What is an IVA?

IVA stands for Individual Voluntary Arrangement and is a legal agreement between you and your creditors, where you agree to pay off a portion of your debts whilst the rest will be written off.

An IVA allows you to consolidate all of your eligible debts into one monthly payment, which makes keeping on top of things much simpler. The process must be handled by a licensed Insolvency Practitioner and they deal with creditors on your behalf, so you don’t have to. In this time, your creditors that have agreed to the IVA must freeze all interest and charges.

The amount you pay will be calculated beforehand, so both you and your creditors can choose whether to agree to it.

Your personal circumstances will be taken into consideration (income / outgoings), along with your total level of debt. The proposal will then include the total amount to be paid, total to be written off and the end date for your IVA.

A typical IVA lasts around 5 years, after which you will be debt free.

What debts can be included in an IVA?

Not every type of debt can be consolidated into an IVA, so it’s important to know exactly which ones may be covered, and which of your debts you will have to continue paying towards separately.

  • Credit Cards
  • Payday Loans
  • Overdrafts
  • Arrears on utility bills eg. Gas / Water / Electric bills
  • Council Tax arrears
  • Benefit Overpayments
  • Tax Credit
  • National Insurance
  • Personal Debts eg. money owed to family and friends
  • HMRC debt

What debts can’t be included in an IVA?

You cannot include your ‘secured’ debts in an IVA and you should keep up regular payments towards these so you do not accrue further debts.

A few examples of debts that can not be covered are:

  • Mortgages
  • Student Loans
  • TV License Arrears
  • Court Fines
  • Child Maintenance
  • Unpaid VAT bills

Advantages and Disadvantages of an IVA

Not every debt solution is right for everyone, so we’ve listed below some aspects that make an IVA a great option, as well as some other important things to consider.


  • A large sum of your debt can be written off
  • You only pay back what you can afford
  • The agreement is legally binding, so your creditors have to stick to it and extra charges and interests remain frozen
  • Your creditors are not allowed to contact you directly for the duration of the plan – your Insolvency Practitioner deals with them on your behalf
  • You will be given a clear end date for the IVA
  • As long as you keep up regular payments towards your mortgage, an
  • IVA will not cause you to lose your home


  • If you receive a lump sum of money during your IVA, your creditors may require you to pay this towards your debts.
  • You may be asked to release equity from your home – if this isn’t possible then your plan may be extended by 12 months
  • Your credit rating will be affected for the duration of the plan and for one year following its completion
  • Your name will be visible on the Insolvency Register which is publicly accessible

What will I have to pay?

It’s important to note that all of the debts and fees you pay towards on an IVA will be covered by your monthly payments.These will all be explained fully by your Insolvency Practitioner before any arrangement is agreed to by both yourself and your creditors, but there are no hidden or added fees that you will be faced with.

Below is a rough outline of what your total payments will be made up of:

Money Towards Debts
The amount paid towards debts each month on an IVA will differ from person to person. This is because it is fully based on individual circumstances in order to create a realistic and affordable amount for the duration of the IVA.

Your financial situation is reviewed annually and if there are any changes to your income, your IVA may be changed accordingly – eg. if you inherit a sum of money in this time, your creditors may require you to contribute this towards your debts.

Other Fees
There are other fees that cover the cost of the IVA – these will be clearly set out in your IVA Proposal. These are:

Nominees Fee
This fee covers our professional costs and charges for arranging your IVA including:

  • Preparing your IVA proposal – which sets out the proposed terms of your IVA and provides your lenders with a detailed snapshot of your finances.
  • Organising the creditors’ meeting, in which lenders can request changes to the terms of your IVA.

It will typically be between £1000 and £2700 and is often capped to an amount equal to your first 4-6 months’ IVA payments.

The Nominee’s fee will be paid first before any payments are made to your lenders.

Supervisors Fee:
This covers the administration work involved in running your IVA and is calculated as a percentage of the money you are paying back. Typically it is charged at 15–18% of any money being paid back. It covers:

  • Ongoing costs such as your monthly
  • Annual Reviews of your IVA

IVA vs. other solutions

There are many aspects that make an IVA a great option for you to deal with your financial difficulties.

Here’s some quick comparison with a few other options that you may be presented with when you are wanting to get out of debt.

Bankruptcy or IVA

Whilst both of these options may see you writing off large portions of your debt, there are some key differences between going bankrupt and going insolvent (IVA).

Here are a few examples:

  • Bankruptcy may see you having to sell your assets, including your home, to cover your outstanding debt. With an IVA, you will never be forced to sell your home.
  • Bankruptcy is a court order, whilst an IVA is an ongoing agreement between you and your creditors.

