An Individual Voluntary Arrangement (IVA) is a legally binding agreement between you and your creditors to repay a proportion of your debts over a set period (usually 5-6 years). An insolvency practitioner sets it up and manages it. At the end, any remaining debt included in the IVA is written off.

How much debt do you need for an IVA?

There is no fixed minimum, but most IVA providers require at least £6,000-£10,000 of unsecured debt owed to two or more creditors. You also need to have enough disposable income to make regular payments (typically at least £80-£100/month).

How long does an IVA stay on your credit file?

An IVA stays on your credit file for 6 years from the start date. This means it affects your ability to borrow for 6 years. After it is removed, your credit score can begin to recover, though it may take additional time to rebuild fully.

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IVA Guide UK — Individual Voluntary Arrangements Explained

What is an IVA? How Individual Voluntary Arrangements work, eligibility, costs, pros and cons, and how they affect your credit score and future finances.

By PocketWise · 20 February 2026 · Last reviewed: 20 March 2026 · 7 min read

If you're struggling with debt, free confidential help is available from StepChange (0800 138 1111), National Debtline (0808 808 4000), and Citizens Advice.

An Individual Voluntary Arrangement (IVA) is a formal debt solution for people who cannot afford to repay their debts in full. It can write off a significant portion of what you owe — but it is a serious commitment with long-lasting consequences for your credit and finances.

How an IVA Works

Stage	What Happens
1. Assessment	Insolvency practitioner (IP) reviews your income, expenditure, and debts
2. Proposal	IP drafts an IVA proposal to your creditors
3. Creditor vote	Creditors holding 75%+ of your debt (by value) must approve
4. Implementation	You make agreed monthly payments for 5–6 years
5. Completion	Remaining included debt is legally written off

Eligibility

Requirement	Detail
Minimum debt	Typically £6,000–£10,000+ (unsecured)
Number of creditors	Usually 2 or more
Disposable income	Enough to make meaningful payments (£80–£100+/month)
Residency	Must be resident in England, Wales, or Northern Ireland (Scotland uses a Protected Trust Deed)
Type of debt	Unsecured debts only (credit cards, loans, overdrafts, catalogue debts)

What Debts Can Be Included?

Included	Not Included
Credit cards	Mortgage arrears
Personal loans	Secured loans
Overdrafts	Student loans
Store cards	Child maintenance
Catalogue debts	Court fines
HMRC debts (sometimes)	Council tax arrears (sometimes)
Payday loans	Fraud-related debts

Typical IVA Terms

Feature	Typical Terms
Duration	5–6 years
Monthly payment	Based on disposable income (usually £100–£400)
Total repaid	30–60% of original debt
Debt written off	40–70% of original debt
IP fees	Paid from your contributions (not extra)

Example

Detail	Amount
Total unsecured debt	£30,000
Monthly payment	£200
IVA duration	60 months
Total repaid	£12,000
Debt written off	£18,000 (60%)

Pros and Cons

Advantages

Advantage	Detail
Debt written off	Typically 40–70% of your debt
Single payment	One affordable monthly amount
Legal protection	Creditors cannot chase you (if they voted for the IVA)
Interest frozen	No more interest or charges on included debts
Avoid bankruptcy	Less severe than bankruptcy in some respects
Keep your home	Usually (though equity may need to be released)

Disadvantages

Disadvantage	Detail
Credit file	Recorded for 6 years — severely affects borrowing
Public record	Listed on the Individual Insolvency Register
Restrictions	Must disclose when applying for credit over £500
Home equity	May need to remortgage or extend the IVA to release equity
Windfall clause	Inheritances, PPI payouts etc. must be paid into the IVA
Failure risk	If you cannot maintain payments, it can fail (leading to bankruptcy)
Long commitment	5–6 years of reduced living standard

Impact on Your Life

Area	Impact
Credit score	Severely damaged for 6+ years
Bank account	May need to change to a basic account
Mortgage	Very difficult to get during the IVA
Employment	Must disclose for some jobs (finance, legal, military)
Renting	Some landlords check credit — may be harder
Car finance	Not available during the IVA
Mobile phone contract	May be declined — use pay-as-you-go

Alternatives to an IVA

Alternative	Best For
Debt management plan	If you can repay debts in full but need lower payments
Balance transfer	If debt is manageable and you have a reasonable credit score
Debt consolidation	If you can get a lower interest rate
Bankruptcy	If debts are completely unmanageable
Debt Relief Order (DRO)	Low income, few assets, debts under £30,000
Full and final settlement	If you have a lump sum to offer creditors

