An IVA Can Help You Clear Your Debts

Individual Voluntary Arrangements are the perfect solution for people with a lot of creditors. There's the potential to write off up to 75% of your debts!.

How can an IVA help me?

An Individual Voluntary Arrangement is a formal and legally binding agreement between you and your creditors. It provides both parties with certain legal protections whilst you solve your debt problems.

Once the agreement is in place your creditors must stop all further interest and charges on your debts. All letters and phone calls from your creditors in relation to your debts should then cease. Once the 60 months have ended, and you have kept to the arrangement any outstanding debt included in the IVA is written off.

For more information and advice, contact the debt charity StepChange

Whats the minimum criteria
for an IVA?


You must be indebted to at least two creditors

debt value

The debt must be to the value of at least £5000


You must be able to show that you're struggling with payments


UK citizen (IVAs are specific for England and Wales)

More information about IVAs

What is an Individual Voluntary Arrangement?

An individual voluntary arrangement, or IVA, is an agreement reached between you and your creditors to pay part or all of the debts you owe over a certain period of time.

IVAs are designed to help you deal with unsecured debts like personal loans or credit card debt but will not apply to things like mortgages that are secured against your home.

This kind of debt solution is designed for those who are swamped in debt that they are simply unable to repay. It is a form of insolvency that is, arguably, less severe than declaring bankruptcy. The idea is that you extend the repayment term by reducing monthly repayments and eventually pay off all or most of what you owe.

How do they work?

To set up an IVA, you’ll need the services of an insolvency practitioner, or IP. The IP will often be an accountant or lawyer or other kind of licensed legal operative and will charge a fee for their services. The exact size of this fee can vary but typical costs could be around £5,000.

The insolvency practitioner will facilitate the setting up of the IVA, interacting with the creditors on your behalf throughout the course of the arrangement.

The IP will work out a monthly payment plan that will last around five years. Essentially you pay this money to your IP and they will then distribute it among your creditors in some way that they deem appropriate given how much you owe to each. In this sense, you are effectively combining all of your existing debt into one reduced repayment plan.

It is important to remember that depending on the IP you go with, they may keep a portion of what you pay each month as an additional fee.

For an IVA to be made official, you need a consensus from the creditors to whom you owe at least 75% of you debt. So if you owe a total of £50,000 to ten different creditors and £40,000 is owed to six of them, then agreement from those six means that the remaining four are legally obliged to agree to the terms as well.

Once the IVA is put in place officially, all parties are legally bound to stick to the terms.

How will I be affected by an IVA?

The main benefit of an IVA is that the payment plan will be tailored to what you can actually afford to pay back. If, by the end of the agreed term of the IVA, your debt is not completely paid off, then the remainder will be written off.

If you’re a business owner, you’ll also be able to continue trading while the IVA is active and unlike bankruptcy, an IVA is not announced publicly, making it a less stigmatising form of insolvency.

You’ll usually be able to keep expensive assets like your home and your car when you start an IVA, though you may have to remortgage your house in order to release any equity that may help pay off your debts.

One major drawback of IVAs is that starting one will adversely affect your credit rating. However this is more or less unavoidable if you’re in a situation where you need to declare some kind of insolvency and it can always be improved over time. If the debt you owe outweighs the income you’re receiving, then coming up with a debt solution like an IVA should take priority over attempting to maintain a good credit score.

Who qualifies for an IVA?

In order to qualify for an IVA, you generally need have at least £5,000 in unsecured debt owed to two or more creditors. These figures are not legal requirements (there are none) but are general rules of thumb followed by the industry. You also need to be a resident in England, Wales or Northern Ireland. There is an equivalent scheme for those who live in Scotland called a Protected Trust Deed.

If all of the above applies to you and you have enough of a regular income to pay some but not all of the debt that you owe then you should consider an IVA. You should bear in mind though, that if you fail to meet the agreed monthly payments at any point during the course of the arrangement, then it may be rescinded and you could be forced to declare bankruptcy.


Frequently asked questions about Individual Voluntary Arrangements

Will the IVA prevent my creditor from taking any further action?
Yes. Once the IVA is in place, you are protected from all further recovery action by your unsecured creditors providing you agree to the terms of the arrangement.
Can I enter an IVA if i have CCJs against me?
Yes. Entering into an IVA even offers you a way by which you can avoid further recovery action after a creditor has obtained a CCJ against you.
Will i be credit checked before acceptance?
No. Since you will not be borrowing any money, there will be no need for a credit search.
Do I have to be in full time employment?
No. To enter into an IVA, you only need to have a surplus of income above what you need to live on.
Does it make a difference if I am a homeowner or tenant?
No. It makes no difference whether you are a tenant or homeowner or even if you are still living with your parents.
Can I cancel the IVA once its set up?
No. An IVA is a legal process and, once it is set up, you cannot just cancel it if you change your mind. If you do find yourself in a position whereby you cannot continue to uphold the original terms then contact your insolvency practitioner and they will be able to offer you procedural advice.
How long does it take to set up an IVA?
This can vary but providing everything is standard, it takes typically between 6 and 8 weeks to set up an IVA.
How long does an IVA last?
This can vary, but usually up to five years.
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