Individual voluntary arrangements (IVAs) explained

An individual voluntary arrangement, usually called an IVA, is an agreement between you and the people you owe money to, to pay all or part of your debts¹. It is legally binding, which means that once it is approved your creditors cannot take action against you, such as taking you to court or making you bankrupt, and interest and charges are usually stopped¹. IVAs are a form of debt relief created by the Insolvency Act 1986 and are supervised by licensed insolvency practitioners².

The most common type works like this: you make one affordable monthly payment for five or six years, and any debt left over at the end is written off³. IVAs are one of the most used formal debt solutions in England and Wales: 7,442 people entered one in July 2026, out of 11,926 individual insolvencies in total that month⁴, and 7,318 in June 2026⁵. IVAs are available in England, Wales and Northern Ireland, but not in Scotland, where a similar arrangement called a protected trust deed is used instead⁶.

What an IVA is and what it does

An IVA is a formal agreement under which you make affordable payments to your debts over five or six years, and a one-off payment can also be made to shorten it. It can only be set up with the help of an insolvency practitioner, often shortened to IP, who is a licensed professional authorised to manage the arrangement¹². The IP negotiates with your creditors, puts the proposal to them, and then supervises the arrangement for its whole life¹.

What an IVA offers is a combination of protection and debt reduction. Once it is approved, your creditors agree to freeze interest and write off any outstanding debts that remain at the end¹³, and they cannot take enforcement action against you in the meantime¹. While the IVA is being set up, your IP may also be able to get the court to issue an order preventing creditors taking further action against you in the interim¹.

It is worth being realistic about the write-off. Some organisations claim that IVAs can write off up to 90% of your debt; while that can happen in rare cases, in reality an IVA will write off less than that amount¹³. How much is written off depends entirely on your income, your essential living costs and how much you can afford to pay in each month.

An IVA is a serious commitment, not a quick fix. It is a legally binding agreement that cannot be converted into an informal solution such as a debt management plan later on¹⁴, so it makes sense to understand all the debt solutions before deciding. The comparison between a DMP and an IVA and between an IVA and bankruptcy is covered in detail elsewhere on this site.

Who can get an IVA: debts, income and where you live

There is no single legal test for who can get an IVA, but there are practical thresholds that creditors and insolvency practitioners work to. You must be a resident of England, Wales or Northern Ireland¹⁵. Under the IVA Protocol 2025, the industry standard for consumer IVAs, a person suitable for a protocol IVA will in most cases have a regular sustainable income other than State benefits or the State pension, multiple debts of £7,000 or more, uncomplicated assets, be unable to repay their debts in full within the IVA period, and not be eligible for a debt relief order¹⁶.

Guidance varies on the numbers. Official guidance for Northern Ireland says the unsecured debts must generally be at least £15,000, though this depends on the individual creditors¹, while the Debt Advice Foundation says you will generally have debts with a combined value of more than £7,000¹⁵. There is no maximum or minimum level of repayments, except what is acceptable to your creditors¹.

On income, the Debt Advice Foundation describes a common industry rule of thumb that you can afford to pay £100 a month towards your unsecured debts¹⁵. Debt charities that run IVA panels set their own entry criteria: Business Debtline's panel scheme usually requires at least two different debts across at least two different creditors, and at least £50 per month spare income after your essential bills¹⁷, while National Debtline's panel asks that you be able to repay at least 5p in every £1 to your creditors over the term of the IVA⁸. Any number of debts can be included, but normally an IVA will be suitable if you have more than one creditor⁷.

Because an IVA depends on steady payments over five or six years, it tends to suit people whose income is stable. It may not suit those whose income goes up and down, because the IVA would fail if you cannot keep to the payments¹⁸. If your debts are smaller and you have little spare income, a debt relief order may be the better fit, and free debt advice will help you compare the options.

Debts an IVA covers and debts it leaves out

An IVA covers unsecured debts: overdrafts, credit cards, store cards, charge cards, catalogues, payday loans, unsecured loans, doorstep loans and credit union loans¹⁹. Credit cards, loans and overdrafts are the typical contents of an IVA⁶.

Some debts cannot go in. National Debtline lists what you cannot include: maintenance or arrears of maintenance ordered by a court; Child Maintenance Service or Child Support Agency arrears; magistrates' court fines; mortgage, secured loan or rent arrears unless the lender or landlord agrees; and student loans⁸. Business Debtline gives the same list in summary: secured debts unless your lender agrees, rent, student loans, magistrates' court fines, and maintenance payments or arrears²⁰.

Secured debts are treated differently because a secured lender has a claim on your property. You cannot usually include secured loans, mortgages or rent in an IVA; a secured loan or mortgage can only be included if your lender agrees, which they do not usually do⁷. Your mortgage is not usually included in your IVA, which means you keep paying it separately alongside your IVA payment²¹.

Joint debts need care. An IVA can only cover one person, so if you have a joint debt with a partner, the other person remains responsible for the whole of the debt even if your share is in the IVA⁷. The page on joint debts and your partner's debts explains how this works.