Important Warnings

Never pay for debt advice — free services (StepChange, National Debtline, Citizens Advice) are available
Beware IVA “factories” — some companies aggressively market IVAs when they are not the best solution
An IVA is not right for everyone — always explore alternatives first
Get independent advice — from a free debt charity, not a commercial IVA provider
Understand the full commitment — 5–6 years of restricted finances

Getting Help

Organisation	Contact
StepChange	0800 138 1111 (free)
National Debtline	0808 808 4000 (free)
Citizens Advice	citizensadvice.org.uk
MoneyHelper	0800 138 7777 (free)

IVA vs Other Debt Solutions: A Detailed Comparison

An IVA is one of several formal debt solutions available in England, Wales, and Northern Ireland (Scotland has its own equivalents). Understanding the alternatives is essential before committing:

Debt solution	Min debt	Types of debt	Credit file impact	Length	Asset risk
Debt Management Plan (DMP)	Any	Unsecured only	Markers on file	Until cleared	Low
Individual Voluntary Arrangement (IVA)	~£10,000	Unsecured	6 years on file	5–6 years	Home equity if owned
Debt Relief Order (DRO)	Under £30,000 debt	Unsecured	6 years on file	12 months	Very low asset limit
Bankruptcy	Any	Unsecured + some secured	6 years on file	12 months to discharge	High — assets can be seized
Sequestration (Scotland)	Any	Same	6 years on file	12 months	High
Protected Trust Deed (Scotland)	~£10,000	Unsecured	6 years on file	4 years	Home equity if owned

For England and Wales, a DRO is often the better option than an IVA if your total debt is under £30,000 and you have no assets and no surplus income. DROs cost £90 compared to typical IVA setup fees of £1,000–£3,000.

How an IVA Affects Your Home

If you own your home, the IVA will include your home equity in the arrangement. Typically:

In year 4/5 of your IVA, you’ll be asked to release equity by remortgaging (if you can)
If you can’t remortgage, your IVA may be extended by 12 months instead
You don’t automatically lose your home in an IVA (unlike bankruptcy, where the trustee can force a sale)
However, your home equity does not “belong” solely to you during the IVA — it is a creditor asset

If you are a homeowner with significant equity, get specialist advice before agreeing to an IVA.

What Happens if an IVA Fails?

An IVA fails (is revoked) when you miss too many payments and can’t agree a variation with your IP. Consequences:

All the debts that were covered by the IVA become immediately payable again in full (with accrued interest in some cases)
Creditors can take individual legal action — including County Court Judgements, charging orders, bailiff action
The failed IVA remains on your credit file for 6 years from the date the IVA commenced (not the failure date)
In some cases, if the IP believes there were assets or income you failed to disclose, criminal fraud charges are possible

If you’re struggling to make IVA payments: Contact your IP immediately. A payment variation (“variation meeting”) can be arranged to lower payments if your circumstances have genuinely changed.

The Effect of an IVA on Employment

Situation	Impact
Most employed workers	No direct impact — employer usually not notified
Financial sector workers (FCA regulated)	May breach conditions of authorisation — check FCA rules
Solicitors, accountants in practice	May affect practising certificate — check with professional body
Government security clearance	IVA likely triggers review of clearance
Company director	You can remain a director in an IVA (unlike bankruptcy)
Self-employed	You can continue to trade (unlike bankruptcy)

How Your Credit File Is Affected

The IVA is registered on the Insolvency Register (public record, searchable online)
It appears as a default or IVA marker on your credit file with all three agencies (Experian, Equifax, TransUnion)
The marker remains for 6 years from the date the IVA commences — not from completion
After 6 years, it is automatically removed and your credit file starts fresh
Rebuilding credit after IVA is possible — secured credit cards and credit-builder products help

Finding a Reputable IP

Insolvency Practitioners (IPs) must be licensed by a recognised professional body. Legitimate IPs are listed on the GOV.UK Insolvency Service register. Beware:

Companies that cold-call you promoting IVAs
“Debt help” websites that earn referral fees for steering you into IVAs
Any company that charges upfront fees for debt advice

The safest route is to start with a free debt charity (StepChange, National Debtline) who will assess whether an IVA is appropriate and, if so, refer you to a licensed IP.

Debt Management Plan Guide — informal alternative to IVA
Debt Relief Order Guide — for lower debt levels
Balance Transfer Guide — if debt is manageable and you want to reduce interest
Debt Repayment Strategies — snowball and avalanche methods
Credit Score Guide — rebuilding credit after debt problems