Let Us Tell You What IVA Is

IVA most commonly stands for Individual Voluntary Arrangement.

What is an IVA?

An Individual Voluntary Arrangement (IVA) is a formal, legally binding agreement between you and your creditors to repay your debts over time — usually 5 to 6 years.

It’s commonly used in the UK as an alternative to bankruptcy.

How It Works

You work with a licensed Insolvency Practitioner (IP).
They assess your finances (income, expenses, debts).
A repayment proposal is created based on what you can realistically afford.
Creditors vote on the proposal.
If approved (by creditors holding at least 75% of the debt value), it becomes legally binding.

You then make one affordable monthly payment, which is distributed among creditors.

What Happens to Your Debt?

You repay what you can afford.
If you complete the IVA, any remaining unsecured debt included in the arrangement is usually written off..
Once an IVA is approved by your creditors, interest and charges on the debts included in the arrangement are usually frozen.
Creditors bound by the IVA should stop pursuing payment for those debts once the arrangement begins.

Debts Typically Included

Credit cards
Personal loans
Store cards
Overdrafts
Some tax debts

Secured debts (like mortgages) are usually not included.

Pros

Avoids bankruptcy
Stops creditor harassment and legal action
Interest and charges on debts included in the IVA are usually frozen once the arrangement has been approved by creditors.
One fixed monthly payment
Remaining debt written off at the end

Cons

Entering into an IVA will affect your credit rating and will normally remain on your credit file for six years from the start date.
Public record
Must stick to strict budget
Missing payments can cause failure
Insolvency Practitioner fees apply
Homeowners may need to release equity in the final year

Who Is It For?

IVAs are generally suitable if:

You owe money to multiple creditors
You have unsecured debts you cannot realistically repay
You have a regular income and can afford a monthly payment
You live in England, Wales or Northern Ireland