Individual Voluntary Arrangements

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One solution which offers a safe route out of debt is an Individual Voluntary Arrangement (IVA). This agreement, generated between an individual and their creditors, manages out of control debts and creates a single affordable monthly repayment. It is available to people in England, Wales and Northern Ireland, and results in a binding contract between you and your creditors.

What is an IVA?

Although voluntary, once established an IVA becomes formal and legally binding. It brings a variety of debts into one single payment and allows large amounts of debt to be written off.

Negotiations are led by an Insolvency Practitioner, who will take on the responsibility of dealing with your creditors throughout the agreement. Though a type of insolvency, it is not the same as bankruptcy and, as a court-approved solution, offers a clear and secure pathway to life after debt, if successfully completed.

How do Individual Voluntary Agreements work?

Proceeding with an IVA, your insolvency practitioner will arrange a repayment plan. This plan is offered to creditors for approval, and if approved, you will repay a single monthly amount for the term of the plan. The duration is usually, but not always, five years.

Circumstances vary, but an IVA signals the inability to otherwise make repayments and means that the majority of eligible proposals are accepted.

Can debt amounts be written off?

Thanks to government legislation, a person may be entitled to write off as much as 90% of their total debt amount. This depends on the total amount owed and your ability to make repayments. There is not a “one size fits all” so what you get to write off would be entirely dependent upon your unique situation. You will be expected to pay back as much as you reasonably can.

With significant amounts of debt, making affordable monthly payments over a period of five years often means debt must be written off at the end of the agreement. The debt forgiveness at the end of a successfully concluded IVA provides you with comfort that moving.

Advantages of an IVA

Asset protection

An IVA safeguards your home, and ensures that creditors are unable to obtain a charge and force the sale in order to recover debt.

Interest payments

During your IVA, interest payments and debts such as credit cards and store cards are halted, allowing you to keep your debt amount controlled as you work to repay it.

Write off debt

The chance to write off certain unaffordable debts allows additional funds to be used to tackle the repayable amount. Debt Forgiveness is a key and important feature of an IVA.

Legal Protection

As a legally approved solution, you are protected from further legal action by creditors for the duration of the IVA. This also ensures that late payment fees are suspended, preventing your debt from increasing.

Disadvantages of an IVA

Credit Rating

Your credit rating will be adversely impacted.

Insolvency Register

If approved, your IVA will appear on a public register of insolvencies.

Secured Debts

Any asset that has lending secured against it (think of a mortgage on a house or vehicle finance) that you do not want to be repossessed has to have the ongoing payments maintained, so an IVA is not a form of debt relief from secured lending.

Priority Debts

Magistrate’s Court fines, court orders under matrimonial and family proceedings, etc. still need to be paid. An IVA is not going to provide you with debt relief from these

Approved IVA Subsequently Fails

An IVA is not as flexible as the informal debt solutions. If you fail to keep one of the promises you make (for example, by missing promised monthly payments, or not returning annual Income & Expenditure Review items) then your IVA risks failing. If your IVA fails, you may still face bankruptcy proceedings.

Income & Expenditure Review

Every year, you will be expected to carry out a review of your Income & Expenditure. This often means that you have restrictions on your personal expenditure.


This is only available for people living in England, Wales and Northern Ireland.

How is an IVA funded?

An IVA agreement is not free. Its attached fees come from your creditors and will not affect you. From the money you repay each month, a fee is retained from your creditors by the Insolvency Practitioner, with their agreement.

You will not personally be expected to pay any fees to the IP for the duration of the agreement, apart from a situation where you have had a significant injection of cash during the IVA and are able to repay your debt in full. In this case, or if your IVA fails, you may be required by your creditors to make a payment for fees on top of the repayments you have made on your debt amount.

Applying for an IVA

As a form of insolvency, it is important that you understand how an IVA will affect you and if it is an appropriate solution for your debt problems.

For impartial advice you can trust, contact one of our expert advisors today and they will discuss the details of an agreement and give you all the information you need to make an informed decision about this solution.

At the start of the process, one of our experienced team will lead an income and expenditure check to find out how much disposable income you have to service your debts, and from this, they will work with you to establish a reasonable monthly repayment towards your outstanding debts.