What is an Individual Voluntary Arrangement (IVA)?


An Individual Voluntary Arrangement (IVA) is a debt repayment option that essential freezes your debts and allows you to pay them back over an agreed period of time.  Any debts still owed after this set period has passed is then written off.

IVA’s are recommended for individuals who are able to pay some of their debts back but not the amount in full.  As the repayment period is likely to span five to six years, individuals will be required to demonstrate that they have a guaranteed source of regular income when applying for an IVA.   Those who can pay a lump sum towards their debts may also qualify for an IVA.

An IVA is a legally binding agreement between an individual an the debtor that they owe money too that will be set up by a qualified Insolvency Practitioner.  Personal circumstances will determine if you’re approved for an IVA.

IVA’s can be used to pay off a number of debts, including but not limited to:

  • Overdrafts
  • Personal loans
  • Catalogue debts
  • Council Tax arrears
  • Hire purchase debts
  • Mortgage shortfalls
  • Credit and store cards
  • Money owed to HM Revenue & Customs, like income tax or National Insurance contributions

Other debts (including student loans, fines and child support) will still have to be paid separately, outside of the IVA.

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IVA’s can have consequences for both your personal and financial life, which need to be considered before you decide to take one out.  The IVA will affect your credit rating for six years, starting from the date the arrangement is agreed.  Plus, you’ll be required to keep to a budget for the full term of your IVA, usually five to six years.  If you miss payments, your IVA will be extended to make up the arrears.

One thing many people are unaware of is how an IVA could also affect your employment and any hire purchase agreements you may have.  Plus, during the course of an IVA you will be required to declare any additional assets you receive after its approval - it’s likely you’ll have to pay these into your IVA.  Plus, any additional income or bonuses earned during the period of the IVA will have to be paid towards the IVA in addition to the normal contribution made.

Any IVA taken out will be recorded on the Insolvency Register. The register is maintained by the Insolvency Service and is available for viewing by the general public. It contains all details of current IVAs.

It’s unlikely that you’ll have to sell your home under an IVA, however, depending on the amount of equity that you have in your home you may be required to remortgage your property six months before the IVA ends to release some equity, which will be paid in to the IVA.  While on an IVA, it’s unlikely that you’ll be approved for a new mortgage.  The IVA will impact your credit file in a negative way, and will remain on there for a period of six years.