About an iva
This page provides general information only.
We do not provide debt advice or recommendations.
For personalised advice about whether this solution is suitable for you, you will need to speak with an FCA-authorised debt adviser.
What Is an Individual Voluntary Arrangement (IVA)?
An Individual Voluntary Arrangement (IVA) is a formal insolvency process available in England, Wales and Northern Ireland. It is a legally binding agreement between an individual and their creditors.
Under an IVA, you agree to make affordable payments towards your debts over a fixed period, typically around five years. If the arrangement is successfully completed, any remaining included unsecured debt may be written off.
An IVA must be set up and supervised by a licensed Insolvency Practitioner. They are responsible for assessing your circumstances, preparing a proposal, and communicating with your creditors.
During an approved IVA, interest and charges on included debts are usually frozen. However, approval is not automatic. Creditors must vote to accept the proposal, and acceptance depends on your individual circumstances.
The amount you pay is based on a detailed assessment of your income, expenditure, assets, and total debt level. A regulated adviser or Insolvency Practitioner will explain how this is calculated and whether an IVA may be appropriate for you.
Important Considerations
An IVA is recorded on your credit file for six years.
It may affect your ability to obtain credit.
Failure to maintain payments could result in the arrangement failing and creditors pursuing further recovery action.
Fees apply and are taken from your agreed payments.
An IVA may not be suitable for everyone.
Credit Counsellor Limited is not authorised or regulated by the Financial Conduct Authority. We do not provide debt advice or arrange IVAs. We provide general information and may refer you to an FCA-authorised debt advice firm or a licensed Insolvency Practitioner who can assess your individual circumstances and provide regulated advice.
You should always ensure that any firm providing advice or arranging an IVA is authorised and properly regulated.
For free and independent debt advice, you may also wish to contact MoneyHelper or Citizens Advice.
Click “DEBT HELP” to start your journey, one of our friendly team will then be in touch to give you all the information you need to deal with your enquiry and refer you to one of our regulated associate experts.
We would pass you onto a FCA regulated debt advice firm for a full advice call who would look into a range of options for you, May not be suitable in all circumstances fees may apply.
We are a debt help lead generation organisation & may be paid a referral fee from the FCA regulated firms.
What debts can be included in an IVA?
- Credit Cards
- Payday Loans
- Overdrafts
- Arrears on utility bills, e.g. Gas / Water / Electric bills
- Council Tax arrears
- Benefit Overpayments
- Tax Credit
- National Insurance
- Personal Debts, e.g. money owed to family and friends
- HMRC debt
What debts can’t be included in an IVA?
- You cannot include your ‘secured’ debts in an IVA, and you should keep up regular payments towards these so that you do not accrue further debts.
- A few examples of debts that an IVA can not cover are:
- Mortgages
- Student Loans
- TV License Arrears
- Court Fines
- Child Maintenance
- Unpaid VAT bills
Advantages and Disadvantages of an IVA
Advantages
- An IVA can write off a large sum of your debt
- You only pay back what you can afford
- The agreement is legally binding, so your creditors have to stick to it, and extra charges and interests remain frozen
- Your creditors are not allowed to contact you directly for the duration of the plan – your Insolvency Practitioner deals with them on your behalf
- You will be given a clear end date for the IVA
- IVA will not cause you to lose your home as long as you keep up with your regular mortgage payments
Disadvantages
- If you receive a lump sum of money during your IVA, your creditors may require you to pay this towards your debts
- You may be asked to release equity from your home – if this isn’t possible, then your plan may be extended by 12 months
- Your credit rating will be affected for the duration of the plan and one year following its completion
- Your name will be visible on the Insolvency Register, which is publicly accessible.
- If your IVA fails for any reason (e.g. you do not maintain the agreed monthly payments), your creditors will be able to resume collections activities
- You will be expected to live within an agreed budget for living expenses during your IVA
- You will be expected not to obtain additional credit of more than £500 without the approval of your IVA Supervisor
The monthly payment that you will make will be based on your disposable income (what’s left each month after your usual living costs) and will always remain affordable, even if things change.
This payment covers your debts, as well any fees related to the IVA, so there will be no additional or hidden charges. Any fees will all be explained to you thoroughly before anything is signed, and they include:
A nominee’s fee
Supervisor’s fees
Costs/expenses
For a further breakdown of what these include, then read more about IVA Costs and Fees.
There is not just one type of IVA – different options are available depending on your circumstances. We’ve listed a couple of alternatives below so you can understand what’s available:
Self-employed
You can still enter an IVA if you are self-employed. You will still make monthly payments based on your affordability, but it works slightly differently:
Business Credit
You may require credit to keep your business going whilst on the IVA. This can be negotiated in your initial proposal to your creditors, to be agreed on before the IVA commences. Creditors aren’t likely to reject without reasonable cause, but you must keep up repayments for business credit in good time to avoid further financial issues.
Varying Income
A self-employed IVA considers that businesses may have seasonal/varying income, so you are allowed some flexibility. You must provide accurate statements regarding your income and expenditure so that your IVA payments may be adjusted accordingly. You must regularly provide this information to your Insolvency Practitioner so that you only pay what you can afford and avoid any issues with creditors.
Trade
An IVA can be negotiated without including debts owed to specific traders if your business is to continue trading with them throughout the IVA. This will be negotiated during the initial proposal period and allow you to continue making separate payments to those traders, so your business will not be compromised.
Joint IVAs
These may be included in an IVA if you have any joint debts. It’s important to note that if one person enters an IVA but the other doesn’t, it will still impact both credit files.
Instead, if there is an eligible amount of debt between two people, both can set up individual IVAs and include any joint debts. This is subject to creditors agreeing to the merging of debts and terms of the IVAs themselves, but if approved, both IVAs can be covered by only one monthly payment.
IVA Pros and Cons
With an IVA, it’s essential that you consider all the positive and negative aspects before committing to the solution. Understanding all sides of the situation will give you confidence in any decision-making.
