Money Wellness

IVA (Individual voluntary arrangement)

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

Most customers have about 70% written off but it can be as much as 85%

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What is an individual voluntary arrangement?

An individual voluntary arrangement (IVA) is a legally binding agreement between you and your creditors to pay back your debts at a rate you can afford.

It usually lasts for five or six years. After that time, any remaining debt included in your IVA is written off meaning you don’t have to pay it back.

During your IVA, providing you make the agreed payments, creditors aren’t allowed to charge interest or fees on your debts. They also have to stop chasing you to pay.
An individual voluntary arrangement must be set up by a qualified insolvency expert.

An IVA usually lasts five years, but it may last longer if you need to make up for missed or reduced payments. It may also be extended, usually to six years, if you’re a homeowner. As a homeowner, you may need to remortgage at the end of the fifth year of your IVA to cover some of your debts. If you’re unable to remortgage, you may need to carry on making your agreed IVA payments for up to another 12 months. 

In some cases, creditors may agree to accept a lump sum to settle your debts. This is known as a full and final settlement individual voluntary arrangement. These IVAs don’t generally last for more than three months.  

Most non-priority debts can be included in an IVA. A debt is classed as either priority or non-priority depending on how serious the consequences are if you don’t pay.  The consequences of not paying non-priority debts are less serious than for priority debts. Despite being less serious, your creditors could still take you to court or arrange for bailiffs to visit you. The main non-priority debts that can be included in an individual voluntary arrangement are: 

  • Credit Cards
  • Payday Loans
  • Store Cards
  • Overdrafts
  • Personal Loans

There aren’t black and white rules about who can get an IVA. We’ll take into account lots of factors before deciding whether an IVA is suitable for you.

As a general rule of thumb, you will usually need:

  • a regular source of income
  • non-priority debts (credit cards, buy now pay later, personal loans, overdrafts etc.) of at least £5,000
  • to live in England, Wales or Northern Ireland
  • to owe money to more than one creditor
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If we are unable to help you with all of your debts, or for further information and support to help you with your money troubles, please visit MoneyHelper.

Is an IVA right for me?

This depends on your situation.
It might be a good idea if you:

  • can’t pay your debts at the rate you originally agreed to, but you can afford to pay something each month

  • owe money to more than one creditor

  • want to write off some of your debt.

IVA benefits & things to consider

There’s a lot to think about when you’re considering an IVA. To help you decide if an IVA is right for you, we’ve outlined the main benefits and things to bear in mind:

A formal agreement with lenders to make one affordable monthly payment towards all your unsecured debts.

If your IVA is approved, lenders will freeze interest and charges and stop chasing you for payment.

On completion of your IVA, any remaining unsecured debt will be written off - up to 85%

You’ll be left with enough money each month to cover all your essential living costs.

You won’t be forced to sell your home.

Available in England, Wales and Northern Ireland.

We’ll need to check if an IVA is suitable for you. If not, we’ll suggest other ways to deal with your debt.

An IVA will affect your credit rating.

Fees will be payable if your IVA is accepted. Find out about the fees here.

Details of your IVA will be added to the Insolvency Register.

You may need to reduce spending on non-essential items.

If you own your home, you may need to remortgage to cover some of your debts. If you can’t remortgage, you may need to make your IVA payments for an extra 12 months.

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Expert verdict: IVAs can be a great option for homeowners 

With an IVA, a customer knows - if they stick to the plan – they have an end date for clearing their debts. And they get to protect their home and essential assets. 

Katrina – Debt advice specialist 
Money Wellness

Steps towards an IVA

How it helps: A typical example

“When I first spoke to you it felt like there was somebody on the other end of the line, that finally could do something to help. It felt like there was light at the end of the tunnel.”
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Here is how we could help

  • Unsecured debt
  • Number of lenders
  • Term
    5 Years
  • Previous monthly repayments

Reduced to

  • New single monthly repayment
  • Total amount written off
Fees are payable which are included in your affordable monthly payment. Find out about the fees here.


There are always fees for an IVA but they can vary quite a bit between companies. If you get an IVA from our associated company, Freeman Jones, they will only charge a fee if your IVA is accepted by your creditors. These fees are paid out of – not on top of – your regular, affordable IVA payments. Read more about individual voluntary arrangement fees.  

An IVA is a form of insolvency. This means it’s a legally binding agreement that you and your creditors can’t get out of without serious implications. If you don’t make the agreed payments, your IVA might fail and you’ll still have all your debts. Your creditors will then be able to take action against you to try and recover what you owe them. But don’t worry, we’ll only recommend an individual voluntary arrangement if it’s the right option for you.

Yes, an IVA is a legally binding agreement between you and your creditors. This means it’s approved by the court and both you and your creditors have to stick to it or face serious consequences. 

There’s no rule against going on holiday when you’re in an individual voluntary arrangement. You can spend your money as you see fit, as long as your living costs and IVA payments are covered first. You’re unlikely to be able to afford anything too extravagant as you’ll be living on a strict budget. But an inexpensive break is not beyond the realms of possibility.

Your IVA will stay on your credit file for six years from the day it was agreed. After six years, you’ll basically have to start building your credit rating from scratch. This may take some time but there are steps you can take to help the process along.  

You could try applying for small amounts of credits with companies that specialise in lending to people looking to rebuild their credit score. If you do this wisely, making sure you repay your borrowing every month, you’ll show other potential lenders that you’re a low-risk customer. This will help to improve your credit rating. 

Other ways to boost your credit rating include making sure you’re on the electoral register and checking your credit file to make sure all the information is correct.

IVAs are more likely to be accepted when you’re paying as much as you can without causing yourself financial hardship. Your proposal will show this, as it will include detailed information about your income and expenses. An individual voluntary arrangement is also more likely to be accepted if all creditors are included, as it means everyone’s being treated the same.   

Don’t worry - the qualified IVA experts we work with will only submit a proposal to your creditors if they believe it is likely to be accepted. Your creditors will vote on whether to accept your proposal. For it to be accepted, creditors representing over 75% of the debts you owe must vote ‘yes’. 

Being a homeowner and having a mortgage doesn’t stop you from getting an IVA. If there is more than £5,000 of equity in your home, you’ll usually have to remortgage to release money to be paid into your IVA. Equity is how much money you’d make from selling your home once any mortgages were paid off. If you’re unable to remortgage, you’ll carry on making your IVA payments for up to another 12 months. This means your individual voluntary arrangement will last up to six years instead of five.

Why choose us?

Our expert debt advisors have helped thousands of people in a similar situation to you. We'll listen and do not judge.

But don’t take our word for it...

Learn more about IVAs

A wide range of debt solutions and services

It may be that an IVA isn’t quite right for you and another debt solution is more suitable. We’ll make sure we recommend the one that’s best for your individual circumstances and your long-term financial wellbeing.

You can find more information below on alternatives to an individual voluntary arrangement.

IVA or Bankruptcy

IVA or Debt Management Plan

IVA or Debt Relief Order

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