Straight answers to the most common questions about Individual Voluntary Arrangements, from eligibility and costs to your home, your car and what happens at the end. Jump to a topic below.
An Individual Voluntary Arrangement is a formal, legally binding agreement between you and the people you owe money to, set up by a licensed Insolvency Practitioner. You agree to pay back what you can realistically afford over a set period, usually five to six years, after which any remaining balance on the included debts is normally written off. IVAs are available in England, Wales and Northern Ireland.
Read more →You agree an affordable monthly payment with an Insolvency Practitioner, who puts a formal proposal to your creditors. If creditors holding at least 75% by value of the debt that votes agree, it becomes binding on everyone included. You then make your payments, with a review each year, until the term ends and the rest is written off.
Read more →There are no rigid rules, but an IVA generally suits people in England, Wales or Northern Ireland who owe money to more than one creditor, have a steady income, and can afford a regular monthly payment after their essential costs. Whether it fits you depends on your full circumstances, which an adviser can assess.
Read more →There is no legal minimum, but because the fees are significant, an IVA is rarely good value for very small debts. As a rough guide, many people considering one owe at least a few thousand pounds across more than one creditor; below that, a cheaper option often suits better.
Read more →It can be if you have unsecured debt you cannot realistically clear, a stable income, and you want creditors legally bound. It is often the wrong choice if your debts are small, you can only pay a little each month, or a Debt Relief Order would be cheaper for you.
Read more →Neither is automatically better. An IVA can protect assets like your home and avoids bankruptcy, but it lasts longer; bankruptcy is quicker but can mean losing assets. The right choice depends on your income and what you own.
Read more →They suit different situations. A DMP is informal and flexible and repays your debt in full over time, while an IVA is binding, has a fixed end date and writes off the remainder, but carries fees and appears on a public register.
Read more →Depending on your situation, alternatives include a Debt Relief Order, a Debt Management Plan, Breathing Space, bankruptcy, or simply an informal repayment plan. A free adviser can compare them all with you before you commit to anything.
Read more →There is no set percentage. You repay what you can afford over the term and the rest of the included debt is written off when you complete, so the amount written off depends entirely on your payments and what you owe.
Read more →Most IVAs last five years, sometimes six, especially if a homeowner needs extra time to deal with equity. Occasionally a lump-sum settlement can finish one earlier.
Read more →You will usually need proof of income such as payslips or accounts, details of your essential spending, a full list of your debts and creditors, recent bank statements and some ID. Your Insolvency Practitioner will tell you exactly what they need.
Read more →An Insolvency Practitioner is a licensed, regulated professional, often an accountant or solicitor, authorised to set up and run formal insolvency arrangements such as IVAs. They are the only people who can propose one.
Read more →You do not pay anything upfront. The Insolvency Practitioner's fees come out of your monthly payments, with early payments tending to cover more of the fees. They must explain all the fees clearly before you agree.
Read more →Yes. Creditors vote on your proposal, and they can reject it or ask for changes, known as modifications. It is approved only if those holding at least 75% by value of the debt that votes agree.
Read more →Creditors representing at least 75% by value of the debt that votes must approve the proposal. Once that threshold is met, the IVA binds all included creditors, even those who voted against it.
Read more →Not freely. Your supervisor is appointed by your creditors, so a live IVA cannot simply be moved to another company. A change of supervisor usually only happens if a firm closes. If you are unhappy, complain to the firm first and get free advice.
Read more →You can choose to end it, but doing so usually means it fails, which lets creditors chase you again and add back the frozen interest, so it is rarely a good idea without advice first.
Read more →It varies, but drafting the proposal and holding the creditor vote often takes a few weeks to a couple of months from your first detailed conversation.
Read more →Your payment is your disposable income, what is left after reasonable living costs are taken from your income, worked out using standard spending guidelines. It is set at a level you can genuinely afford.
Read more →Start by getting advice and speaking to a licensed Insolvency Practitioner, who will assess your finances and draft a proposal for your creditors. You can begin that process here.
Read more →Most unsecured debts can be included: credit cards, personal loans, overdrafts, catalogue and store debt, payday loans, and often things like council tax arrears and some benefit overpayments.
