What Is an IVA?

An Individual Voluntary Arrangement, or IVA, is a formal legally binding agreement with creditors to deal with qualifying debts.

IVAs are heavily advertised, but they are a significant financial commitment and are not suitable for everybody.

How does an IVA work?

An insolvency practitioner puts a proposal to creditors. It may involve regular payments, a lump sum or a combination.

If the required creditor approval is obtained, creditors bound by the IVA must follow its terms while you comply with the arrangement.

How long does an IVA last?

Many IVAs run for several years. MoneyHelper describes five or six years as common, although the actual proposal can differ.

That makes it important to consider whether the payment is realistic over the whole period rather than only affordable this month.

What fees are involved?

Insolvency-practitioner fees and other costs are normally paid from money going into the IVA.

Ask for the total expected fees, how they are calculated and how much creditors are expected to receive.

What if my circumstances change?

Ask what happens if you lose work, become ill, separate, have a baby or face higher essential costs.

An IVA may allow certain variations, but if it fails you can be left with debts and may face further insolvency consequences.

Could my home or assets matter?

Yes. Home ownership and other assets can affect how an IVA is structured.

Do not accept vague statements that your home is ‘protected’ without understanding exactly what the proposal requires.

Should I get a second opinion?

Yes if you are unsure. Compare an IVA with a DMP, DRO, bankruptcy and any other realistic option.

A free debt adviser who is not relying on selling you a particular solution can help you understand the alternatives.

7.54: What Is Bankruptcy?

7.55: How Are Debt Management Plans, DROs, IVAs and Bankruptcy Different?

7.56: What Questions Should I Ask Before Agreeing to a Debt Solution?

Important information

This guide provides general information and is not intended to provide financial, benefits, debt, housing or legal advice. Individual circumstances can be different. Check current information from official sources and seek advice from an appropriately qualified or authorised adviser before making important financial decisions.