What is an IVA?

Published Sun, Sep 18, 2016 Updated Tue, Feb 16, 2021

An Individual Voluntary Arrangement (IVA) is one of the most popular ways to get rid of larger unsecured debt. Originally used for small businesses, now all sorts of people use IVAs – especially if they don’t want to declare bankruptcy. In short, an IVA is a method where you make debt repayments based on what you can afford. But it’s also a very serious decision.

Who can apply for an IVA?

IVAs can be taken out by anyone with unsecured debt of at least £6,000 living in England, Wales or Northern Ireland. But, as a general rule, you should have:

  • A stable, regular income
  • Assets such as a car or house
[cta type=”debt”]

What can be included in an IPA?

Here are the types of debt that can and can’t be included in an IVA:

Yes No
Personal loans Mortgages
Bank overdrafts Loans secured on your assets
Student loans Council tax arrears
Credit cards Magistrate’s court fines
Store cards Child Support Agency arrears
VAT owed to HM Revenue Parking / speeding tickets

How do I get an IVA?

There are a couple of ways you can apply for an IVA. You could either use an insolvency practitioner or an IVA company. They’ll ask you about your financial situation including amount of debt, your income, who your creditors are, how many creditors you owe and whether you have any assets such as houses, cars, etc. They will then work out how much you can repay per month based on affordability – this means taking into account your current and income and essential living costs such as rent, mortgage, food, council tax, utility bills, etc. This will determine how long your IVA lasts (usually five years).

[cta type=”debt”]

On average, debtors tend to pay around £135 per month to creditors during their IVA – but some people pay as low as £70 per month. It does depend on whether your creditors accept the IVA or not. If they do accept it, then you pay what you can afford until your IVA finishes. It’s worth noting that all unsecured creditors agreeing to the IVA cannot take any further legal action against you.

After the end of your IVA agreement, creditors will legally write off outstanding debt – but only if you pay your IVA on time.