Individual voluntary arrangement (IVA)

What is an Individual voluntary arrangement (IVA)?

An individual voluntary arrangement (IVA) is a formal and legally binding agreement between you and your creditors to pay back all, or part of your debts over a period of time at an affordable rate. Set up and managed by an Insolvency Practitioner (IP), an IVA is a form of insolvency which allows you to write off unsecured debt with government legislation, and offers an alternative to bankruptcy. 

Once you enter an IVA, creditors can take no further action against you and won’t be able to contact you directly. An IVA will affect your credit rating for six years and your information will also be placed on the public Register of Insolvencies for the duration of the plan, but will allow you to clear your debts. In an IVA, a single monthly payment is agreed with your current financial situation taken into consideration – this payment is then divided among the people you owe money to.

Advantages and Disadvantages

There are many factors to consider before opting for a IVA. Some advantages / disadvantages include:


  • Once approved, an IVA is binding on all of the creditors included in it, whether they agreed to it or not
  • Under an IVA, creditors cannot apply any interest/charges to the debts included, take legal action, or contact you about your debts
  • The IVA provides a formal alternative to bankruptcy, meaning you don’t need to sell significant assets like your home
  • You will make one affordable payment into the IVA each month


  • The creditors will vote on whether to accept your IVA proposals, and a majority of the lenders (by debt level) will have to agree for it to be approved
  • An IVA will have a negative impact on your credit rating for at least six years, and you will be listed on a public insolvency register for the duration of the IVA
  • If there is reasonable equity in your property, you may be required to release this into your IVA
  • You will need to stick to an agreed budget for the duration of the IVA, with restrictions on your expenditure
  • If you do not keep to the terms of the IVA, it could fail and your creditors could seek to reapply interest or petition for your bankruptcy