Debt Solutions
Brunette woman sat on an office chair looking at a laptop

Individual Voluntary Arrangements (IVA)

Debt Solutions

What is an Individual Voluntary Arrangement (IVA)?

An Individual Voluntary Arrangement is a debt solution that allows you to “freeze”” your debt and agree to pay them back over a specified period, usually 5-6 years. Any money you owe thereafter is written off.

An IVA is a legally binding agreement between you and your unsecured creditors, arranged and supervised by a licensed Insolvency Practitioner (IP). In short, you agree to pay back the maximum you can afford over a specified period of time, at the end of which period your creditors agree to write off any remaining balances.

We will work with you to calculate what you can comfortably afford to pay each month and also assess whether you have anything else you are able to offer to your creditors to enhance the agreement e.g. from the sale of an asset, remortgage, or savings.

We do not charge you for advice about an IVA or for help with the preparation of the documents. If you are in a debt management plan already it will continue as normal until your IVA has been approved.

The fees for an IVA are agreed with your creditors and are taken out of the money paid into the arrangement by you once the arrangement has been approved, so you do not pay anything extra to cover the fees.

Is an IVA the right solution for you?

An IVA is a form of insolvency and is a legally binding agreement therefore it is important that you consider whether:

left wing
You feel able to commit to a regular payment for the next 5 years
left wing
You may be able to resolve your financial problems without the need for a formal arrangement e.g. if you are expecting a pay rise or could sell an asset to pay your debts
left wing
You are willing to be open and honest with your creditors about everything that you owe and all of your assets
left wing
You are willing to provide the Insolvency Practitioner with proof of your income and bank statements each year. A review of income and expenditure is usually a required term of the agreement
left wing
You are in financial difficulty and cannot make the required payments to your creditors

Advantages of an IVA:

You will pay an amount that you can afford over a limited period, usually 5 years

The remainder of your debts will be written off at the end of the term

Your creditors can’t pursue you for the debts once the IVA is agreed, and they can’t apply interest and charges

If you are a homeowner you will be able to stay in your home but you may have to make additional payments to the arrangement

Brunette woman sat on the floor with a laptop, pointing left

Disadvantages of an IVA:

If you fail to keep to your side of the agreement, it could fail and you may owe as much as you did at the start

The IVA will show on the Insolvency Register

If your IVA fails, your creditors or your IP could apply to make you bankrupt

There will be restrictions on your spending whilst you are in an IVA

If you have a property with equity, you will need to try and re-mortgage towards the end of the agreement. If you are unable to do so the IVA may be extended by 12 months

Some debts such as mortgages, secured loans, taxes and fines can’t be included in an IVA so you will need to keep paying these

You can’t borrow more money during the course of the arrangement

If your situation changes for the better you will be expected to pay more to your creditors

The IVA will show on your credit file for 6 years and will affect your ability to obtain credit

If your circumstances worsen and you can’t maintain the payments, your arrangement could fail

If you receive a lump sum e.g. an inheritance or settlement, during the period of your arrangement you will be required to pay the full amount into your IVA. A balance will only be repaid to you if all debts plus the fees and costs of the IVA have been repaid

IVA Frequently Asked Questions