Individual Voluntary Arrangement (IVA)

An IVA, or Individual Voluntary Arrangement to give it its full title, is a formal debt solution for people with a severe unsecured debt problem, who want or need to avoid being declared bankrupt by their creditors.
An IVA provides a formal structure to enable you to make repayments to your creditors based on affordability rather than at the previous contractual arrangements. You agree to pay your creditors as much as you can afford throughout the term of the IVA but no more, whilst, in turn, they agree to accept your payments rather than forcing you in to bankruptcy and promise to legally ‘write-off’ any money still out standing at the end of your arrangement if you successfully reach the end of the IVA term.

Who can apply for an IVA

Anyone with a severe unsecured debt problem can apply for an IVA, but they are particularly helpful to people who own assets, because an IVA offers an opportunity to try and protect assets which would be otherwise vulnerable in bankruptcy.

The same could be said for people trying to protect their income, because an IVA is particularly suitable if you are in a profession that prohibits bankruptcy as a debt solution, such as accountants, bank employees, lawyers, civil servants, Armed Services personnel, Prison Officers and Police Officers. An IVA acts as a formal alternative to bankruptcy, allowing you to reach an amicable agreement with your creditors without the fear of professional sanctions being taken against you.

You need to have a ‘provable’ income to be able to apply for an IVA. Therefore, you can be self-employed or an employee, be a limited company director or in a partnership, or you could even be unemployed or retired and living off your pension. If you are unsure about whether your income qualifies you for an IVA, just give one of our IVA experts a call on 01625 361136 and we’ll discuss it with you.

How does an IVA work?

  • An IVA works by allowing you the chance to repay more to your creditors through the structure of the IVA compared to the return creditors could expect if they made you bankrupt.
  • Because an IVA is a mutual agreement between you and your creditors, you keep more control over your financial affairs than you would otherwise experience in bankruptcy.
  • The IVA also ensures you have the chance to put forward your proposals on how the equity in your assets ought to be introduced for the benefit of your creditors rather than, say, through a forced sale, as you would experience in your bankruptcy.
  • To ensure your IVA is conducted properly it will be overseen, or administered, by an Licensed Insolvency Practitioner (IP).
  • IPs are often accountants, but are always highly qualified financial experts who specialises in insolvency law and they are very heavily regulated to ensure they adhere to all the legal requirements that envelop IVAs. It is up to the IP to ensure that each IVA is conducted along the terms laid out in the IVA proposal. They must make sure all parties are sticking to the IVA and fulfilling their side of the deal.
  • Once your IVA has been agreed by the necessary majority your creditors, i.e. 75% in debt value terms of those creditors that vote, it provides you with immediate protection. It immediately stops your creditors from taking any further legal action against you for the recovery of your unsecured debts, and this even includes those creditors that may have initially voted against your IVA.
  • What’s more, all creditors are legally obliged to stop charging interest on the outstanding balances of your debt, once the IVA has begun. It also ensures they refrain from adding late payment charges and other costs, which might otherwise have continued to increase the outstanding debt levels after the IVA had begun.
  • Each IVA has a fixed term of normally, 5 years with a possibility of a 12 month extension if your IVA is subject to an equity clause. However, in the correct circumstances, it is possible to have an IVA consisting of just one payment. This is often referred to as a Full and Final Settlement IVA, or a Lump Sum IVA.
  • Once your IVA has successfully completed, any outstanding balances on your unsecured debts are written off by your creditors under the terms of your IVA, even though you may have only repaid a fraction of your original debt.



  • Affordable payments – allowances will be made for all key expenditure, which will also provide a
  • manageable budget which many clients find very useful
  • Fixed period of repayment – ordinarily 60 months – provides an end point for the client, they will know when they will be free of debts included in the IVA
  • Protection from lenders – legally binding agreement which is designed to stop lenders contacting by phone or by letter and also any legal action so no bailiffs, CCJs, attachment of earnings and charging orders 
  • Protect any assets owned subject to lenders approval – no risk to homes at all and assets of reasonable value all acceptable
  • Once completed any outstanding debt owed included in IVA written off – The client will be paying as much back as they can over a reasonable period of time so it is an honourable solution
  • All interest frozen upon approval of IVA
  • 75% lender support to gain acceptance


  • Expenditure less flexible – strict adherence to guidelines, which can sometimes result in the debtor paying back more than they owe during a 60 month plan
  • The duration of the product may increase as per the proposal and any modifications that are made. Though you will be made aware before agreeing.
  • Homeowners effected – Property owners will be required to investigate a re-mortgage – only required to do so if affordable. If unable to re-mortgage and have above £5000 equity then up to an extra 12 months of repayments maybe required, which would be confirmed prior to approval.
  • Fees to be paid to Insolvency Practitioner – as part of monthly payments however this is included in the monthly payment.
  • Credit rating affected – on credit file for 6 years from the date of approval. If an IVA fails then lenders may petition for the debtor’s bankruptcy.
  • Some occupations may be affected – You will need to check with employer and trade body to ensure no impact to position of employment
  • 75% of the lenders who vote have to agree for a successful IVA. This is called the requisite majority