Read more →Secured debts such as mortgages, most student loans, court fines, child maintenance, and usually any debt you take on after the IVA starts cannot be included. These have to be dealt with separately.
Read more →Often yes, tax and National Insurance arrears can be included. But if HMRC debt makes up most of what you owe, HMRC may not agree to the IVA.
Read more →Yes, council tax arrears can usually be included as an unsecured debt. You must keep paying your current, ongoing council tax separately.
Read more →Yes, payday loans are unsecured debts and can be included in an IVA like any other.
Read more →Arrears on past utility bills can usually be included, but you must keep paying for your ongoing energy, water and other usage.
Read more →Yes, credit card balances are one of the most common types of debt included in an IVA.
Read more →Yes, unsecured personal loans can be included in an IVA.
Read more →Yes, overdrafts can be included, though you may need to switch to a bank account that is not with a creditor you owe.
Read more →Joint debts can be included for your share, but the other person remains fully liable, so creditors can still pursue them. It often helps for them to get their own advice too.
Read more →An IVA includes the debt behind a County Court Judgment and stops further enforcement on included debts once it is approved. The CCJ itself stays on your record, but the creditor is bound by the arrangement.
Read more →Yes, interest and charges on the debts included are normally frozen once the IVA starts.
Read more →Whatever you can realistically afford after your essential living costs, worked out with your Insolvency Practitioner. There is no fixed figure; it is based on your income and outgoings.
Read more →Tell your Insolvency Practitioner as soon as you can. Occasional missed payments can sometimes be made up or covered by a short break, but repeatedly missing them can cause the IVA to fail.
Read more →Yes, many IVAs allow short payment breaks if you hit genuine hardship, often up to a few months across the whole term. This usually pushes the end date back.
Read more →Your payments may rise. At your annual review, if you are earning more you will usually be asked to pay a bit more, though you normally keep a portion of any extra such as overtime or a bonus.
Read more →Tell your Insolvency Practitioner. They can ask your creditors to reduce or pause your payments, or extend the term, so you are not left unable to cope.
Read more →Once a year your Insolvency Practitioner checks your income and spending and adjusts your payments if your circumstances have changed. You will be asked to provide updated proof of income.
Read more →Sometimes, usually by offering a lump sum as a full and final settlement that your creditors accept.
Read more →Yes, if you can raise a lump sum, for example from family, you may be able to settle early, subject to your creditors agreeing.
Read more →It is an offer to pay a one-off lump sum instead of continuing your monthly payments. If creditors accept, the IVA completes and the rest of the debt is written off.
Read more →Always tell your Insolvency Practitioner. The IVA can often be adjusted, paused or extended to reflect a change in your income or situation.
Read more →Usually no. Unlike bankruptcy, an IVA does not normally force the sale of your home, which is one of the main reasons people choose it.
Read more →No, an IVA cannot take your home in the way bankruptcy can. You may be asked to release some equity near the end, but not to sell up.
Read more →You keep living in it and keep paying your mortgage as normal. Towards the end you may be asked to release some equity if you are able to remortgage.
Read more →Yes, keeping your home is normally possible in an IVA, provided you keep up your mortgage payments.
Read more →Near the end of the term you may be asked to remortgage to release some of your home's equity towards your debts. If you cannot, the IVA is usually extended by about 12 months instead.
Read more →Possibly, in the final year, to release equity if you have any. It is only required if you can realistically obtain a remortgage on reasonable terms.
Read more →You can try, but remortgaging while in an IVA is harder and usually means specialist lenders. The equity-release step is normally handled near the end of the term.
Read more →If you cannot release equity, your IVA is typically extended by around 12 months in place of that equity, so you do not lose your home.
Read more →You can sell, but the proceeds and any equity would usually go towards your IVA, so speak to your Insolvency Practitioner before doing anything.
Read more →Yes, though while the IVA is on your credit file for six years borrowing is harder. After it drops off, and with rebuilt credit, a mortgage becomes more realistic.
Read more →Yes, you can move during an IVA, including moving into rented accommodation. Just keep your Insolvency Practitioner informed.
Read more →Yes, you can rent. Some landlords run credit checks, and an IVA on your file can make that harder, but renting is certainly possible.
Read more →You can usually keep a modest emergency buffer, but significant savings are generally expected to go towards your debts.
