What Are the Benefits of an IVA? A Plain-English Guide
Published 19th of September 2016·Updated 2 April 2026
Reviewed by: Reviewed for accuracy April 2026
An Individual Voluntary Arrangement (IVA) offers several significant benefits for people with serious debt problems. It freezes interest and charges, stops creditor contact, protects your home from being sold, and writes off any remaining debt at the end of the agreed term. For many people in England, Wales, and Northern Ireland, it is the most structured and manageable route to becoming debt-free.
Short Summary
An IVA is a legally binding agreement between you and your creditors, supervised by a licensed insolvency practitioner (IP). Once accepted, all creditors are legally bound by its terms, regardless of how they voted.
Your monthly payment is set at a level you can genuinely afford, based on your income minus essential living costs including rent or mortgage, food, utilities, and transport. You will not be asked to pay more than you can manage.
At the end of the IVA term, usually five years, any remaining debt included in the arrangement is written off entirely. This means you could legally exit the arrangement having repaid only a portion of what you originally owed.
Unlike bankruptcy, an IVA generally allows you to keep your home and continue in professional roles that would be barred to a bankrupt. However, some regulated professions do have restrictions on IVAs, so check your employment contract before proceeding.
If you are unsure whether an IVA is right for your situation, StepChange, Citizens Advice, and National Debtline all offer free, independent advice from regulated debt advisers.
Does an IVA stop creditors from contacting you?
Yes. Once your IVA is accepted and approved, all creditors included in it are legally prevented from contacting you, adding interest or charges, or taking any enforcement action including court action, bailiff visits, or debt collection calls.
This is one of the most significant practical benefits for people who are experiencing harassment from creditors. The legal protection kicks in from the point the IVA is approved, not from when you first engage with an insolvency practitioner. During the proposal stage, you may want to inform creditors that an IVA is being prepared, and many will pause collection activity voluntarily.
Can an IVA write off part of your debt?
Yes. The amount you repay through an IVA depends entirely on what you can afford over the term. At the end of the arrangement, any remaining balance owed to creditors included in the IVA is legally written off.
There is no fixed percentage that gets written off. Some people repay 30 to 40 per cent of their total debt; others repay more, depending on their income. According to the Insolvency Service, around 65,000 IVAs were registered in England and Wales in 2023, reflecting how widely used this solution has become for people with unmanageable debt.
Does an IVA let you keep your home?
In most cases, yes. Your mortgage repayments are treated as an essential outgoing when calculating your IVA payment. You are expected to continue paying your mortgage as normal throughout the IVA.
However, towards the end of the IVA term (typically in the final six months), you will usually be asked to attempt to remortgage your home to release equity. If you cannot remortgage, the IVA term is usually extended by one year instead of a lump sum payment. You are not generally required to sell your home to fund an IVA, which is a significant advantage over bankruptcy.
Does an IVA affect your job?
For most people, an IVA has no impact on employment. Unlike bankruptcy, entering an IVA does not automatically disqualify you from most jobs.
However, certain regulated roles do carry restrictions. If you work in financial services, as a solicitor, as an accountant, in the police, or in the armed forces, your employment contract or professional rules may include restrictions on holding an IVA. Check your contract and, if relevant, speak to your HR department or professional regulator before proceeding. Do not assume you are unaffected if you work in a regulated sector.
How does an IVA compare to bankruptcy for benefits?
| Benefit | IVA | Bankruptcy |
|---|---|---|
| Creditor contact stopped | Yes | Yes |
| Interest frozen | Yes | Yes |
| Remaining debt written off | Yes, at end of term | Yes, after 1 year |
| Home protected | Usually yes | Not guaranteed |
| Public record | Insolvency Register | Insolvency Register |
| Professional restrictions | Limited (check contract) | More extensive |
| Director of a company | Allowed | Not allowed during bankruptcy |
Is an IVA a stable long-term solution?
An IVA provides financial stability because your payment is fixed based on a realistic assessment of your income and essential spending. You know exactly what you will pay each month for the duration of the arrangement. Creditors cannot demand more, and your essential costs are protected.
The arrangement is reviewed annually. If your income increases, you may be asked to increase your payments. If your circumstances worsen, such as losing your job, your insolvency practitioner can apply to vary the terms of the IVA. This flexibility makes it more robust than informal arrangements such as a Debt Management Plan.
FAQ
Who is eligible for an IVA?
You must be insolvent (unable to pay your debts as they fall due), have at least two separate creditors, and have enough regular income to make monthly payments. Most insolvency practitioners look for a minimum of around £6,000 in unsecured debt, though Citizens Advice suggests your prospects are stronger with debts of £10,000 or more and at least £100 per month of disposable income after essential costs.
Does an IVA freeze interest on all my debts?
Yes. Once the IVA is approved, all creditors included in it must stop adding interest, fees, and charges. Any interest that has already accrued up to the approval date is included in the total debt figure. No further interest is added for the duration of the arrangement.
Can I get credit during an IVA?
You are typically not allowed to take out new credit of more than £500 without your insolvency practitioner's written permission. Taking out credit without permission could breach your IVA and lead to it failing.
What happens at the end of an IVA?
Your insolvency practitioner will issue a Completion Certificate confirming that the IVA has concluded successfully. Any remaining debt included in the IVA is written off. The IVA is removed from the Insolvency Register, though it remains on your credit file for six years from the date it began.
Can I include all my debts in an IVA?
Most unsecured debts can be included, such as credit cards, personal loans, overdrafts, and store cards. Some debts cannot be included, including student loans, child maintenance arrears, court fines, and debts incurred by fraud. Secured debts such as a mortgage are also excluded, but your mortgage payments are protected as an essential expense in your budget.