An Individual Voluntary Arrangement (IVA) is a formal and legally binding agreement between you and your creditors that allows you to repay all or part of your debts over an agreed period — usually between five and six years — at an affordable monthly rate based on your financial circumstances.
Once your IVA is approved, creditors included in the arrangement cannot take further legal action against you or contact you directly about the debts covered. Interest and charges on those debts are frozen from the date the IVA begins.
You’ll make a single monthly payment, which is calculated according to what you can afford after essential living costs. Your IVA provider (known as an Insolvency Practitioner) will distribute this payment among your creditors.
An IVA will appear on your credit file for six years from the date it is approved. Your details will also be listed on the Individual Insolvency Register for the duration of the arrangement. Although it can affect your ability to obtain credit during this period, an IVA provides a structured route to becoming debt-free once the arrangement is successfully completed.
Advantage Of A IVA
- Stops creditor contact and legal action once approved.
- Writes off remaining included debts at the end of the term.
- Combines debts into one affordable monthly payment.
- Freezes interest and charges on included debts.
- Helps protect assets like your home or car, depending on circumstances.
- Supervised by a licensed Insolvency Practitioner.
- Gives a clear, structured route to becoming debt-free.
Disadvantages Of A IVA
- Affects your credit rating for six years.
- You must stick to a strict budget for up to six years.
- Homeowners may need to extend the IVA to 6 years, rather than 5.
- Your IVA is recorded on a public register.
- Some debts, like student loans and fines, cannot be included.
- If the IVA fails, creditors can take further action.
- Creditors must approve the IVA for it to go ahead.
- Windfalls such as inheritance or extra income must be declared and paid into the IVA.