Individual Voluntary Arrangement (IVA)
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An Individual Voluntary Arrangement (IVA) is a lifeline for individuals in the UK grappling with unaffordable debt.
This legally binding-agreement offers a structured path to financial recovery by consolidating debts into manageable payments.
In this guide, we explore IVAs, including the criteria you need to meet to enter into one, how to apply for an IVA, and the alternative debt solutions that can provide financial relief for those seeking to regain control of their finances.
What is an Individual Voluntary Arrangement?
Available to people in England, Wales and Northern Ireland, Individual Voluntary Arrangements (IVAs) are a formal, legally binding agreement between you and your creditors that sees you repay your debts over a set time period.
An IVA is approved by the court and, as such, your creditors must stick to it. An IVA typically lasts for around five or six years. Once it ends, any remaining debt is written off.
While you are in an IVA, your creditors must stop chasing you for repayment and they are not permitted to charge interest on your debts. Any contact between you and your creditors goes through an Insolvency Practitioner (IP) or your debt management company.
During the IVA, you’re required to make agreed payments. This might be a monthly sum or a single lump sum.
How does an IVA work?
VAs are set up by qualified IPs. You’ll agree a repayment plan with your IP, and once the IVA starts, you’ll make your payments to this person. They’ll keep some of this money to cover their fees and the rest will be divided among your creditors.
Your IP will review your finances each year during your IVA. If your circumstances change, for example, you get a pay rise in your job, you’ll be expected to increase your debt repayments. This means you must tell your IVA provider if you have any increases to your income, or you get money through other means. This may be through an inheritance, for example.
During the IVA, you won’t be able to take out new credit for more than £500 without permission from your IP.
When should I consider an IVA?
An IVA could be right for you if you are:
✅ Worrying about money
✅ Struggling to pay your household bills
✅ Concerned about creditor contact
✅ Relying on overdraft's or credit cards
✅ Missing repayments or getting into arrears
Are you eligible for an IVA?
Our expert debt advisors will be able to tell you everything you need to know about debt solutions and eligibility criteria.
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IVA pros & cons
IVA Pros
✅ IVAs can be used to write off significant amounts of debt
✅ The monthly payments are affordable
✅ You are protected from legal action
✅ Your creditors can’t contact you directly
IVA Cons
❌ An IVA will impact your credit score
❌ Creditors are under no obligation to agree to an IVA request
❌ Only unsecured debts are included.
❌ IVAs are recorded on a public register
How to apply for an IVA
If you want to apply for an IVA or find out what other solutions could be available, get in touch and one of our friendly advisors will:
Review your current debts and financial situation, then give you all the information to make the right choice for you.
If you decide an IVA is the best option for you, Debt Help Genius will help you with the setup process.
Once set up, we will review your application and send the IVA request to your creditors.
What debts does an IVA cover?
An IVA covers most unsecured debts, which means debts that are not tied to assets (usually your home). These can include:
- Household bills
- Council tax
- Credit cards
- Personal loans
- Overdrafts
- Payday loans
- Buy now, pay later debts
What debts can’t be included in an IVA?
An IVA typically includes most unsecured debts. Any debts that are tied to assets, like your house, will not be covered in an IVA.
- Mortgages
- Debts incurred through fines
- Student loans
- Court fines
- Social fund fines
- Hire purchase agreements
- Child support arrears
The day-to-day with an IVA:
As an IVA is often a long-standing agreement, over multiple years, it’s important to understand how living with an IVA will affect you. Your creditors will expect you to keep your expenses to reasonable levels ensuring you pay back as much as you can towards your debts.
How an IVA affects your finances:
In an IVA, your monthly debt repayments will be vastly reduced. This will, hopefully, free up more of your monthly income and allow you some financial respite from your current debts.
How an IVA affects your job:
In most instances, having an IVA won’t affect your current employment. Though it’s always good to read over your contract before going forward.
How an IVA affects your home:
Your home will be considered when applying for your IVA. Under the arrangement, it’s unlikely you will be made to sell your home. However, the IP will review any equity in your home, and you’ll probably be required to remortgage and release any available equity.