IVA Rules – Complete Overview & FAQs

iva rules

An Individual Voluntary Arrangement (IVA) is a flexible debt solution that can help out individuals that can’t afford to pay back their debts. 

That being said, Individual Voluntary Arrangements often last a long time and during that entire duration, you have to stick by a strict set of rules to ensure your IVA’s success. 

Today, I’ll be looking at the restrictions that you have to abide by when you enter into an IVA so you know what you’re getting into. 

i v a iva's bankruptcy petition

The IVA Protocol

Individual Voluntary Arrangements were introduced as a debt solution in the UK as part of the Insolvency Act in 1986

While Individual Voluntary Arrangements have been in place in 1986, in 2008, the way in which Individual Voluntary Arrangements were conducted was streamlined and adjusted by the introduction of the Straightforward Consumer IVA Protocol

The IVA protocol is a standard code of practice that all insolvency practitioners and most creditors have signed up to. 

The goal of the IVA protocol is to ensure that all parties involved in an Individual Voluntary Arrangement (IVA) are treated equally and fairly

It provides a standard format and code of conduct upon which all standard consumer IVAs are conducted. 

Some aspects that the government IVA protocol sheds light on include: 

  • The content that needs to be included in the IVA proposal
  • The process through which the monthly income and expenditure of the applicant is assessed
  • The way in which the equity in the applicant’s home is settled in an IVA
  • The terms and conditions to be included within an IVA 

You will be eligible for an IVA under the standard IVA protocol if you have a stable and steady income and you have a minimum of three debts with at least two or more creditors. 

Now, let’s look at each area in a little more detail: 


The first part of the protocol applies to you, the applicant. It states that all of the information that you provide in your proposal is true and accurate and that you must not omit any information regarding your income, expenditure, assets and debts. 

If you’re found to be in violation of this, i.e., if you’ve provided false information in your proposal to your creditors or if you have failed to provide certain information regarding any aspect of your finances, then your Individual Voluntary Arrangement (IVA) could be terminated

When your IVA is registered with the Insolvency Service, your details are entered into the Individual Insolvency Register. 

Verification by the Insolvency Practitioner 

The IVA protocol states that it’s the responsibility of the insolvency practitioner to verify all of the information that the applicant provides when drafting the proposal

It’s also the responsibility of the insolvency practitioner to ascertain the value of assets of the applicant as well as the debts owed by the applicant. 

Discretion and Variation by the Insolvency Practitioner 

The IVA protocol gives details on the duties of the insolvency practitioner when it comes to making changes to the IVA. 

It gives information on when an insolvency practitioner can make changes to the terms of the Individual Voluntary Arrangement on their own and when they’ll have to seek permission from creditors. 

The permission to make a change (or changes) must be sought from creditors through what is called a variation meeting. 

Licenses and Standards 

The IVA Protocol obligates IVA companies and independent IPs to ensure that they are licensed and authorised and regulated by the Financial Conduct Authority for giving debt advice. 

Of course, your insolvency practitioner needs to be authorised by the FCA in order to be acting as an IP for your IVA. This is something that you as the applicant should always make sure of when you’re looking for an IP for your individual voluntary arrangement. 

Obligations Stated in the IVA Protocol

There are certain conditions detailed within the IVA protocol which you have to abide by at all costs. Failure to comply could most definitely lead to your IVA failing. 

These conditions (or clauses) are: 

  • The equity clause which gives information on the obligations that homeowners who have opted for an IVA will have to abide by. It obligates the applicant to evaluate the equity they have in their home and release part of that equity into the IVA. As you can imagine, this would be done through a remortgage of the house by you, the applicant. This typically occurs in the final year of your IVA. The clause also gives details on what should be done if equity cannot be released or if the applicant is not a homeowner. 
  • The windfall clause gives details on what should be done if the applicant receives a windfall sum during the course of their IVA. A windfall sum is a large sum that may be given to you unexpectedly such as through a lottery or inheritance, etc. It gives information on the time in which you have to disclose your windfall as well as your obligation to submit the windfall into your IVA. 
  • The redundancy clause details what type of action should be taken in case the applicant is made redundant. It gives information on how soon the insolvency practitioner should be notified as well as how much of the redundancy payment needs to be submitted towards the IVA for the benefit of your creditors. 

Flexibility Provided by the IVA Protocol 

The protocol also details some options for the applicant for added stability and flexibility in case of unexpected financial turmoil. 

These are: 

  • The payment break clause allows the IP to introduce a payment break. It also gives information on what actions should be taken to ensure creditors are not treated unfairly due to the payment break.
  • The payment reduction clause gives the IP the power to make reductions to the monthly payments to be provided by the applicant. According to the applicant, the IP can make reductions up to 15% without seeking permission from creditors. For reductions higher than 15%, the IP will have to seek permission from creditors. Of course, such a reduction should only be provided when the current payments are no longer affordable for the applicant. 

The protocol has several other areas and clauses as well which details responsibilities and code of conduct that creditors and IPs have to abide by

Please note that the IVA protocol deals thoroughly with how the code of conduct should be for every party involved in an IVA (applicant, creditors and IP). 


If you’re being hounded by creditors and are crippled by your debts, then an IVA can definitely be a great solution for you. 

Compared to other solutions that take care of your debts, an IVA is much more flexible and thanks to the IVA protocol, you can rest assured that your rights will be protected and you’ll never have to pay more than you can afford to your creditors. 


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debt free date?
  • Affordable repayments with an end date in sight
  • Reduce pressure from people you owe money to
  • Stop interest and charges from soaring