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An Individual Voluntary Arrangement (IVA) is a formal insolvency option for dealing with debts. This guide explains how it works, the costs and risks, and the importance of getting debt advice before deciding.
This guide covers:
- What is an Individual Voluntary Arrangement (IVA)?
- How does an IVA work to help with debts?
- How long does an IVA last?
- What happens at the end of an IVA?
- Can you write off some debt with an IVA?
MoneyNerd publishes general information and does not provide debt advice or recommend a debt solution. We can introduce you to The Debt Advice Service for free debt advice. IVAs are available in England, Wales and Northern Ireland; the 2025 protocol information below relates to protocol IVAs in England and Wales.
What is an Individual Voluntary Arrangement (IVA)?
An Individual Voluntary Arrangement is a legally-binding insolvency solution to manage debts.
It involves an agreement between you and your creditors to make a monthly payment – which is affordable to you – for a fixed period. It is used when you cannot afford to repay all existing debts within a reasonable time.
An IVA is legally binding once approved. If you cannot meet its terms, speak to your insolvency practitioner about changes, payment breaks or cancellation. Failure or cancellation can leave you owing debts and interest, and creditors may take further action, including bankruptcy proceedings. Fees apply.
Before choosing a debt solution, get advice about the options, costs and risks. MoneyNerd does not assess which solution is suitable for you.
What do Individual Voluntary Arrangements do?
An Individual Voluntary Arrangement commits you to make affordable monthly repayments for five or six years.
Your payment is based on a review of your income, essential living costs and circumstances. The insolvency practitioner takes the agreed fees and distributes money to creditors under the arrangement. Payments are reviewed and may change.
After successful completion, the remaining balances of debts included in the IVA are dealt with under its terms. Debts excluded from the arrangement still need to be paid, and another borrower remains liable for joint debts.
An IVA only covers certain types of debts, so you’ll need to check which debts are included in yours. If you have debts, like student loans, that aren’t included in your IVA, you will need to find other solutions to clear those debts.
An insolvency practitioner assesses whether an IVA is appropriate and affordable. Approval normally requires at least 75% by value of the creditors who vote to agree, with additional voting rules in some cases. An enquiry through MoneyNerd does not establish eligibility.
Assets, home equity, income, debt levels and alternatives all matter. There is no single rule that every IVA applicant must owe more than the value of their assets. High home equity can make a standard protocol IVA inappropriate.
How long does an Individual Voluntary Arrangement last?
Under the 2025 IVA protocol, regular-payment IVAs generally last five years, or six years where the individual’s relevant beneficial home equity is at least £10,000. The protocol uses 85% of the property’s value, less secured borrowing, to calculate available equity before considering the individual’s share. Payment breaks or other agreed changes can extend the term. Older and bespoke IVAs may have different terms.
Request an introduction to The Debt Advice Service for free debt advice. MoneyNerd does not provide debt advice.
What happens at the end of an IVA?
Once you have met all the agreed payments and obligations, your insolvency practitioner completes the arrangement and issues a completion certificate.
There is no automatic extra year simply because you do not own a home. Your agreed proposal and any later variations determine when you complete your IVA.
A 2025 protocol IVA does not require you to release equity from your family home. Where the relevant beneficial equity is at least £10,000, a six-year term is proposed instead. This does not change the terms of an older or bespoke IVA.
Check your own proposal with your insolvency practitioner, particularly if your IVA began under an earlier protocol. Successful completion does not clear debts excluded from the IVA or another person’s liability for joint debts.
What is the IVA Register?
The IVA register is an informal name for the Individual Insolvency Register, which includes a public record of people who are using an IVA to get out of debt.
The insolvency register is public. Credit reference agencies, lenders and other people can access it, so an IVA should not be treated as private.
Learn more about how the IVA register works in our IVA publication guide.
Will an IVA affect my personal life?
In some cases, an IVA can affect your current or future employment opportunities, especially if you work in legal or financial services where financial stability is essential.
Not only that but having an IVA could affect any future income or assets. If you sell your home during an IVA, the money you make as a profit from the sale might have to be paid into your IVA.
You also have to declare any income raises when you’re in an IVA.
What are IVA Companies?
An IVA must be arranged and supervised by a licensed insolvency practitioner. Firms offering IVA services may employ an insolvency practitioner or work with one. MoneyNerd does not arrange or supervise IVAs.
An IVA cannot be set up by yourself. A professional must arrange it called an Insolvency Practitioner (IP). An IP will:
- Offer professional advice and support
- Negotiates with creditors
- Report back to creditors on the progress of the insolvency
Some IVA companies have an in-house IP to be able to offer these services. Some IVA companies use external IPs, but the role is still the same. As IVA companies are commercial businesses, they charge to set up your IVA and charge ongoing costs, which are taken from your monthly repayment rather than paid separately.
If you’re considering an IVA, it’s essential you know more about IVA companies and how they work, which you can do on our dedicated IVA company explanation page.
