TL;DR
An IVA is a formal insolvency procedure that writes off a portion of unsecured debt but remains on your credit file for six years and restricts financial activity during the arrangement. It requires 75% of creditors by value to approve it and is unsuitable for most debts under £10,000.
Last reviewed: June 2026 | Sources: Debt & Credit
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Debt & Credit Key Facts: Individual Voluntary Arrangements Credit file: 6 years from start dateCreditor approval: 75% by value requiredDuration: typically 5-6 yearsInsolvency register: publicly searchableRegulator: Insolvency Service |
What an IVA is
An Individual Voluntary Arrangement is a formal insolvency procedure overseen by a licensed insolvency practitioner. It proposes a reduced monthly payment to creditors over typically five to six years, after which any remaining included unsecured debt is written off. It requires creditors representing 75 percent of the total debt value to approve the proposal. Once approved, it is legally binding on all unsecured creditors included in the arrangement.
The risks most people do not check
It appears on the Insolvency Register. IVAs are recorded on the publicly searchable Insolvency Register maintained by the Insolvency Service. This is visible to employers, landlords and lenders for the duration of the IVA and for three months after completion.
Homeowners may be required to release equity. The standard IVA protocol requires homeowners to attempt to remortgage in year four to five to release equity for creditors. If equity release is not possible, the IVA term may be extended by 12 months. This affects homeowners significantly.
IP fees reduce creditor returns and can be significant. Insolvency practitioner fees are paid from the monthly IVA payment before creditors receive anything. In the early months of an IVA, most of the payment may go to IP fees rather than debt. Compare total IP fees across providers before appointing.
Failing an IVA can lead to bankruptcy. If you miss payments and the IVA fails, your IP can petition for your bankruptcy. The IVA failure is also recorded and the bankruptcy will appear separately on your credit file.
Who IVA works for and who it does not
IVA is most suitable for people with unsecured debts over £10,000 across multiple creditors who cannot repay in full within a reasonable period, who have a regular income to make monthly payments, and who have no assets that would produce a better outcome in bankruptcy.
What to verify before entering
Obtain free advice from StepChange or National Debtline before approaching a commercial IVA provider. Compare IP fees. Understand the equity release clause if you are a homeowner. Confirm which debts are included and excluded.
Where to complain
Complaints about insolvency practitioners go to their authorising body: the Insolvency Practitioners Association or ICAEW. The Insolvency Service handles regulatory complaints.
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Disclaimer This article is for information only and does not constitute regulated financial advice. Always verify current terms with relevant providers and seek regulated advice for your specific circumstances. Kael Tripton Ltd is an independent editorial publisher and is not regulated by the FCA. |
Frequently asked questions
What debts can be included in an IVA?
Unsecured debts including credit cards, personal loans, overdrafts and HMRC debts can typically be included. Secured debts, student loans, child maintenance, court fines and criminal confiscation orders cannot be included.
What happens to my home in an IVA?
Your home is not automatically at risk in an IVA as it is in bankruptcy. However, the standard IVA protocol requires equity release attempts in year four or five. If you have significant equity, discuss the equity clause specifically with your IP before proceeding.
Can my employer find out I am in an IVA?
The Insolvency Register is publicly searchable. Some employment contracts include clauses about insolvency. Certain regulated professions including solicitors, accountants and financial services roles may have professional body rules about insolvency.
What is the difference between an IVA and bankruptcy?
An IVA is a formal arrangement that avoids bankruptcy and allows you to keep your assets while repaying reduced debts over time. Bankruptcy typically lasts one year but has more severe restrictions including potential asset disposal and restrictions on certain occupations. Both appear on the Insolvency Register and credit file for six years.
Can I get credit during an IVA?
IVA terms typically restrict borrowing to amounts over £500 without IP permission during the arrangement. Some essential credit may be available but at significantly higher rates given the IVA on the credit file.
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Sources Insolvency Service: IVA Information |
