Self-employed IVA Pros and Cons – what you need to know

A Self-Employed IVA (Individual Voluntary Arrangement) can offer real peace of mind if you’re running your own business and struggling with debt.

It’s a formal solution that lets you make affordable monthly payments based on your income, while protecting you from creditor contact and legal action.

But, like all debt solutions, it’s not right for everyone. Here’s a simple overview of the pros and cons to help you decide if it could be a good fit for your situation.

Benefits of a Self-Employed IVA

• You can continue to trade, knowing that you’re protected from creditor contact and legal action, giving you the breathing space you need to focus on your business.
• HMRC debts can be included – tax, VAT and PAYE arrears can be added to your IVA, which isn’t always the case with other solutions.
• Your unsecured debts will be written off at the end, as long as your stick to your agreed payments.
• You won’t need to sell your business assets and can keep essential tools, machinery and stock that you need to carry on running your business.
• You can structure repayments to suit your cash flow, which can be especially useful if your work is seasonal.
• Once your self-employed IVA is agreed, your debt is frozen and your creditors won’t be able to add any additional interest or charges to it.
• There are no hidden fees – everything is included in your agreed monthly payment. Learn more about fees in an IVA.
• If your business depends on certain suppliers, we can work with you to make sure those relationships are maintained.
• Your home will be safe – unlike with bankruptcy, you won’t be forced to sell your home to repay your debts.
• Once your IVA is complete, you can move forward knowing your remaining unsecured debt has been cleared.

Things to keep in mind

• If your IVA fails, this could result in a petition for bankruptcy.
• If you own a property and have £10,000 or more in equity, you’ll be asked to make an additional 12 payments into your IVA, extending your IVA to six years rather than five. Learn more about the equity clause.
• There are restrictions on your expenses when you enter into an IVA.
• Your creditors may not agree to the IVA, as this isn’t a guarantee.

• Only the unsecured debts included in your arrangement may be discharged at the end.
• Any unsecured debts which aren’t included will still be outstanding, and you’ll still be liable for the full balance.
• Secured debts aren’t included, so you’ll still need to pay your mortgage or other secured loans separately.
• Your credit rating will be affected – an IVA stays on your credit report for six years, which can impact your ability to get credit during and after the arrangement.
• Your name will be on the Insolvency Register, which is public, but someone would need to search for your name specifically to find it.
• If you don’t stick to the agreed terms of your arrangement or miss payments, your arrangement may fail.
• Self-employed IVAs are only available if you live in England, Wales or Northern Ireland (different solutions apply in Scotland).

Talk it through with us

We’re here to help you understand how a self-employed IVA works and whether it’s the right fit for you.

Get debt help online or call us on 0800 316 1833 for a confidential conversation.