An Individual Voluntary Arrangement (IVA) is a formal debt solution used in the UK by people who are unable to repay their debts in full but can afford to make regular payments over time.
This page explains what an IVA is, how it typically works, what is involved in the process, and the types of situations in which an IVA is commonly considered. It is provided for general information only and does not offer advice or recommendations.
What Is an Individual Voluntary Arrangement (IVA)?
An IVA is a legally binding agreement between an individual and their creditors. It sets out how much of the debt will be repaid, over what period, and under what conditions.
IVAs are arranged and supervised by licensed Insolvency Practitioners. Once approved by creditors, the terms of the IVA must be followed by both the individual and the creditors included in the arrangement.
How an IVA Typically Works
IVAs are often compared with other formal solutions, including bankruptcy
Although each IVA is tailored to individual circumstances, the process usually follows a similar structure.
- A review of income, expenses, and debts is carried out
- A repayment proposal is prepared by an Insolvency Practitioner
- Creditors are asked to vote on the proposal
- If approved, monthly payments are made for the agreed period
- At the end of the IVA, remaining unsecured debt is usually written off
Most IVAs last five or six years, although some may vary depending on circumstances.
Some people also compare IVAs with other options such as Debt Relief Orders (DROs)
IVAs are more commonly explored by people who:
- Have multiple unsecured debts
- Have a regular or predictable income
- Are unable to repay debts in full
- Wish to avoid bankruptcy
Eligibility and outcomes depend on individual circumstances and creditor agreement.
What Debts Are Usually Included in an IVA
IVAs typically cover unsecured debts, such as:
- Credit cards
- Personal loans
- Overdrafts
- Store cards
- Catalogue debts
Some debts, including certain fines or secured lending, may not be included.
Monthly Payments and Living Costs In some situations, people also have concerns about housing or property
Monthly IVA payments are usually based on disposable income after essential living costs are taken into account.
Payments can change if circumstances change during the IVA, such as income increases or unexpected expenses.
What Happens at the End of an IVA
If the IVA is completed successfully and all terms have been followed, remaining unsecured debts included in the arrangement are usually written off.
Completion is subject to meeting all agreed conditions.
Impact on Credit Files and Public Records recorded on credit files, which can affect access to financial products.
An IVA is recorded on credit files and on the Individual Insolvency Register. These records typically remain visible for several years and can affect access to credit, housing, and some financial products.
Important Information
This website provides general information only and does not offer legal, financial, or debt advice. IVAs are regulated debt solutions and suitability depends on individual circumstances. Always seek advice from a qualified, authorised professional before making decisions about your financial situation.