Individual Voluntary Arrangement (IVA) Guide
Everything you need to know about setting up an IVA in the UK. Navigate eligibility, the creditor voting process, and long-term financial implications with confidence.
Your Step-by-Step IVA Roadmap
An Individual Voluntary Arrangement is a formal, legally binding debt solution. Follow this structured roadmap to understand the process from initial assessment to successful completion.
The IVA Process
Five essential phases to establishing and completing an IVA
Assess Your Eligibility
Generally, you need at least £6,000 in unsecured debt, owe money to at least two different creditors, and have a reliable disposable income to make a monthly contribution.
Consult a Licensed Insolvency Practitioner (IP)
An IVA must be set up by a regulated IP. They will conduct a thorough review of your income, expenses, assets, and debts to determine if an IVA is the most appropriate solution.
Draft the IVA Proposal
Your IP will create a formal legal document detailing your financial situation, the proposed monthly repayment amount, and the duration of the arrangement (typically 5 to 6 years).
Creditor Meeting & Vote
The proposal is sent to your creditors. For the IVA to be approved, at least 75% (by total debt value) of the creditors who choose to vote must agree to the terms.
Make Monthly Payments
Once approved, the IVA is legally binding on all creditors, even those who voted against it. You make a single monthly payment to your IP, who distributes it. Remaining qualifying debt is written off upon completion.
Pre-IVA Checklist
Ensure you are fully prepared before proceeding
Key Debt Solution Comparisons
A summary of how an IVA compares to other formal and informal debt management options in the UK.
| Debt Solution | Best Suited For | Credit File Impact | Asset Risk |
|---|---|---|---|
| Individual Voluntary Arrangement (IVA) | Those with £6k+ unsecured debt and a steady income. | Recorded for 6 years from start date. | Low, but may require equity release from home. |
| Bankruptcy | Those with high unsecured debt and no realistic ability to repay. | Recorded for 6 years from discharge date. | High. Non-essential assets and home equity can be sold. |
| Debt Management Plan (DMP) | Those seeking an informal, flexible reduction in monthly payments. | Not a formal legal process, but missed payments are noted. | Very Low. No legal protection, but assets are safe. |
| Debt Relief Order (DRO) | Those with low income, minimal assets, and debt under £50,000. | Recorded on the Individual Insolvency Register for 6 years. | Very Low. Strict asset and income limits apply. |
IVA FAQ
Answers to the most frequently asked questions about Individual Voluntary Arrangements in the UK.
An IVA is a legally binding agreement between you and your creditors to pay back a portion of your unsecured debts over a fixed period, usually 5 to 6 years. At the end of the term, any remaining qualifying debt is typically written off, providing a clear path to becoming debt-free.
An IVA will be recorded on your credit file and will negatively impact your credit score. It remains on your credit file for 6 years from the start date, making it difficult to obtain new credit, mortgages, or sometimes even certain rental agreements or mobile phone contracts during this time.
Yes, you can usually keep your home. However, you may be required to release some of the equity in your property during the final year of the IVA, often through remortgaging. If remortgaging is not possible, your Insolvency Practitioner may extend the IVA term by up to 12 months instead.
If your income decreases or essential expenses increase, you should contact your Insolvency Practitioner immediately. They can review your budget and potentially apply for a payment break or reduce your monthly contributions. Conversely, significant pay rises or financial windfalls (like an inheritance) must be declared and may be claimed for the benefit of your creditors.