Debt Management Plan (DMP) or IVA

Both of these options do allow you to consolidate your eligible debts into one payment, however, there are some key differences that are worth noting:

  • A DMP is an informal agreement, whereas an IVA is legally binding.
  • On a DMP, your creditors may still try to contact you about your debts whereas on an IVA creditors can not contact you directly – any communication is handled by your Insolvency Practitioner.
  • An IVA will be suitable for debts of at least £6000 or more, but a DMP may help with lower debts of £2000+

Different types of IVA

There is not just one type of IVA – there are different options available depending on your circumstances. We’ve listed a couple of alternatives below so you can understand what’s available:

You can still enter an IVA if you are self-employed. You will still make monthly payments based off your affordability, but it works slightly differently:

Business Credit
You may require credit in order to keep your business going whilst on the IVA. This can be negotiated within your initial proposal with your creditors and it to be agreed on before the IVA commences. Creditors aren’t likely to reject without reasonable cause, but it is crucial that you keep up repayments for business credit in good time to avoid further financial issues.

Varying Income
A self-employed IVA takes into consideration the fact that businesses may have seasonal / varying income and so you are allowed some flexibility with this. You must provide accurate statements regarding your income and expenditure so that your IVA payments may be adjusted accordingly. It is crucial that you provide this information to your Insolvency Practitioner regularly so that you only pay what you can actually afford, as well as avoiding any issues with creditors.

It’s possible for an IVA to be negotiated without including debts owed to certain traders, if your business is to continue trading with them throughout the duration of the IVA. This will be negotiated during the initial proposal period and is designed to allow you to continue making separate payments to those traders so as not to compromise your business.

Joint IVAs
If you have any joint debts, then these may be included in an IVA. It’s important to note that if one person enters an IVA, but the other doesn’t, it is still going to have a negative impact on both people’s credit file.

Instead, if there is an eligible amount of debt between two people, it is possible for both to set up individual IVAs and then include any joint debts within these. This is subject to creditors agreeing to the merging of debts and terms of the IVAs themselves, but if approved then both IVAs can be covered by only one monthly payment.

Is an IVA right for me?

With any debt solution, it’s important to make sure you’re making a well informed decision about what’s right for you.
You must also be able to commit to paying each month’s payment on time, as well as be clear and honest with your Insolvency Practitioner about any changes in your circumstances in order to avoid risking your IVA being voided.

No solution will be able to clear your debts overnight – if you stick with the IVA, you are likely to be debt free in 6 years and back on your way to building your credit and moving on financially.

Get debt free

Our IVA specialist & debt advice team will help you
get debt free in 3 easy steps.

Step 1

Complete our online form

Completely Private & Confidential

Our quick and easy assessment will let you know what options you qualify for in 30 seconds.

Step 2

Talk to the experts

Regulated Advice Process

If you are worrying about managing your debt, give us a call today or request a callback.

We understand debt and know it can be difficult, but our trained specialists are here to help without judgement.

Step 3

Take action today

No Obligation Service

Being in debt can be daunting, but putting together an action plan will feel like a burden has been lifted

Specialist IVA advice you can trust

We pride ourselves on customer satisfaction. With independent Feedback based on 385 verified reviews (and counting), we were recently awarded the Feefo Gold Trusted Service Award.

Feefo Gold Trusted Service Award

Verified Customer Reviews

Extremely helpful

I was really worried about finances and Priya made my experience really easy and helpful. I am now proceeding on the basis of what we discussed. This has meant I can now sleep at night knowing km on the road to being debt free.

Kaley, North Wales

Fantastic service, huge weight lifted from my shoulders

Fantastic service, a huge relief after speaking to Money Advice. Really wish I’d have gone to them sooner. I’d highly recommend anyone in a similar situation to contact these guys.

Ian and Denise

Gave sound advice in a clear and understanding way

Very patient and friendly service. I spoke to Priya who helped me understand my options at a very stressful time and directed me to the help I needed.


Let's get started

  • IVAs are affordable

You’ll make one reduced payment each month – it’ll be affordable for you, and will take into account your essential expenditure, such as your rent or mortgage.

  • Freeze interest & charges

If your IVA is approved, lenders will freeze interest and charges and they’ll stop chasing you.

  • Your debts will be written off on completion

Once you’ve completed your IVA, any outstanding balance on your unsecured debts included in the IVA will be written off. Any unsecured debts not included will remain outstanding.

  • Equity release

You’ll be able to keep your home, however you may need to release equity to repay your debts. If you’re unable to re-mortgage, you may need to make extra contributions for 12 months. Re-mortgaging could result in a higher interest rate.

  • Terms of the IVA

You could be required to reduce spending on non-essential items. If the IVA fails, you could be at risk of bankruptcy.

  • Credit rating

Your IVA will appear on your credit rating for six years from the date it’s registered and details will be included in the publicly available Insolvency Register.

customer relieved for debt problem

Money Advice UK help over over 5,000 people every year

Our team of experts help thousands of families every year across the UK get their finances back on track.

Timer icon

Is IVA is right for you?

Find out in 30 seconds.

Calendar icon

Prefer to speak later?

We will offer advice, support and a solution.

*To find out more about managing your money and getting free advice, visit Money Helper, independent service set up to help people manage their money.

Want to know how you can clear your debt?