What is an Individual Voluntary Arrangement (IVA)?

If you live in England, Wales or Northern Ireland and you’re unable to afford your unsecured debt repayments, an Individual Voluntary Arrangement (IVA) is one option you can look at to help. Put simply, an IVA is a plan to pay your unsecured debts back over a certain timeframe.

It’s a formal, legally binding agreement you come to with your unsecured lenders to pay your debts back in a way that’s affordable for you. IVAs are not available in Scotland, but Trust Deeds are a similar solution that might help. You can read more about Trust Deeds at the end of this guide when we discuss the alternatives to an IVA.

An IVA allows you to repay the debts you owe at a lower, affordable monthly rate. You don’t pay everything back that you owe – you just pay as much as you can afford for a period of five to six years. When the IVA ends, your creditors agree to write off the rest of the debt included on the plan. An IVA is one way to deal with insolvency - this means you’re unable to pay your debts when they are due, or that your assets are worth less than your debts.

How an IVA is set up

It’s not possible for you to set up an IVA by yourself – this needs to be done by an Insolvency Practitioner (IP). This is someone who is qualified to put a proposal together for your creditors and to oversee the IVA while it’s ongoing. Your IP will take on the responsibility of dealing with your creditors, so you should find that they stop contacting you once the solution is set up. Your monthly payment will be sent to your IP and this will be distributed to your creditors on the IVA.

individual voluntary arrangement
see if an iva could help-you


In the right circumstances an IVA can help with the worry of problem debt and when it's over, give you an opportunity to start rebuilding your finances. We know that having unmanageable debts can be very stressful. That’s why it’s so important that you look into solutions like IVAs if you’re in this position, so that you can get your debts under control and can focus on other important things in life.

As well as the positive aspects, there are also negative points to consider when it comes to IVAs, which we’ll explore in more detail in the rest of the guide. When it comes to deciding which debt solution is right for you it’s all about weighing up the pros and cons and evaluating how much you stand to benefit. If an advisor has recommended this solution to you, it means that it’s the best option for you. If it isn’t right for you, they will look into other more suitable options.

If you’re considering an IVA, you’ve probably got lots of questions about how it might affect the different areas of your life. In the rest of this guide we’re going to answer those questions and hopefully, leave no stone unturned.

What is a creditor?

Before we get into the details of an IVA, we just want to explain what we mean by ‘creditors’, in case you are unfamiliar with the term. You may know your creditors better as ‘lenders’, which is what a lot of people call them, but there is a difference between the two.

Lenders are organisations or people that lend you money, so that’s the groups that provide your credit cards, loans and store cards. The term creditors includes all of the above but also the people you owe money to even if they’ve not lent you any. For example, your local council can be a creditor if you don’t pay your council tax bill; HMRC can be a creditor if your taxes go unpaid, as can your utility provider if you don’t pay your bills when they’re due.