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Individual Voluntary Arrangement (IVA)

For free and impartial money advice and guidance, visit MoneyHelper, to help you make the most of your money.

An Individual Voluntary Arrangement is a debt solution that can make debt repayments affordable over five or six years. 

An Individually Voluntary Arrangement (IVA) is a legally binding agreement between you and your creditor(s), which must be set up by an insolvency practitioner (IP). The IP will propose an affordable repayment plan to your creditors lasting five or six years. 

The IVA is approved when 75% of creditors accept the agreement. Any unsecured debt that is still outstanding when the repayment term ends will be written off. However, if you have a home or mortgage you may be asked to borrow more to repay the outstanding balance to finalise the IVA. 

The pros

  • Repayments are based on your finances and what you can afford without experiencing difficulty
  • You’ll be allowed to keep your home, but you will need to keep to your ongoing mortgage payments
  • You aren’t required to pay IVA set-up fees
  • Ongoing monthly fees are included in your single monthly payment – not added extra
  • Unsecured debts that have not been fully repaid at the end of the IVA are written off

The cons

  • At the end of the agreement, homeowners may need to remortgage or take out a secured home loan to pay the shortfall
  • Failing to keep to an IVA can lead to bankruptcy
  • Using an IVA negatively affects your credit file
  • Your IVA proposal can be rejected
  • Personal spending is restricted during an IVA, and annual reviews of your finances will ensure you are paying what you can

More information on Individual Voluntary Arrangements

Individual Voluntary Arrangements (IVAs) are a serious formal debt solution. They should not be entered into without professional advice and the full implications of using an IVA should be understood, especially if you own a property or have a mortgage. MoneyNerd offers a selection of free guides to discuss the finer details of IVAs. Check out our IVA posts to learn about IVAs.

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