You must give your IP a full list of your creditors. Any creditor left out can apply to the court to have your IVA cancelled¹, so completeness matters from the start.

IVA fees: paid from your monthly payments, approved by creditors

Every IVA costs money to set up and run, and you pay your fees through your monthly IVA payment⁶. The fees are part of the reduced monthly payments you make to your creditors²², deducted from the money you contribute into the IVA each month²³. Crucially, any fees have to be approved by your creditors¹¹, so the fee level is not simply whatever the practitioner asks for.

How the split works in practice is described differently by different sources, and it is worth seeing the range. The Debt Advice Foundation states that after the first five payments, the IP gets 15% of your monthly repayments and your creditors get 85%²³. The same charity, describing the picture "very broadly", says your creditors will receive around 80% of the total amount you pay into your IVA with your IP receiving the other 20%²⁴. The exact split depends on the individual arrangement and when in the IVA's life the payments are made.

Your monthly payment itself is calculated by subtracting your essential living costs and priority debt arrears payments from your income²²: in full, all of your monthly essential expenditure such as travel, food, utilities and insurance, plus priority arrears like mortgage arrears, Council Tax arrears and court fine arrears, taken away from your monthly incomings such as wages, benefits and investments²⁵. The budgeting process behind this is explained in how your financial statement is built.

Two warnings about fees. First, avoid any IP that charges an up-front fee: most IPs agree to take their fees from the payments you make into the IVA¹⁴. Second, if your IVA fails, you are back to square one having paid fees, and any fees paid up to that point will not be recoverable²⁶. The page on what debt solutions cost compares IVA fees with the fees for other options.

How to set up an IVA, from free debt advice to the creditors' vote

The process runs in a fixed order, and it starts with advice rather than paperwork. You need to get free debt advice before applying for an IVA¹², because an adviser will check whether an IVA is the right solution for your circumstances at all. Free, confidential advice is available from charities such as StepChange and the Debt Advice Foundation, which offer support on any aspect of debt including IVAs²⁷.

Only an IP can set up an IVA, and you have to prove to them that you can afford to make regular repayments¹. The IP drafts a proposal based on your income, budget and full list of debts. Expect to provide supporting documents: if you own a vehicle, for example, your practitioner will need to see your V5 form to confirm the value of your car as an asset²⁹.

The proposal then goes to a vote. The IVA becomes binding if your proposal is accepted by at least 75% "by value" of the voting creditors⁸, meaning the creditors who vote in favour must make up at least 75% of the total debt included in the vote¹⁴. Creditors representing over 75% of the value of the debts owed to unsecured, unconnected creditors who vote must approve it³⁰. Once approved by 75% or more of creditors, the arrangement is binding on all of them, including any who voted against or did not vote at all⁴.

Creditors can also add conditions, known as "modifications", to your IVA before they approve it¹². A common example is a requirement to try to release equity from your home, covered below. If the vote succeeds with modifications, the arrangement that starts is the modified one, so read any changes carefully before agreeing.

Living on an IVA: budgets, reviews, windfalls and borrowing over £500

Life in an IVA is built around the budget agreed at the start. You have to stick to the agreed budget for the next five or six years, so you need to be realistic about how much you can afford when the payment is set²². If you have an instalment-based IVA, there is a review of your payments every year to see if you can pay more¹⁴.

The rules on extra money are strict. If you benefit from an "after acquired asset" during your IVA, meaning an asset, windfall or inheritance above £500, you must tell your IVA supervisor about it as soon as possible³¹. Windfalls and inheritances are the classic example: the money may have to be paid into the arrangement³¹. Redundancy payments and insurance payouts are slightly different, as you may be able to keep these if unemployment or illness means you have nothing else to live on³². The page on windfalls during an IVA covers this in detail.

Borrowing is tightly restricted. You cannot take out more than £500 of credit while in an IVA unless you get written approval from your supervisor²¹, and you need your IP's permission to borrow more than £500 while the IVA is running⁹. In most cases you cannot take out loans or credit at all while your IVA is active, including borrowing from family and friends, and you must talk to your supervisor before borrowing money³³. Using an overdraft counts as borrowing money³³.

If your circumstances improve, you may be able to settle your debt early: an IVA usually involves 60 or 72 monthly payments, but if you have a lump sum of money you may be able to use it to bring the arrangement to an earlier end³⁴. No more payments are needed after the lump sum is paid, and the IVA is closed down once the payment is made³¹.

Your home, car and job during an IVA

For many people, protecting the home is the main reason to choose an IVA over bankruptcy. Your home is protected in an IVA: you do not need to sell or remortgage your property⁶, and generally speaking an IVA allows you to keep your home³⁵. An IVA can also stop creditors taking action that affects your home, such as obtaining a charging order or applying for your bankruptcy¹⁴.

