What is an IVA?

An IVA, by definition, is a legally binding agreement set up between you and your creditors for you to repay an amount you can afford over a fixed period of time; usually around five years. It allows any unsecured debts to be written off at the end of the IVA, and will usually mean your creditors get more of their money back than if they force you into bankruptcy.

For an IVA to be approved, creditors representing at least 75% in value of the creditors who vote must agree to it. Once they have, it’s legally binding and they can’t pursue you, or take any further court action, as long as you keep to the terms of the agreement.


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If you enter into an IVA then you will have an insolvency practitioner who will act as your nominee and help you put together a proposal for your creditors. Part of this will process will involve negotiating with lenders on your behalf to agree an affordable amount to repay.

You will only have to pay one amount each month and that will include fees for setting up and managing your IVA. You won’t have to pay extra for these fees – you simply pay the agreed amount you can afford each month and these costs will be deducted from the sum you pay every month.

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What does IVA stand for?

IVA is an abbreviation for Individual Voluntary Arrangement. It was introduced as an alternative to bankruptcy and a way for people with problem debts to clear them at a rate they can afford.

Are IVA’s a government debt help scheme?

Individual voluntary arrangements (IVAs) were launched in the 1980s by the government, under the Insolvency Act 1986. The idea was originally that people struggling with debts, perhaps because of a failed business endeavour, could protect themselves and repay what they could afford over a fixed period of time.

These government-created IVAs then became increasingly common among people with high levels of consumer debt, who wanted to protect their assets by avoiding bankruptcy. Today, they are relatively common but still a serious route out of unmanageable debt, and one that often allows your creditors a better chance of repayment than bankruptcy.

How common are IVAs?

Bankruptcy rates are now at the lowest level in 25 years, according to the Insolvency Service, and that’s partly down to the increasing number of struggling debtors turning to other schemes, like IVAs and Debt Relief Orders.

In fact, figures from the Insolvency Service show that just under 20,000 people in England and Wales were made insolvent in the three months to October 2015 and of those, around 10,000 turned to an IVA as the best solution for their unsecured debts.

An IVA is certainly not an easy option, as it usually involves around five years of making monthly repayments to creditors, and potentially even re-mortgaging your home if you own one. However, unlike bankruptcy, it does mean you can definitely keep your home – an IVA also allows you to become debt free within a set period of time.

Once the payment period is up, any remaining debts are written off and the insolvency is removed from your credit reference file six years after the IVA was approved or once your IVA is completed, whichever is the latter.

What should I do now?

If you think an IVA could be the answer to your debt difficulties then you probably need to take advice sooner rather than later.

You can talk to one of our experienced and sympathetic advisers by calling our free helpline on 0800 280 2816 between 8am and 8pm Monday to Friday, or 9am to 3pm on Saturday. Our advisers can discuss your situation with you, and help you figure out whether an IVA could be the best solution, or if there’s another state-backed insolvency option that’s best suit you.

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*In the case of a one-off lump sum settlement

More Information on IVAs