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Individual voluntary arrangement (IVA)

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.

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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.

There are no up-front fees, and we won’t charge you for debt advice. Once your IVA is set up, there will be fees set by your creditors. Find out more about the risks and benefits.

An individual voluntary arrangement (IVA) is a formal agreement allowing you to make affordable payments to your debts, usually over five or six years. At the end of your IVA any unsecured debt left is written off. You can also make a one-off payment known as a lump-sum IVA.

It’s important you understand how an IVA could affect you before you apply. You should always get expert, trusted debt help to find out if an IVA is right for you.

You can only get an IVA with the help of an insolvency practitioner. We are an approved organisation to manage IVAs and will support you through the process.

Video: What is an individual voluntary arrangement (IVA)?

An individual voluntary arrangement, or IVA, is a form of insolvency, and it can be a good way of repaying your debts at a rate that you can afford.

An IVA shows your creditors you’re insolvent. In other words - you can’t repay your debts in a reasonable amount of time. But, there's no expectation that you’ll have to sell your home, and you might not have to sell any of your assets or items of value, such as a car if you have one.

To be eligible for an IVA you need to show that you don't have enough money to pay your normal monthly debt repayments, and that the amount of debt you have is more than any assets and equity you have in your home.

Instead, once you’re on an IVA you’ll make monthly payments for five or six years. There’s also something called a one-off lump sum IVA, where you make a one-off payment, and you can find out more about these on our website.

For an IVA to go ahead, 75% of your creditors need to agree to the proposal. This works on a value basis, so for example if you owe 50% of your debt to one creditor, their share of the vote is 50%.

IVAs are only available in England, Wales and Northern Ireland. If you live in Scotland, we’d suggest looking at some of the alternative options, including some solutions that are specific to people living in Scotland – again you can find out more about these on our website.

So let’s go through some of the benefits and risks of a standard IVA

When it’s approved, an IVA gives you protection from your creditors. They’ll stop contacting you and they won’t add any more interest or charges to any debts that are included in it.

And at the end of the IVA, any money left to pay off on the debts included in your IVA will be written off, as long as you’ve made all of the payments that you agreed.

So that hopefully sounds good. However, it’s important for you to understand the risks that you’ll need to consider before taking out an IVA. IVAs are a form of insolvency, they’re legally binding, and they must be arranged through an Insolvency Practitioner.

The budget you agree with your Insolvency Practitioner should be affordable for the full term of the IVA, however if your financial circumstances change the IVA can be adapted.

If you go on an IVA, a reference to it will be added to your credit file. This’ll stay on your record for six years and will make it more difficult for you to get further credit during your IVA and once it’s finished.

You’ll also need permission to take out any credit over £500. This is really important to remember, as if you do this without getting permission, your IVA could be cancelled. This also applies to borrowing money from family and friends.

Additionally, your name will be added to an insolvency register. This can be read online if someone looks for it, but it’s unlikely someone would stumble across it, and it shouldn’t appear in online search results for your name.

If you’re a homeowner, you may also need to try to release equity through a re-mortgage. If you can do this, your IVA will probably last for a total of five years. If you’re unable to do this, it’s likely you’ll need to make another year’s payments instead.

There is also a risk that if your IVA fails for any reason, there is a risk of bankruptcy.

There are also fees involved with setting up an IVA, and these are included in the amount you pay. This does mean that there aren’t any upfront costs, and if your IVA isn’t approved then you won’t have any fees to pay at all.

And finally, it's very important to get expert debt advice to make sure that an IVA is suitable for you, and your individual circumstances.

We offer free debt advice both online, and over the phone. We'll help you put together a realistic budget and then recommend the most suitable debt solution for you.

If an IVA is a solution that’s appropriate for your situation, we'll help you set it up and be here to support you every step of the way.

