IVA guide

How an IVA works

A plain-English guide to the process, what it can change, and the commitments you should understand.

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Rough figures are fine. This gives you an idea of what a typical IVA payment
might look like before you speak to anyone.

The basic agreement

An IVA combines qualifying unsecured debts into one formal arrangement. Your payment is based on affordability, not simply the amount you owe. Creditors holding at least 75% of the voting debt must approve it.

A licensed Insolvency Practitioner reviews your finances.

A proposal sets out your affordable payment and term.

Once approved, included creditors are bound by the arrangement.

Complete the IVA and remaining included balances are written off.

Possible benefits

One affordable monthly payment
Interest and charges on included debts normally stop
Protection from legal recovery by included creditors
A clear end date if the arrangement is completed

Important risks

Your IVA is recorded publicly and affects credit for six years
Homeowners may need to release equity or extend the plan
Spending is restricted and changes in income are reviewed
If it fails, creditors may resume action and bankruptcy is possible

Debts commonly excluded

Secured borrowing, court fines, child maintenance, student loans and some other debts cannot usually be included. Keep paying priority bills such as rent, mortgage, council tax and utilities.

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