| TL;DR: An IVA is a formal, legally binding agreement with your creditors, arranged through a licensed insolvency practitioner, that typically runs for five to six years and appears on your credit file for six years from when it starts, whether or not it completes early. Last reviewed July 2026 |
| DEBT : INDIVIDUAL VOLUNTARY ARRANGEMENTS |
An Individual Voluntary Arrangement, or IVA, is a formal insolvency solution where a licensed insolvency practitioner negotiates a legally binding repayment plan with your creditors, usually lasting five to six years. It requires creditors representing at least 75% of your debt by value to agree, and once approved it is binding on all included creditors, even those who voted against it.
KEY FACTS
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How an IVA actually gets set up
An IVA begins with a licensed insolvency practitioner reviewing your income, debts and assets, then proposing a realistic monthly payment based on what you can genuinely afford after essential living costs. This proposal is then put to your creditors, who vote on whether to accept it.
If creditors representing at least 75% of the total debt by value agree, the IVA becomes legally binding on all included creditors, even those who voted against it or did not vote at all. This is one of the key differences between an IVA and an informal arrangement: once approved, individual creditors cannot simply opt out and continue chasing you separately for the same debt.
What actually happens during the arrangement
For the duration of the IVA, you make a single agreed monthly payment to the insolvency practitioner, who distributes it among your creditors according to the terms set out in the arrangement. Interest and additional charges on the included debts are normally frozen from the point the IVA starts, meaning the amount you owe does not keep growing while you repay it.
The insolvency practitioner also takes a fee for managing the arrangement, which is built into the monthly payment structure rather than charged separately, so it is worth understanding from the outset how much of your payment goes toward fees versus your actual debt.
How an IVA compares to other options
The right formal or informal debt solution depends heavily on the size of the debt, whether you own a home, and how much you can realistically afford each month.
| Feature | IVA | Debt management plan | Bankruptcy |
| Legally binding on creditors | Yes, once approved | No, informal agreement only | Yes |
| Credit file duration | 6 years from start date | Until debts are cleared, no fixed period | 6 years, sometimes longer restrictions |
| Effect on your home | May require equity release near the end of term | No direct effect | Can lead to the home being sold |
| Typical length | 5 to 6 years | Flexible, until debts are repaid | Usually discharged after 12 months |
What happens to your credit file and your home
An IVA is recorded on your credit file for six years from the date it started, not six years from when it finishes, which means even an IVA completed early in four years will still show for the remaining two years. It is also recorded on the Individual Insolvency Register, a public record, while the arrangement is ongoing.
Many IVAs that include a homeowner require some form of equity release or remortgage near the end of the term if there is enough equity in the property to make a meaningful contribution to creditors, though the exact terms depend on the specific arrangement agreed at the outset. This is worth clarifying with the insolvency practitioner before agreeing to the proposal, rather than discovering it partway through.
What happens if a payment is missed
Missing a single payment does not usually end an IVA immediately, but a pattern of missed or reduced payments can put the arrangement at risk of failing. If an IVA fails, creditors are generally free to pursue the original debts again, including the possibility of further legal action, and in some cases this can lead toward bankruptcy if no alternative arrangement can be reached.
If your circumstances change significantly during an IVA, whether income falls or unavoidable costs rise, contacting the insolvency practitioner promptly to discuss a variation to the payment plan is almost always a better route than simply missing payments and hoping the issue resolves itself.
Getting a mortgage during or after an IVA
Most mainstream mortgage lenders will not lend to someone currently in an IVA, and even after it completes, many require a period of clean credit history, commonly a year or more, before considering an application. Specialist lenders who work with applicants who have a history of insolvency do exist, though they generally require a larger deposit and charge higher rates than a standard mortgage.
Because the IVA remains on your credit file for six years from its start date regardless of when it completes, someone who completes a five-year IVA early will still see it on their file for a further year, which is worth factoring into any plan to apply for a mortgage shortly after completion.
Breathing space before committing to an IVA
Before agreeing to a formal solution such as an IVA, it is worth knowing about the government-backed Debt Respite Scheme, commonly called Breathing Space, which gives someone in problem debt 60 days of legal protection from most creditor action, including collection calls, further interest and charges, while they seek proper debt advice and work out the right long-term option. This is arranged through a debt adviser rather than directly with creditors.
Breathing Space does not write off any debt or decide anything on your behalf; it simply pauses the pressure for a set period so a considered decision, whether that turns out to be an IVA, a debt management plan, or something else entirely, can be made without creditors continuing to chase in the meantime. It is generally a sensible first step for anyone unsure which formal option, if any, actually fits their situation.
Why an IVA is not always the right fit
An IVA works best for someone with a stable, predictable income who can commit to the same monthly payment for several years, since the whole arrangement depends on consistent payments being maintained. Someone with irregular income, such as certain self-employed workers or those on zero-hours contracts, may find the fixed monthly commitment harder to sustain, which increases the risk of the arrangement failing partway through.
For debts that are relatively small, or where a debt management plan or direct negotiation with creditors could realistically clear the balance in a similar timeframe without a formal, long-lasting mark on the credit file, an IVA may not be the most proportionate option. A debt adviser can help assess which route actually fits a specific set of debts and income, rather than defaulting to the most formal solution available. This assessment costs nothing and can save years of an unnecessarily formal commitment.
| Note: An IVA is a serious, long-term legal commitment. Free, independent advice from a debt charity such as StepChange or Citizens Advice, or from a regulated insolvency practitioner, should be sought before agreeing to one. |
| RELATED GUIDES |
| Disclaimer: Kael Tripton Ltd is an independent editorial publisher, ICO-registered (ZC135439). This guide is general information, not financial, legal or debt advice, and carries no commission or referral arrangement. Your circumstances may differ; consider speaking to a regulated adviser or a free debt charity before acting. Figures and thresholds change; verify current numbers with the primary sources listed below. |
Frequently asked questions
Can I set up an IVA myself without an insolvency practitioner?
No. An IVA must be arranged and supervised by a licensed insolvency practitioner, who proposes the arrangement to your creditors on your behalf.
How long does an IVA stay on my credit file?
Six years from the date the IVA started, regardless of whether it is completed early or runs the full term.
What happens if I cannot keep up IVA payments?
Contact your insolvency practitioner immediately to discuss a variation. Missed payments left unresolved can cause the IVA to fail, potentially exposing you to further creditor action.
Will I lose my home if I enter an IVA?
Not automatically, but many arrangements that include a homeowner require some equity to be released or the property remortgaged near the end of the term if sufficient equity exists.
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