Benefits of an IVA

  • You make affordable monthly payments, usually over five or six years
  • If you’re a homeowner you’ll usually be able to keep your home, as long as you maintain the mortgage payments and any secured loans on your property
  • There are no up-front fees, and we won’t charge you for debt advice
  • Once your IVA is set up, there will be fees set by your creditors, which you’ll pay in your monthly repayments
  • If you have a lump sum to offer, this can be paid as a one-off ‘full and final’ settlement, or a combination of a lump sum payment followed by monthly payments
  • Once you've made your final payment any remaining unsecured is written off and your creditors can't pursue you for payments

Risks of an IVA

  • If there’s equity in your home, you’ll need to try to re-mortgage which may result in a higher interest rate
  • If you're unable to re-mortgage you can make a maximum of 12 extra payments or a third party can offer a sum equivalent to the equity
  • If your IVA fails, creditors may request the supervisor of your IVA petitions for your bankruptcy, however this is very unlikely to happen.
  • Your credit rating will be negatively affected
  • Your creditors may not agree to your IVA
  • At the end of your IVA, only unsecured debts included in the arrangement will be written off. Any not included will remain outstanding
  • Your IVA will be recorded on a public register
  • Once your IVA is set up your spending will be restricted until the IVA comes to an end
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How we helped Kieran

Kieran, Glamorgan: "I buried my head in the sand, became so anxious and hardly survived. I’m at the end of my IVA now...my anxiety's gone down and I feel like myself again."

Get help like Kieran did >

How to apply for an IVA

The first step is to see whether an IVA is right for you. To do this use our free online advice tool or call us and speak to one of our expert advisors.

If an IVA is the best solution to your debt problem our specialist company, StepChange Voluntary Arrangements, can help you through the set up process.

We'll review your finances and put forward the IVA proposal to your creditors.

Frequently asked IVA questions

An individual voluntary arrangement is a type of insolvency and a legally binding arrangement between you and your creditors. It may be a suitable solution if you can afford to pay something to your debts, but not the full amount your creditors want.

If you have a lump sum to pay towards your debts, you may also qualify for an IVA. The easiest way to find out if an IVA is your best option is to use our free, confidential online debt advice tool.

An IVA should be carefully considered because of the possible consequences for your personal, professional and financial life. There are several risks and things you must consider before applying which is why you should get expert debt help.

Ready to find out if an IVA is right for you?

Firstly, have a debt advice session online or over the phone. If we think an IVA is suitable for you, we’ll recommend it. at the end of your advice session. You’ll then get a personal action plan with a step-by-step guide to apply for one.

If an IVA is right for you, we can help you set up your arrangement through our own IVA company, StepChange Voluntary Arrangements. We won’t charge you for the advice and support we provide before your IVA is set up. There are fees once your IVA is in progress, but these will be included in your monthly repayments and are set by your creditors.

Ready to get started?

IVAs are a type of insolvency and will show on your credit file for six years from the date they begin. During this time you're likely to find it difficult to obtain credit. You must also inform your insolvency practitioner (IP) and get written permission if you want to take out more than £500 worth of credit during your IVA.

Details of individual voluntary arrangements are listed on a public register called the Individual Insolvency Register. Its unlikely that anyone would come across this information, but it's something to be aware of.

No matter who arranges your IVA there are associated costs and fees.  Our IVA costs and fees follow industry standards and, at StepChange Voluntary Arrangements we don't charge a fee for the advice and support we provide before your IVA is set up.

All fees are agreed by you and your creditors before an IVA is approved. If at any time you decide not to go ahead with an IVA with us, there will be no fees to pay.

Other IVA companies may charge different fees. It's important to check and understand them before going ahead.

Some jobs could be affected if you're on an IVA, for example:

  • Company directors
  • Law and property roles
  • Finance and accountancy roles
  • Pub licensees

The best way to find out if an IVA or bankruptcy would impact on your job is to check with your professional membership body or trade union or ask to speak to your HR department confidentially. It’s important to check if your job will be affected, but in our experience most jobs are not.

Over the first 3-6 months of your IVA contact from your creditors should gradually start to reduce and it's usually nothing to worry about. But, while it’s normal to still get letters or emails chasing the money you owe, if you receive any threatening debt enforcement action, such as from bailiffs or about a County Court judgment (CCJ), you should contact us or your IVA supervisor as soon as possible.

Our individual voluntary arrangement (IVA) guides

An individual voluntary arrangement is a legally binding debt solution, and can have serious consequences. It's important that you're fully informed before making a decision. Our individual voluntary arrangement guide section has great advice about the entire process.

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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.