts

There are some debts which can’t be included in an IVA, including:

  • Mortgage / mortgage arrears
  • Hire purchase agreements
  • Court fines
  • Child support arrears
  • Student loans
  • Fraudulent debts
  • Secured loans

If you’re unsure if your debts can be included in an IVA it’s best to speak to a trained debt adviser who can assist you with tailored advice for your circumstances.

Benefits of an IVA

You could benefit from entering an Individual Voluntary Arrangement and some of the reasons people choose to enter the solution, are:

  1. It’s legally binding which means no further charges or interest could be added and your creditors could not take any further action once they have agreed to your proposal.
  2. You will only be asked to make one affordable payment each month and won’t have to pay multiple creditors directly.
  3. As long as you’ve made all your contributions you can expect to be debt free at the end of the solution, with no unexpected bills to pay.
  4. You are likely to be able to keep your home within the solution. Usually the Insolvency Practitioner will only be interested in any equity.
  5. You are allowed an expenditure in an IVA for things you may not have being able to afford previously, such as clothes, sports, hobbies and entertainment.
  6. There are items which are not considered assets and you retain. These include computers, phones, clothes, furniture, televisions, sofas and other household items.
  7. If you have not started to access your pension then you will not be expected to contribute this fund towards your solution. 
  8. You will regain control of your finances and be able to plan for a debt free future. 

Negatives of an IVA

There are some negatives to entering an Individual Voluntary Arrangement which you should be aware of. Some of the negatives to consider are:

  1. Any available equity in your house or other assets would be considered. You would never be expected to sell your home. If you can’t re-mortgage to release equity then your solution would be extended for 12 months in lieu of your equity.
  2. It’s legally binding so defaulting on the agreement would result in your IVA failing, which could mean your creditors may proceed with bankruptcy.
  3. Your income and expenditure will be reviewed on an annual basis which can mean your monthly contribution could fluctuate up as well as down.
  4. Your Individual Voluntary Arrangement would be noted within your credit file. The default on your credit file will last for 6 years in total from the date it was applied.
  5. A remortgage is likely to be on less favourable terms and if you are unable to gain a remortgage your payments may be extended for up to 12 months.
  6. Whilst your Individual Voluntary Arrangement will be listed on the Register of Insolvencies, most people don’t read this and won’t know you’ve entered a debt solution.
  7. If you have assets like shares, savings, endowments, ISAs, bond or stocks then these may need to be realised for the benefit of creditors.

Your bank could decide to take money from your account if they are one of your creditors. For this reason, if you’re entering any debt solution it’s best to open a new bank account, with a bank you don’t owe money to. You should not open an account with a credit facility. More advice on opening a bank account is available from a regulated debt adviser.

StepChange: 0800 138 1111
Debt Advice Foundation: 0800 043 40 50
Citizens Advice Bureau: 0808 223 1133
National Debtline: 0808 808 4000

Apply For An IVA

There’s criteria you need to meet in order to qualify for an Individual Voluntary Arrangement. While you may meet the criteria below, you may still be suitable for other debt solutions and may wish to consider these too.

The criteria to enter an Individual Voluntary Arrangement is:

  • Your unsecured debt should be £5,000 or over.
  • You must have a monthly disposable income which you can afford to pay towards your debts. If your disposable income would mean you can repay an IVA in less than 5 years then it may not be your best option.
  • You must live in England, Wales or Northern Ireland
  • To be accepted, at least 75% of your creditors must approve the proposal. If 75% of creditors approve your proposal then you will be protected from further action. If less than 75% approve your proposal then another debt solution would need to be considered.
In An IVA...

Once you’ve entered an IVA there are a number of things you must do to remain compliant with the terms of the agreement. The two main requests are that you pay your monthly contribution towards your debt on time and that you submit paperwork to demonstrate you’re paying an affordable amount each month, when required. Usually you will be asked to complete an annual review and be requested to submit paperwork.

You should also maintain contact with the insolvency practitioner to ensure they are apprised of your current circumstances. If your income increases dramatically, for instance, then it could mean you need to pay more towards your solution on a monthly basis.

You cannot change your insolvency practitioner when you are in the Individual Voluntary Arrangement. Also, it’s important to state that if you decide to stop paying your debt solution then you could be discharged and the debts would return to you. You can cancel the plan, but it’s important you seek debt advice first.

What Does IVA Stand For?

The full name of an IVA is an Individual Voluntary Arrangement.

What Is An IVA Agreement?

An Individual Voluntary Arrangement is a formal debt solution where you agree to make an affordable monthly contribution to your debts usually for 5 years along with any equity from your assets. In return, any remaining unsecured debt obtained before the solution was accepted by your creditors will be cleared.

