- Where it applies
- England, Wales and Northern Ireland (Scotland has protected trust deeds)
- Typical length
- Usually five or six years
- Creditor approval
- Creditors owed at least 75% by value must vote yes
- Credit file
- Recorded for six years from the start date
On this page
- What is an IVA?
- How an IVA works
- Who can get an IVA?
- Which debts are included?
- How much will I pay?
- How long does an IVA last?
- What does an IVA cost?
- Pros and cons
- Credit, work and everyday life
- Your home and your car
- If you fall behind
- IVA compared with other options
- Is an IVA right for me?
- Choosing who to use
- Frequently asked questions
What is an IVA?
An individual voluntary arrangement (IVA) is a legally binding agreement between you and the people you owe. You make one affordable monthly payment, usually for five or six years. Your creditors share what you pay, and when the IVA finishes, whatever is left of the debts included in it is normally written off.
An IVA is set up and run by a licensed insolvency practitioner (IP). Once creditors have approved it, those included in the IVA generally cannot chase you for those debts, take court action or keep adding interest and charges, as long as you keep to the terms. It is a formal type of insolvency, and your name goes on the public Individual Insolvency Register.
Talk to a free adviser first
An IVA is a big commitment. Free, independent advice can tell you whether it suits your situation or whether a simpler option would do. Get free debt advice or call 0800 3688 133.
How an IVA works
- You get advice. A debt adviser or IP looks at your income, spending, debts and assets to see whether an IVA is realistic.
- Your payment is worked out. It is based on what is left after reasonable living costs, using a standard financial statement.
- A proposal is drawn up. Your IP writes out the terms: how much you will pay, for how long, which debts are included and how fees are taken. Some IPs ask the court for an interim order, a short-term protection from creditors while the proposal is considered.
- Creditors vote. The IVA goes ahead if creditors owed at least 75% of the debt, by value, vote in favour.
- You make payments. You pay each month for the length of the IVA. Your IP shares the money between creditors, after taking their fees, and reviews your finances each year.
- It finishes. When you have completed the terms, remaining included debts are written off and you receive a completion certificate.
Who can get an IVA?
An IVA tends to suit people with a steady income and a regular surplus after essential spending. There is no single legal minimum, but providers commonly look for the following:
- Unsecured debts of at least around £6,000, owed to two or more creditors.
- Enough income left over to make regular payments for several years.
- Living in England, Wales or Northern Ireland, or having a connection there.
- Not currently bankrupt.
Minimum debt levels and payment amounts vary between providers. If you do not meet a provider’s rules, ask an adviser about the alternatives below.
Which debts are included?
An IVA deals with unsecured debts such as credit cards, store cards, overdrafts, personal loans, payday loans, catalogue accounts and buy now pay later balances. Debts that have been passed to collection agencies or sold, for example to Lowell, can be included too.
Secured debts, such as a mortgage, stay outside the IVA and you must keep paying them. Hire purchase and car finance usually sit outside as well if you want to keep the vehicle. Some other debts, including court fines, are treated differently. Ask your IP exactly which of your debts will be included and which will not.
How much will I pay?
Your monthly payment is based on your disposable income, not on the size of your debts, so it can be much lower than the minimum payments you are making now. The amount is fixed in your proposal and reviewed each year.
- Extra payments. If your income rises or you receive a windfall such as an inheritance or large bonus, you may have to pay some of it into the IVA.
- Lump sums and help from others. A lump sum, or contributions from family, can shorten the term or increase what creditors receive.
- Payment breaks. Many IVAs allow a short break if you lose income, but this has to be agreed with your IP.
How long does an IVA last?
Most IVAs run for five or six years. A lump sum may shorten this, and missed payments or lower contributions may lengthen it. If you own your home, you may be asked to release equity near the end, and if you cannot, the IVA can be extended, often by up to 12 months.
An IVA stays on your credit file for six years from the date it started, even if it finishes sooner. The Individual Insolvency Register entry is usually removed around three months after the IVA is completed.
What does an IVA cost?
You do not usually pay a separate bill. The IP’s fees are agreed in the proposal and taken out of your monthly payments. That means fees reduce how much goes to your creditors, and they affect how long the IVA takes.
- Ask for a written breakdown of every fee before you agree.
- Compare it with free routes, such as a debt management plan or debt relief order, which charge nothing.
- Be wary of anyone asking for a large fee before they have arranged anything.
Pros and cons
Pros
- One fixed monthly payment based on what you can afford.
- Interest and charges on included debts usually stop.
- Included creditors cannot take action while you keep to the terms.
