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Thinking about going ahead with an IVA?

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i England, Wales and Northern Ireland only

How an IVA affects me

How will an individual voluntary arrangement (IVA) affect me?

An individual voluntary arrangement (IVA) is a legally binding agreement between you and your creditors that helps you pay off your debts at an affordable rate. This is a form of insolvency that can affect your financial situation in many ways.

IVAs are arranged by StepChange Voluntary Arrangements, part of StepChange Debt Charity.

No matter who arranges your IVA there are associated costs and fees, agreed by you and your creditors. Our IVA costs and fees follow industry standards. There are no up-front fees, and we won’t charge you for debt advice.

You’ll need to get expert, impartial debt advice before applying for an IVA. It's important to find out if this is the best way to deal with your debts and that you understand the restrictions and obligations.

Do I qualify for an IVA?

Not everyone can qualify for an individual voluntary arrangement. They’re generally suitable for people with a sustainable, regular source of income. People with a lump sum to pay towards their debts may also qualify for an IVA.

IVAs are available in England, Wales and Northern Ireland. They aren't available if you live in Scotland. In Scotland, a protected trust deed is a similar solution, but has different benefits, risks and fees associated with it.

How much debt is written off in an IVA?

Not all debts can be included in an IVA. However, most types of debt can be included, such as credit cards, personal loans, overdrafts, gas and electric arrears and payday loans.

Secured debts, such as mortgages or secured loans, and some other debts (including student loans, fines and child support) will still have to be paid separately, outside of the IVA. Find out more about the debts that can be included in an IVA.

What is the minimum IVA payment?

There’s no set minimum payment for an IVA, but if you can’t afford to pay a reasonable amount each month, your creditors are unlikely to accept the IVA proposal. In this case other debt solutions, such as a debt relief order, may be a better option for you. Find out more about IVA costs fees and charges.

How long does an IVA last?

An IVA usually lasts five years, but sometimes an IVA is extended for another 12 months to allow you to make the agreed payments. If you’re able to make a lump sum payment, your IVA can end sooner.

If you’ve not been able to pay what you agreed within six years, the insolvency practitioner (IP) will work with you and your creditors and may extend your payment arrangements.

Clare Lindley and James O'Carroll of StepChange Voluntary Arrangements are licensed to act as insolvency practitioners in the UK by the Insolvency Practitioners Association.

Considering an IVA?

mum at the table with bills

Thinking about going ahead with an IVA?

We're here to help. Free, online debt advice available now.

Get debt help

What restrictions will I face on an IVA?

An IVA should be considered with care because of the possible consequences for your personal, professional and financial life.

  • Your credit rating will be affected for six years, starting from the date the arrangement is agreed
  • You’ll have to keep to a budget agreed with your provider for the full term of your IVA
  • If you miss payments, your IVA will be extended to make up the arrears
  • An IVA could affect your employment and you should check your contract or speak to your HR department before applying
  • An IVA can affect any hire purchase agreements you have
  • During the IVA you must declare any additional assets you receive. It’s likely you’ll have to pay some of the value of these into your IVA
  • If you earn any additional income or bonuses during the IVA you’ll have to pay some of this into the IVA in addition to your normal contribution
  • Your IVA will be recorded on the Individual Insolvency Register (IIR). The register is maintained by the Insolvency Service and is available for viewing by the general public. It contains details of individuals who have a current IVA including their name, address and date of birth.
  • You can’t take out any new debts above £500 during the IVA

How will an IVA affect my home?

Under an IVA it's unlikely you'll have to sell your home. However, depending on the amount of equity in your home, you may have to re-mortgage six months before the end of your IVA to release equity. This will then be paid into your IVA.

If you do have to re-mortgage, you won’t be expected to increase your mortgage to more than 85% of the value of your property. The mortgage will also be assessed to make sure it’s affordable.

If you’re a first-time buyer, looking to get on the property ladder, it’ll be harder to get a mortgage while you're on an IVA.

Once you’re on an IVA your Insolvency Practitioner (IP) will discuss all of this with you in more detail. They’ll share information about mortgaging and re-mortgaging in your IVA proposal.

What happens if I miss payments to my IVA?

If you can’t make a payment to your IVA, you must let your IP know as soon as possible.

Your IVA agreement will allow you a short payment break if you have an emergency. With the agreement of your IP you may also be able to alter your monthly payments if the change is small.

If you need a longer payment break, or your situation has changed a lot, your IP may need to contact your creditors to agree the changes.

If you don’t speak to your IP about missing payments you may be in breach of your IVA terms and your IVA could fail.

Any payments you miss will be added to the end of the IVA term. This means that missing payments will lengthen the time it takes for the IVA to complete.

Will an IVA affect my credit rating?

When you enter into an IVA, it’ll appear on your credit file for six years, from the date your IVA is approved.

  • If you finish your IVA early, it’ll still appear on your credit file for six years, however it’ll be marked as complete
  • If your IVA takes longer than six years, it’ll appear on your credit file until the IVA completes

In addition, your creditors may record a default on your credit file. The default indicates that the original credit agreement has been broken and will be visible on your credit file for six years.

This is a normal part of the debt collection process. Any defaults added to your credit file should be dated no later than the date your IVA was approved.

Find out more about how IVAs affect credit ratings.

What happens to my assets on an IVA?

An asset is something of significant value that you own, for example a house, car or item of jewellery, or savings or shares.

Assets aren’t necessarily included in your IVA.

If you enter into an IVA, you’d need to let the insolvency practitioner (IP) dealing with your IVA know about your assets.

Each IVA is different as it’s tailored to suit your situation. In most cases, you’ll be able to keep items like your phone, jewellery, car and home.

Can I keep my car on an IVA?

You’ll usually be able to keep it, depending on the value. Your insolvency practitioner will value the car to check how much it’s worth.

If your car is worth quite a lot, the IP may question whether you need to own a vehicle of such a value, or your creditors might ask you to sell it. If you’re asked to sell your car, you’ll usually be allowed to keep some money to buy a replacement.

If you own two or more cars, you may be expected to justify this to the IP. If there’s no valid reason for owning an extra car, it may be sold so the money from the sale can go towards your IVA.

If you have a car on hire purchase, it’s likely you’ll be able to keep making payments towards it so you can keep it. You will need to speak with the hire purchase company to check if they have a problem with you entering into an IVA.

If the hire purchase agreement comes to an end during your IVA, the extra money that becomes available as a result will have to be paid towards your IVA. However, if the vehicle has to be handed back, you may be able to take out another agreement with the permission of the Insolvency Practitioner and the creditors, if it's essential to you.

Will my job be affected by an IVA?

There are certain jobs that may be affected if you enter into an IVA. These include roles in:

  • Finance
  • Law
  • Property
  • Accountancy

If you’re unsure about whether you’ll be able to keep your job if you have an IVA:

  • check your employment contract,
  • speak to your professional membership body,
  • contact your trade union, or,
  • ask to speak to your HR department in confidence.

Get free IVA advice

For free, confidential help with individual voluntary arrangements, speak to one of our expert debt advisors. If you already have an IVA, you should always discuss your situation with your insolvency practitioner first.

Get free, impartial debt advice online, so we can recommend the best solution for your situation.

StepChange Voluntary Arrangements is a registered trading name of Consumer Credit Counselling Service Voluntary Arrangements Limited, a wholly owned subsidiary of StepChange Debt Charity.