Will My House Be Taken Away From Me?

The aim of the formal solution is to help you retain your property. The Insolvency Practitioner will only be interested in any equity. We will be able to fully explain what will happen with your property.

Do My Creditors Have To Accept My Proposal?

No, your creditors get to decide whether to accept, reject or modify your proposal. The better the offer you put to them the more likely they are to accept.

After your proposal is sent to the creditors a meeting is then held (which you do not have to attend). The creditors can accept, reject or modify your proposal. If 75% of your creditors who vote at the meeting approve your proposal then it will be automatically accepted. Each creditor gets one vote for every pound they are owed.

Do I Have To Accept A Modified Proposal?

Your creditors have the right to reject or modify your proposal. However, it’s unlikely an insolvency practitioner will put a proposal to your creditors if they do not think your creditors will accept it. More likely, a creditor may modify the proposal.

Your had the right to decide whether you accept your creditors modifications or decide to enter a different debt solution.

What Are The Fees Associated With An IVA?

An Individual Voluntary Arrangement 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 below.

Nominee Fee

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 proposal prior to presenting it to your creditors. The insolvency practitioner will provide a report to advise whether they believe the solution will be successful.

The nominee fee will cover this work and drafting your 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. 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.

Supervisor’s Fee

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, providing reports to your creditors, distributing payments to your creditors and resolving any issues that arise during your solution as a result of your financial situation changing.

Each insolvency practitioner will have their own fee structure and it is typically decided on a case by case basis depending on the complexity.

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 is below

  • 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 – £31,000
  • Net paid to creditors – £13,235 (43%)
  • Amount written off at the end – £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 year Individual Voluntary Arrangement.

My House Has Been Repossessed, What Happens?

If your property has been repossessed then the mortgage owner (s) would be liable for any shortfall between the mortgage value and the sale cost (including any fees).

So, for example, if your house is sold for £100,000 but your mortgage is £120,000 then you would have an unsecured shortfall of £20,000 + fees. You would be liable to pay this money.


A mortgage company can legally chase you for any shortfall within your house for 12 years after the house has been sold in England, Wales and Northern Ireland. In Scotland the time limit is 5 years.

In an IVA or Bankruptcy your shortfall from your house sale can be included. If your IVA is accepted and you complete it satisfactorily, then your mortgage company cannot ask you to make any further payments for a shortfall from the sale of your house.

Can I Have An IVA If I'm Self-Employed?

If you’re self-employed then you can apply for an IVA too. The process is very similar however depending on your business, there may be additional requirements and documentation needed.

If you need a line of credit for your business then this can be permitted, with the approval of creditors.  If your income is based on seasonal trade then your IVA can be structured to ensure it’s affordable to meet your repayments on a monthly basis. Tax returns and a cash flow projection will be required in this circumstance.

Lump Sum / Full And Final IVA?

Depending on your circumstances it may be possible to enter a full and final / lump sum IVA.  This is where you offer a one-off payment to your creditors to settle your outstanding debts. This may be applicable if you have no money to pay towards a debt solution each month but could raise a one-off payment for your creditors. For instance, you may be unable to pay towards the solution on a monthly basis and have £30,000 of unsecured debt. If a family member or friend could give you a lump sum of money to pay towards your debt then you could enter a full and final IVA.

There are other ways to raise funds, for instance, you may be about to sell an asset or receive redundancy pay which could mean you’re suitable.

Who Can Enter An Individual Voluntary Arrangement?

An individual struggling to repay their debt of £5,000 and above, residing in England, Wales or Northern Ireland. Whether this is the best route for you will also depend on your disposable income and assets.

Can I Arrange The Solution Myself?

An Individual Voluntary Arrangement is a legally binding debt solution, which requires a qualified insolvency practitioner in order to enter it. During the period of the solution, the IP will monitor and supervise.

The insolvency practitioner will put your proposal to your creditors and act on your behalf.

Is An IVA Better Than Bankruptcy?

Which debt solution is best will be dependent on your financial circumstances.

While both are insolvency debt solutions, they are very different from each other. 

The impact of each debt solution will affect people in different ways.

It’s important to seek professional debt advice to ensure you are entering the correct solution.

Can I Enter The Solution If I've Entered One Before?

Your insolvency practitioner will want you to demonstrate that your new proposal is credible, genuine and sustainable.

Whether you have successfully completed or failed an IVA, you can still put a new proposal to your creditors.

You can re-enter for a second time if your circumstances have changed significantly.