Read more →Essential household items and usually a reasonable car are protected, with the details set out in your proposal. High-value assets may need to be considered separately.
Read more →No. An IVA is designed to be more protective than bankruptcy; you keep your essentials and normally your home and a reasonable car.
Read more →Usually no. You can normally keep a reasonable, essential car in an IVA.
Read more →Yes, a car of modest value that you need for everyday life is normally kept. A very valuable car might need to be downgraded.
Read more →Existing car finance can usually continue as an essential cost if the payments are reasonable. If the agreement ends during the IVA you may need a cheaper replacement.
Read more →Taking on new finance during an IVA is restricted, and you would normally need your Insolvency Practitioner's agreement, especially for amounts over a set limit.
Read more →It is possible but limited while the IVA is on your file. After it drops off and you rebuild your credit, your options improve.
Read more →An inheritance received during an IVA is usually treated as a windfall and paid to your creditors.
Read more →A lottery or gambling win during the IVA would normally go towards your debts as a windfall.
Read more →Bonuses and overtime are usually shared. You typically keep a portion, often up to around 10% of your normal take-home pay, and pay the rest into the IVA.
Read more →Redundancy is treated carefully. Part may be protected to cover living costs while you find work, with the rest contributed. Tell your Insolvency Practitioner straight away.
Read more →It depends on the type. Some compensation, such as for personal injury, may be protected, while other payouts can count as a windfall. Speak to your Insolvency Practitioner.
Read more →Yes, an IVA lowers your credit score and makes borrowing harder for as long as it is on your file.
Read more →Six years from the date the IVA started, even though the arrangement itself may finish sooner.
Read more →Very difficult. Most mainstream lenders will decline while the IVA is active, and any options are limited and specialist.
Read more →You should not take on new borrowing during an IVA, and over a set amount you would need permission. It is also hard to obtain in practice.
Read more →Usually yes, but if your account is with a bank you owe money to, you may need to switch to a basic account elsewhere.
Read more →You can keep a small emergency buffer, but larger savings are generally expected to go towards your debts.
Read more →Yes, an IVA does not stop you travelling or holidaying abroad, as long as you keep up your payments.
Read more →Usually not. Most employers are never told, though a small number of regulated professions require you to disclose insolvency.
Read more →For most people, no. A small number of professions, such as some roles in finance or law, have rules that may require disclosure.
Read more →Your IVA is yours alone, so it does not appear on your partner's credit file. But any debts held in joint names remain their responsibility too.
Read more →Your partner's solely owned property is not taken. For jointly owned property, only your share of the equity is relevant to the IVA.
Read more →Yes, you can usually continue running a business during an IVA.
Read more →Yes, self-employed people can have an IVA. The proposal is built around your business income, and it is a common route for the self-employed.
Read more →Yes, IVAs are recorded on the public Individual Insolvency Register for as long as they run.
Read more →It is a free, public online register run by the Insolvency Service, listing people subject to insolvency in England and Wales, including IVAs. Entries are removed about three months after the IVA ends.
Read more →Creditors can start chasing you again and add back the frozen interest and charges, which can leave you worse off, and in some cases bankruptcy follows.
Read more →You receive a completion certificate, the remaining included debt is written off, and you can start rebuilding your finances.
Read more →Over time, by keeping up any remaining commitments, staying on the electoral roll, and using credit carefully once you are able. Your score improves gradually.
Read more →It is possible, usually with specialist lenders at first, and easier once the IVA has dropped off your file after six years.
Read more →It becomes easier over time. While the IVA is on your file borrowing is limited, but options open up as it ages and after it is removed.
Read more →It usually improves gradually once the IVA completes, and more noticeably after it leaves your credit file six years from the start date.
Read more →No. An IVA stays on your credit file for six years from the start date and cannot normally be removed earlier if it was recorded correctly.
Read more →Get your completion certificate, check the included debts show as settled on your credit file, and focus on rebuilding. Keep the certificate safe as proof.
Read more →Answer a few quick questions and an advisor will call to talk through your situation and all your options, not just an IVA. Or picture the numbers with the IVA calculator.
You never have to pay anyone to understand your options. These services are free, independent and will go through every route with you.