The protection is not unconditional. Typically, if you enter an IVA you will not have to sell your home, but you may be required to attempt to release equity from it during the term³⁶. Where there is equity in your home, your IVA may be agreed at six years instead of five years⁶, which is why homeowners often have the longer term. The rules around this are covered in home equity in an IVA.

Cars are usually safe. You can normally keep your car in an IVA as long as it is moderately priced³⁷, but cars are assets and can affect your IVA, so talk to your supervisor before replacing or buying a car³³. Your IVA is recorded in a public register, the Individual Insolvency Register, which shows details such as your name, date of birth and address, though the address may be withheld if you are at risk of violence¹⁴.

Work is affected for some people but not most. Certain jobs can be affected by an IVA, in particular roles in finance, law, property and accountancy³⁸. Your employer can only find out about your IVA by doing financial checks you approve in advance, or by searching the public Insolvency Register, which is rare; some employers might run the type of credit check that shows an IVA, but most do not, and by law employers should ask before running a credit check³⁹. The page on IVAs and employment goes further into this.

An IVA stays on your credit file for six years

An IVA will appear on your credit file for the six years from the date it starts¹⁰. Other guidance puts the same rule slightly differently: the IVA stays on your credit report for six years from the date that it is approved³¹, and it will be recorded on your credit reference file for six years, affecting your ability to get further credit¹⁷. The date your IVA was processed remains on your credit file for six years⁴⁰.

One edge case matters for longer arrangements. If the IVA lasts longer than six years, it will remain on your credit file until the date the IVA ends¹⁷. So a five-year IVA drops off about a year after it completes, while a six-year IVA may drop off around the time it finishes.

The IVA is not the only mark on your file. The defaults on your existing debts also affect your credit, and the IVA is listed on the Individual Insolvency Register, an online database used by credit reference agencies to update your credit rating¹. The section on credit scores and credit reports explains how records like these are used.

The effect on borrowing is real but not permanent. It is unlikely you will be able to take out credit cards, loans or a mortgage while you are repaying debt through an IVA³². After six years, the IVA will have disappeared from your credit history, and you may be able to get a mortgage with a smaller deposit of 5% or 10%³². Even then, some lenders will refuse any applicant who has ever had an IVA, while others may only lend once the IVA has disappeared from the credit report³².

When an IVA fails or you need to change it

An IVA fails when the payments cannot be sustained and nothing is done about it. Many IVA proposals state that three missed payments in any twelve month period is an automatic fail⁴¹. If you do not keep up your monthly payments, your creditors can cancel your IVA, and if it is cancelled they can take further action against you: they may take you to court or make you bankrupt¹.

The consequences of failure are severe. When your IVA is terminated you are no longer protected from collections action, you still owe the outstanding balance, interest and charges can start again, and creditors could petition to make you bankrupt⁴⁰. If your IVA fails, your debts will be reinstated less any payments received by the creditors, interest may be added back on, and your IP may be required by your creditors to petition for your bankruptcy²⁴. If you are unable to maintain the payments, there is a risk you may be made bankrupt, which could result in you losing your home¹⁷. In practice, if your IVA fails, the people you owe may ask your supervisor to petition for your bankruptcy, but this is unlikely to happen⁴². Any fees paid up to that point will not be recoverable²⁶.

Contacting the IP early when payments become unaffordable matters, because consistently missing payments without doing so can cause the IVA to fail²⁶. If there is a good reason why payments cannot continue, for example reduced income, the IP has some discretion to reduce the payments or, failing that, they can go back to the creditors and try to renegotiate the monthly payments, which is called a "variation"²⁶. Losing your job does not automatically cause an IVA to fail, but the supervisor needs to be told about changes in circumstances³⁹. The pages on missing IVA payments, reducing IVA payments and what happens when an IVA fails cover each situation.

If your problem is with the practitioner rather than the payments, complaints about an IP's regulated work can be made through the Insolvency Service's online complaint form; if you cannot access it, contact the Insolvency Service Enquiry Line⁴³. If the complaint is not settled there, it goes to the regulatory body that licences the practitioner²⁹. The page on complaining about an insolvency practitioner explains the process step by step.

IVA or protected trust deed: the option in Scotland

IVAs are not available in Scotland⁶. If you live in Scotland and are considering a formal arrangement of this kind, the equivalent solution is a protected trust deed, which is a similar solution with different benefits, risks and fees¹¹.

The two arrangements do the same broad job, transferring your debts into one supervised arrangement with a share of the debt written off at the end, but the detail differs enough that advice from a Scottish adviser matters. The pages on protected trust deeds, sequestration and the Debt Arrangement Scheme set out the Scottish options, and the comparison of a trust deed against sequestration may help you weigh them.

Free advice is available wherever you live. Charities including StepChange, National Debtline, Business Debtline and the Debt Advice Foundation provide free, confidential advice on IVAs and the alternatives²⁷, and face-to-face services exist in Northern Ireland as well¹⁵. Never pay for advice about an IVA before checking the free options, and see how to tell if a debt adviser is legitimate if you are unsure who to trust.