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What is an IVA?

A plain-English explanation of the Individual Voluntary Arrangement: its legal basis, how it works, and what being in one means for you.

The definition of an IVA

An Individual Voluntary Arrangement (IVA) is a formal, legally binding agreement between you and your unsecured creditors. You agree to repay a proportion of your debts over a fixed period — typically five or six years — and your creditors agree to write off any remaining balance at the end, provided you have met all the terms.

An IVA is a statutory process created by the Insolvency Act 1986. It is not simply a private contract; both you and your creditors are legally bound by its terms once it is approved.

England, Wales and Northern Ireland only

An IVA is only available in England, Wales, and Northern Ireland. If you live in Scotland, the equivalent process is a Protected Trust Deed under Scottish insolvency law.

The IVA framework is set out in Part VIII of the Insolvency Act 1986, with procedural detail in the Insolvency Rules 2016 (SI 2016/1024). These rules govern how an arrangement must be proposed, how creditors vote, how the Insolvency Practitioner supervises the arrangement, and what happens if it fails.

Because an IVA is a statutory instrument, once approved by the required majority it binds all unsecured creditors who were notified — even those who voted against or did not vote.

How an IVA works in practice

Your IVA is supervised by a licensed Insolvency Practitioner (IP), who acts as your Supervisor throughout. They collect your monthly payments, distribute funds to creditors, conduct annual reviews, and issue a completion certificate at the end.

Each month you make a single payment — your IVA contribution — to your Supervisor. They distribute collected funds to creditors in proportion to each debt. You do not pay creditors directly. Everything is governed by your IVA Proposal document.

Typical structure of an IVA

FeatureTypical arrangement
Duration60 months (5 years), often extended to 72 months if there is property equity
Minimum paymentNo legal minimum; most IVAs require at least £80–£100 per month
Debt written offAny remaining unsecured debt at the end of the arrangement
Interest and chargesFrozen from the date the IVA is approved
Credit fileRecorded for six years from the date the IVA begins
Public registerListed on the Individual Insolvency Register for the duration

What an IVA covers

An IVA deals with unsecured debts. Common examples include credit cards and store cards, personal loans and overdrafts, catalogue and hire purchase arrears (where goods have been surrendered), council tax arrears, HMRC debts (subject to acceptance), utility bill arrears, and payday loans.

What an IVA does not cover

Certain debts cannot be included and remain your personal responsibility throughout:

  • Secured debts such as a mortgage or secured loan
  • Student loans
  • Child maintenance arrears ordered by a court
  • Magistrates' court fines
  • Compensation orders made by a criminal court
  • Debts arising from fraud (in most circumstances)
  • Social fund loans
Secured debts must be paid separately

If you have a mortgage, you must continue to make those payments separately throughout your IVA. Failure to maintain a mortgage is independent of the IVA and could put your home at risk.

IVA compared to other insolvency options

SolutionDurationAsset protectionPublic register
IVA5–6 yearsMay keep home (subject to equity clause)Yes — Insolvency Register
Bankruptcy1 year dischargeAssets may be soldYes — Insolvency Register
Debt Relief Order (DRO)12 monthsMust have minimal assetsYes — Insolvency Register
Debt Management Plan (DMP)VariesNo formal legal protectionNo

Who can see your IVA

Your IVA is recorded on the Individual Insolvency Register, publicly searchable via the Insolvency Service on GOV.UK. It shows your name, date of birth, address, approval date, and Supervisor's name. The entry is removed when the IVA completes or is terminated.

Your employer is not routinely notified. However, some professions regulated by the FCA, and certain legal and public sector roles, may have contractual or regulatory requirements affected by an IVA. Check your contract or professional body if unsure.