- A fixed end date, with remaining included debt written off.
- Usually less disruptive than bankruptcy, and you normally keep your home and car.
Cons
- It lasts for years and is legally binding.
- Fees come out of your payments.
- It is recorded on your credit file and on a public register.
- You may need to pay in extra income or release home equity.
- If you cannot keep up, it can fail.
Credit, work and everyday life
- Credit. Borrowing becomes hard during the IVA. You will usually need your IP’s permission to take on more than a small amount of credit, and existing cards and overdrafts may be withdrawn.
- Bank accounts. You can normally keep a current account, but your bank may change or stop an overdraft, so ask in advance.
- Mortgages and renting. A mortgage is difficult during the IVA and for some time afterwards. Renting is easier, though landlords may run credit checks.
- Work. Most jobs are unaffected. A few roles, such as some in finance and law, have rules about insolvency, so check your contract or professional body.
Your home and your car
Most people keep their home. Near the end of the IVA, your IP will usually review how much equity you have. You may be asked to release some by remortgaging, and if that is not possible, the term can be extended. Joint owners should ask how a partner’s share is treated.
You can normally keep a car you need for work or family life, as long as you keep up any finance payments. A very valuable car may be considered as an asset.
If you fall behind
Tell your IP straight away if your income drops or you miss a payment. They may agree a payment break or change the terms. If you fall far behind, typically by around three months of payments, the IVA can fail. Creditors may then apply for bankruptcy and interest can return on what is left owing, though you keep the benefit of what you have already paid.
IVA compared with other options
| Option | Length | Legal protection | Your assets | Credit file |
|---|---|---|---|---|
| IVA | Usually 5 to 6 years | Yes, once approved | Usually kept; equity may be reviewed | Six years from the start |
| Debt management plan | Until repaid | No | Kept | Depends on how creditors record it |
| Debt relief order | 12 months | Yes | Limited assets allowed | Six years from the start |
| Bankruptcy | Usually 12 months | Yes | May be sold | Six years from the start |
Read more about debt management plans, debt relief orders and bankruptcy. Eligibility rules and limits change, so check current figures with an adviser.
Is an IVA right for me?
An IVA may be worth considering if your debts are large compared with your income, you can afford regular payments for five years or more, and you want to keep your home and avoid bankruptcy. It may be less suitable if your income is unstable, your debts are small, or you have no spare money, in which case a debt relief order or other route might fit better.
Before you decide, ask:
- How much of what I pay will actually reach my creditors after fees?
- What happens if my income falls or I lose my job?
- Would a free option such as a debt management plan work as well?
- Will my home, car or pension be affected?
Choosing who to use
IVAs must be set up by a licensed insolvency practitioner, and many firms that advertise them are introducers who pass you on. Whoever you speak to, check that the insolvency practitioner is authorised, ask for the fees in writing and do not feel pressured to sign on the day. Money Advice Online does not provide IVAs itself, so you can also get free, independent advice from MoneyHelper, StepChange, National Debtline or Citizens Advice before you commit.
Want to see if an IVA could work for you?
Speak to a free adviser who can look at your budget and explain your options without obligation. Get free debt advice.
Frequently asked questions
Is an IVA the same as bankruptcy?
No. Bankruptcy is a court process where a trustee takes control of your assets. An IVA is an agreement with creditors, so you keep control of your finances. Both are forms of insolvency and both affect your credit file.
Do all my creditors have to agree?
No. If creditors owed at least 75% by value vote in favour, the IVA binds all your unsecured creditors, including those who voted against.
Does an IVA stop interest and charges?
Usually yes, on the debts included, once the IVA is approved. It does not stop interest on debts that are not included, such as a mortgage.
Can I get an IVA with a bad credit record?
Yes. A poor credit history does not prevent you from having an IVA. What matters is whether you can afford the payments.
Can I get an IVA if I am self-employed?
Yes, but because income can vary, the IP will want evidence of your earnings, and the arrangement needs to allow for changes in income.
Can I add more debts to an IVA later?
Generally not. Debts you owe at the start are included, but new debts taken on during the IVA are not covered. Tell your IP if you discover an old debt you had forgotten.
What happens at the end?
When you have completed the terms, the remaining included debts are written off and you receive a certificate of completion. The IVA still shows on your credit file for six years from the start date.
Will I be able to get a mortgage afterwards?
It becomes easier over time. Some lenders will consider you once the IVA is complete, usually with a larger deposit or at a higher rate, and more lenders become available as the record ages.
This guide gives general information and is not personal advice. Rules and limits change, so check with a free adviser before acting. Last reviewed 9 November 2026.