Will My Employer Know?

No, your employer will not be informed you have entered into a debt solution unless they are a creditor. 

If I Am Unable To Make A Payment What Will Happen?

It is important that you keep up with your payments. However if you are struggling to maintain payments there are a number of options available, such as a temporary break or reduced payments. These options will extended the amount of time you are in the individual voluntary arrangement.

Will The Plan Last Longer Than Agreed?

If you take a payment break then this will be added to the end of the debt solution increasing the length of time you are in it.

How Much Will It Cost?

The amount a person pays during the solution is dependent on their financial circumstances.

An income and expenditure will be completed to assess each person’s affordability and how much disposable income they have available at the end of each month, ensuring all priority bills are accounted for.

The amount of disposable income they have left each month will be the amount they pay towards the plan.

Will I Still Be Able To Have A Bank Account?

Yes, however if you do owe money to the bank that you have an account with you will be advised to move to a new bank. This is to avoid the bank taking money from your current account to repay debts owed.

Will I Still Get Credit When In The Solution?

You are not allowed to obtain any new credit until your IVA is complete. There are some exceptions to this and it’s best to check with your insolvency practitioner. 

Will An IVA Affect My Job?

Only in rare cases will an IVA have an impact on a person’s employment. The easiest way to find out whether your job will be affected by any debt solution is by checking your employment contact. 

Would I Be Able To Cancel My IVA?

It would not be advised as it could result in serious consequences. 

You should speak to your insolvency practitioner in great detail about why you wish to cancel the IVA.

If your IVA is cancelled you would become responsible for repaying your debts, speaking to the creditors and will incur fees from the insolvency practitioner.

What Happens If My Income Increases?

Your income and expenditure will be reviewed on an annual basis by the insolvency practitioner.

Depending on the outcome of the review your payments may increase or decrease.

Should your income significantly increase then your payments will also increase. If your income increases significantly it’s best to inform the insolvency practitioner at the earliest possible time so they can re-assess your payments.

What Happens If I Get A Large Sum Of Money?

If you come into a windfall like a lottery win, inheritance or work bonus you will have to inform your insolvency practitioner. This money would be paid towards your plan for the benefit of the creditors.

What Happens At The End Of An IVA?

You will receive a completion certificate and any remaining debt will be written off. Your credit rating will begin to repair itself, however any defaults will last for 6 years.

I Want An IVA, Does My Partner Need To Know?

It is possible if your financial arrangements are completely separate. However, the creditors will need proof of household income and household expenditure. They will also need to know about any joint assets.

Do I Need To Involve All My Debt?

You must disclose all your creditors so they are treated equally. However, some creditors are not involved in the solution and you must continue to pay them eg. Mortgage payments, fines, child support or HP payments. These payments are included in your expenditure.

Am I Allowed To Save Money Each Month?

Savings are not accounted for within an income and expenditure. Creditors would not permit savings whilst in the plan. In the solution you are allocated money for your expenditure which you can control.

I Live With My Parents Would They Need To Know?

If you choose not to tell them then no, however they maybe able to help you if they were aware of the situation. 

I Only Want To Pay A Small Amount Each Month?

This will depend on your income and expenditure but yes it is possible if you have a low disposable income. However the IP’s fees and the contribution to the creditors comes out your monthly payment, so there needs to be sufficient money to cover this, otherwise another solution may be more appropriate.

I Have A CCJ Debt, Can This Be Included?

Yes it can be included, unless it has been secured against your property. If the CCJ is being paid through a wages arrestment it can take up to 3 months for the courts to cancel. At this stage it will become involved.

Do I Have To Pay For My IVA?

Most Insolvency Practitioners take no upfront fees, their money will come from your monthly contributions. This is to ensure the payment is gradual over the term of your IVA. All fees and outlays have to be approved at the meeting of the creditor where debtors will be made aware of all the costs. In some circumstances, like a windfall, you may have to pay the full amount of the debt and the insolvency practitioner fees.

What If I Want To Buy a House While I Am In The Debt Solution?

You would have to discuss this with your supervisor because obtaining credit is not permitted. However, if they believed it was in the creditors best interests it maybe possible. However, obtaining a mortgage would be difficult in the current market. You would need a deposit due to the fact most lenders are reluctant to lend 100% LTV mortgages. The lender may also charge a higher premium if they believe you are a credit risk.

Will The Way I Receive My Wages Change?

Your wages will be paid in the same way, you will have full control over your wages and all of your payments. You will need to disclose what you earn to your insolvency practitioner. Reviews of your income will take place, at least on an annual basis, so ensure your payments are appropriate.