New protections for people in debt as IVA rules are updated

New rules designed to better protect people entering an individual voluntary arrangement (IVA) have been published. 

An IVA is an agreement with your lenders to repay part of your debt and have the rest written off. 

It usually lasts for five or six years, and after that time, any remaining debt included in your IVA is written off. 

But some have expressed concern about how some companies are offering and managing IVAs.  

That’s why the Insolvency Service has updated the official IVA protocol to improve the experience for people in debt and help prevent bad advice. 

These changes provide greater clarity around the existing protocol, reinforcing standards that responsible providers already follow, such as ensuring customers are fully informed before entering into an IVA.

For guidance on choosing a reputable IVA company, read our handy guide - What to look for and what to avoid in an IVA company.

People considering IVAs to be given a fact sheet

Anyone considering an IVA will be given a new ‘key facts’ document, before they agree to the proposal. 

Written in plain English, it explains what to expect and covers:

• what happens if you own a home
• how much you’ll repay and how this is calculated
• fees charged by IVA providers
• impact on your credit score

The aim is to make sure people understand the full picture before committing.

Other changes to the rules include:

• clearer guidance on when an IVA might not be the right option – for example, if someone qualifies for a debt relief order
• better protection for homeowners - a person’s home will no longer be part of the IVA agreement, as long as providers and creditors stick to the new rules
• if an IVA ends early, providers must now signpost the person to regulated debt advice, so they’re not left in the dark

New protocol protects people in debt

“It is vital that people with debt problems are always given quality advice,” said Claire Hardgrave of the Insolvency Service.

“This protocol provides much-needed safeguards and transparency for all concerned, ensuring there are fewer grey areas for the practice, and that people in debt are supported from the very start.”