An IVA is a formal legally binding agreement to repay a portion of debts over 5 to 6 years with the remainder written off at the end.

How much does an IVA cost?

Typically £4,000–£8,000 taken from your monthly payments — you do not pay separately.

How long does an IVA last on your credit file?

6 years from the date it is approved regardless of when it completes.

finance ⏱ 2 min read 📅 Updated Apr 2026

What Is an IVA UK? Individual Voluntary Arrangement Explained 2026

Chandraketu Tripathi

Finance Editor, Kaeltripton

Published 3 Apr 2026

Last reviewed 20 Apr 2026

✓ Fact-checked

What Is an IVA UK? Individual Voluntary Arrangement Explained 2026

UK Debt Guide — April 2026

An IVA (Individual Voluntary Arrangement) is a formal legally binding agreement between you and your creditors to repay a proportion of your debts over a set period — typically 5 to 6 years. Any remaining debt is written off at the end. It is set up and managed by a licensed Insolvency Practitioner.

How an IVA Works

Stage	What Happens
Assessment	Insolvency Practitioner reviews income debts and assets
Proposal	IP drafts repayment proposal and presents to creditors
Creditor vote	75%+ of debt by value must agree
IVA begins	One monthly payment to IP who distributes to creditors
Duration	Typically 60 months — up to 72 for homeowners
Completion	Remaining debts written off — IVA certificate issued

IVA Pros and Cons

Pros	Cons
Legally binding — creditors cannot chase you	Fees typically £4,000–£8,000 taken from repayments
Portion of debt written off	Appears on credit file for 6 years
One affordable monthly payment	May need to release home equity in year 5
Protects against bankruptcy if creditors cooperate	If payments fail IVA may collapse leading to bankruptcy

How Much Do You Repay?

Only what you can afford. The IP calculates your disposable income — income minus reasonable living expenses — and that is your monthly payment. Typically creditors receive 20 to 50 pence in the pound.

IVA vs Bankruptcy

An IVA is generally better than bankruptcy if you have a regular income, want to protect your home, or work in a profession where bankruptcy disqualifies you. If you have no income or assets bankruptcy may clear debts faster.

Bottom line: An IVA can be effective for managing significant debt with regular income. Be cautious of IVA companies charging high upfront fees or pushing you toward an IVA when a cheaper solution like a Debt Management Plan or DRO would be more suitable. Always get free advice from StepChange or Citizens Advice first.

By Chandraketu Tripathi · Updated April 2026 · kaeltripton.com

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Chandraketu Tripathi

Finance Editor · Kaeltripton.com

Chandraketu (CK) Tripathi, founder and lead editor of Kael Tripton. 22 years in finance and marketing across 23 markets. Writes on UK personal finance, tax, mortgages, insurance, energy, and investing. Sources: HMRC, FCA, Ofgem, BoE, ONS.