How long does an IVA take to set up?
The time needed to arrange an IVA varies. It depends on gathering information, preparing a suitable proposal and obtaining creditor approval.
Our articles explain the process in general terms. A licensed insolvency practitioner is responsible for an IVA proposal and its administration; MoneyNerd’s role is to provide general information and introductions.
Why do people use an IVA?
People use an IVA because:
- It creates a pathway out of unmanageable debt
- You only have to make affordable repayments
- Service fees are paid from your monthly repayment – not as an extra expense
- Unsecured debts might be written off at the end of the IVA
- It allows people in debt to gain more financial freedom once the IVA is cleared.
What are the disadvantages of an Individual Voluntary Arrangement?
The drawbacks of using an IVA are:
- Home equity can affect suitability and duration. Older or bespoke IVAs may include equity-release terms; the 2025 protocol treats the family home differently.
- A failed IVA can result in creditors applying to make you bankrupt
- Creditors might not agree to an IVA
- Your credit score will be negatively affected
For more information, read our popular Risks of an IVA post.
Is an IVA a good idea?
An IVA can be a suitable and advantageous debt solution for some people, but it might not be the best option available to you. The only way to know if it would be a good idea or not is to get sound debt advice.
There are many alternatives to an IVA such as a Debt Relief Order, Bankruptcy, or a Debt Management Plan.
Free debt advice is available from charities like StepChange!
Understand your debt options
MoneyNerd can introduce you to The Debt Advice Service for free debt advice. MoneyNerd does not provide debt advice or recommend debt solutions.
The Debt Advice Service can explain your options, including their benefits, costs and risks. Options available depend on your circumstances. There’s no obligation to take a debt solution.
MoneyNerd does not provide debt advice or recommend debt solutions. The Debt Advice Service is a trading style of Pacific Financial Solutions Limited. If you request an introduction, we’ll share your details with their team so they can contact you.
Some debt solutions have fees and may negatively affect your credit rating. MoneyNerd is a commercial introducer and may receive a fee if you go ahead with a debt solution through The Debt Advice Service.
For free, impartial money guidance and help finding free debt advice, visit MoneyHelper.
Can I pay my IVA off Early?
Yes, it’s possible to pay off your IVA before the first five years are up. But this may not be advisable in some scenarios.
Uncover the advantages and disadvantages of paying off an IVA early in our Can I Pay My IVA Offer Early? guide.
Loans for people with an IVA
It’s not impossible to get a loan while on an IVA, but any loan will be limited and you may be subject to an eye-watering interest rate. This topic has been discussed in detail in our IVA and loans guide.
Can you get a mortgage while on an IVA?
Getting a mortgage while on an IVA can be difficult. Lenders assess affordability and credit history, and the IVA remains on your credit file for six years from its start. You must also comply with your IVA’s borrowing restrictions.
Not only that, you will need to get the approval of your IVA supervisor, making the process even harder.
For finer details and an in-depth explanation, consider reading our IVA and mortgages page.
Take the first step towards tackling your debt
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Natasha
Very helpful and informative thank you
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Some debt solutions have fees and may negatively affect your credit rating. MoneyNerd may receive a fee if you go ahead with a debt solution through The Debt Advice Service.
The Debt Advice Service is a trading style of Pacific Financial Solutions Limited.
For free, impartial help and access to not-for-profit debt advice, visit MoneyHelper.
Can you get approved for credit after an IVA?
You can get approved for credit after your IVA has finished, but your credit score won’t immediately recover from the IVA so you will still face some difficulties.
Learn the details on our dedicated page explaining credit after an IVA and how to improve your chances.
Is an IVA Worth it?
An IVA can help some people deal with unaffordable debt, but it involves fees, restrictions and a risk of failure. Suitability depends on your circumstances and the available alternatives.
But not everyone should use an IVA.
Sometimes an IVA might go completely wrong and off track. This could be because it wasn’t the right debt solution, or you might have been mis-sold the IVA in the first place.
Speak with a debt charity to work out whether an IVA is the best debt solution for you, and read our Is an IVA Worth It? post for more information.
Can an IVA stop a CCJ?
An IVA could stop a creditor from taking legal action against you to get back its money via a CCJ.
An approved IVA generally binds creditors in relation to debts included in the arrangement. It does not automatically remove an existing CCJ or protect against action on excluded debts. Ask your insolvency practitioner about any current court or enforcement action.
If you start getting communications from creditors asking for payment after the IVA was set up, or if you get legal threats, you should inform your IVA supervisor immediately.
IVA rejected – what now?
Sometimes creditors don’t agree with the repayments proposed in the IVA and your IVA will be rejected
Don’t worry if this happens, there are many debt solutions that can help people get out of their debt nightmare. A debt charity will re-assess your suitability for other solutions. Get a head start by reading about the most popular IVA alternatives on our debt solution page.
