IVA Advice: Your Financial Action Plan for Getting Out of Debt
Published 21st of June 2012·Updated 13 April 2026
Reviewed by: Reviewed for accuracy April 2026
An Individual Voluntary Arrangement (IVA) is a formal, legally binding agreement between you and your creditors to repay a portion of your debts over a fixed period, typically five or six years. At the end of the arrangement, any remaining debt included in it is written off. If your debts are unmanageable and you have a regular income, an IVA may be the most structured path back to financial stability.
Short Summary
An IVA is arranged by a licensed insolvency practitioner (IP) and requires the agreement of creditors holding at least 75 per cent of your total debt by value.
Monthly repayments are based on what you can genuinely afford after essential living costs. You will not be asked to pay more than your surplus income allows.
An IVA stays on your credit file for six years from the date it is approved. During this time, getting new credit will be difficult.
Free IVA advice is available from StepChange, Citizens Advice and the National Debtline. You do not need to use a fee-charging IVA company to access this option.
What is the first step if you are struggling with debt?
Write down every debt you have: the creditor's name, the outstanding balance, the interest rate, and the minimum monthly payment. This list is the foundation of any debt action plan and takes priority over everything else. Once you have a clear picture of what you owe, you can work out whether an IVA, a debt management plan, or another route is appropriate.
Contact a free debt advice service before approaching a commercial IVA company. StepChange (0800 138 1111) and Citizens Advice both offer confidential, impartial advice at no cost. They will assess your full situation and tell you which options are available.
Who qualifies for an IVA?
You are likely to qualify for an IVA if you owe at least £6,000 to two or more creditors and have a regular monthly income with some surplus after essential costs. The Insolvency Service reported that approximately 80,000 IVAs were registered in England and Wales in 2023, suggesting the option is widely used.
You cannot use an IVA if you are in Scotland. The Scottish equivalent is a Protected Trust Deed, arranged through a licensed insolvency practitioner under Scottish law.
How does an insolvency practitioner set up an IVA?
Your insolvency practitioner will gather details of your income, outgoings, debts, and assets. They will then draft a proposal for your creditors outlining what you can afford to repay each month and for how long. Creditors vote on the proposal; if those holding 75 per cent or more of the total debt value agree, the IVA is approved and becomes legally binding on all creditors, including those who voted against it.
Once approved, your IP supervises the arrangement for its duration. You make one monthly payment to the IP, who distributes it to creditors.
What debts can be included in an IVA?
Most unsecured debts can be included in an IVA, such as credit card balances, personal loans, overdrafts, utility arrears, and HMRC tax debts. Secured debts such as your mortgage or a loan secured against your home cannot be included. Student loans are also excluded. The table below gives a quick overview.
| Debt type | Can be included in IVA? |
|---|---|
| Credit card debt | Yes |
| Personal loans | Yes |
| Overdrafts | Yes |
| Utility arrears | Yes |
| HMRC tax debts | Yes (with HMRC agreement) |
| Mortgage | No |
| Secured loans | No |
| Student loans | No |
| Child maintenance arrears | No |
| Court fines | No |
How will an IVA affect your day-to-day life?
During the IVA you will be required to live within a budget set by your IP. You cannot take on new credit above a threshold (typically £500) without your IP's permission. Your IP will review your income annually; if your earnings increase significantly, your monthly payments may rise.
Your IVA will be listed on the Individual Insolvency Register, which is publicly searchable. It will not, however, be advertised in local newspapers, unlike bankruptcy in some circumstances. Your employer is unlikely to find out unless your contract specifically prohibits insolvency arrangements.
What happens at the end of an IVA?
When you complete all agreed payments, your IP issues a completion certificate. Any remaining debt that was included in the IVA is legally written off at this point. Your credit file will show the IVA as satisfied, though it remains on your file for six years from the date it was approved. After that date, the record is removed automatically.
FAQ
Can I get an IVA if I am self-employed?
Yes. Self-employed people can enter an IVA. Your IP will use your average monthly income over a recent period to calculate affordable repayments. Income fluctuations are taken into account, and the arrangement can be structured to accommodate variable earnings.
Will my partner be affected by my IVA?
Your IVA covers your debts only. Joint debts are more complicated; the IVA covers your share, but your creditor can still pursue your partner for the full balance. Speak to a free debt adviser at StepChange or Citizens Advice about joint debts before proceeding.
Can I be forced to sell my home in an IVA?
It is rare. Your IP will attempt to protect your home. However, if you have significant equity, you may be asked to remortgage in the final year of the IVA to release some of it towards your creditors. If remortgaging is not possible, your IVA term is usually extended by 12 months instead.
What happens if I miss an IVA payment?
Missing a payment is serious and can put the IVA at risk of failure. Contact your IP immediately if you think you will miss a payment. Most IPs can arrange a short payment break or variation to the arrangement if your circumstances have changed. If the IVA fails without agreement, your creditors can pursue you for the full original debt.
How long does an IVA last?
Most IVAs last five years. If you own a property with equity, a sixth year is commonly added to allow time for a remortgage review. Your IP will confirm the expected duration when your proposal is drafted.
Is an IVA better than bankruptcy?
It depends on your situation. An IVA allows you to protect your home and keep certain jobs that bankruptcy would prevent. Bankruptcy discharges most debts in 12 months but has more severe restrictions on employment and assets. A free debt adviser from StepChange or the National Debtline can explain which option suits your circumstances.