IVA UK: Is an Individual Voluntary Arrangement Right for You? (2026)
My friend entered an IVA with £28,000 of debt. Five years later it was gone. She paid what she could afford every month and the rest was written off legally.
But her colleague entered the same arrangement and it failed after two years. He ended up in bankruptcy anyway — with two years of payments already gone.
An IVA is powerful. It is also not right for everyone. Here is the honest truth.
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Get My Free Plan →What Is an IVA?
An Individual Voluntary Arrangement (IVA) is a legally binding agreement between you and your creditors. It is governed by the Insolvency Act 1986 and can only be set up through a licensed Insolvency Practitioner (IP).
You pay an affordable monthly amount for 5 to 6 years. Whatever remains at the end is legally written off. Your creditors cannot chase you during the arrangement.
IVAs are available in England, Wales and Northern Ireland. Scotland has its own solution called a Protected Trust Deed.
Who Qualifies for an IVA?
- Unsecured debt of at least £6,000 to £7,000 — exact minimum varies by Insolvency Practitioner
- Two or more creditors
- A regular income — employed or self-employed
- Some disposable income after essential living costs
- Live in England, Wales or Northern Ireland
75% of your creditors by value must agree to the IVA for it to proceed. If they agree it becomes binding on all creditors — including the ones who voted against it.
How Does an IVA Work?
- You contact a licensed Insolvency Practitioner — free initial advice available via StepChange or National Debtline
- The IP reviews your income, expenses, debts and assets
- They calculate an affordable monthly payment
- They draft a proposal and send it to your creditors
- Creditors vote — 75% by value must agree
- If approved — the IVA is legally binding on all creditors immediately
- You make monthly payments for 5 to 6 years
- Remaining debt is written off at the end
During the IVA creditors cannot take enforcement action, add interest, or contact you directly. All communication goes through your IP.
What Debts Can Be Included?
IVAs cover unsecured debts:
- Credit cards and store cards
- Personal loans and overdrafts
- Catalogues and buy now pay later
- Payday loans
- Council tax arrears
- Utility arrears
Debts that cannot be included:
- Mortgage or secured loans
- Student loans
- Child maintenance
- Court fines
- Debts from fraud
The Real Risks of an IVA
This is what most IVA companies do not tell you upfront.
Failure rate is high. Around 1 in 3 IVAs fail — usually because people cannot maintain payments when their circumstances change. If your IVA fails you may end up in bankruptcy with nothing to show for years of payments.
Fees are significant. IPs charge fees — typically £1,000 to £2,000 upfront plus a percentage of monthly payments. These come out of your payments before creditors receive anything.
Your home may be at risk. In the final year of an IVA you may be required to release equity from your home if you are a homeowner. If you cannot — the IVA may be extended by 12 months.
Windfalls must be declared. If you receive an inheritance, lottery win, or any lump sum during the IVA — you must declare it. It may be taken to pay creditors.
Credit file impact. An IVA stays on your credit file for 6 years from the date it starts. It also appears on the public Insolvency Register.
Borrowing is restricted. You cannot borrow more than £500 without your IP’s permission during the IVA.
See what your debt is really costing you
Use our free Minimum Payment Trap Calculator before you decide anything.
Calculate My Trap →IVA vs Other UK Debt Solutions
| Solution | Debt Written Off? | Duration | Best For |
|---|---|---|---|
| IVA | Yes — remainder | 5-6 years | £6,000+ debt, regular income |
| DRO | Yes — after 12 months | 12 months | Under £50,000, low income |
| DMP | No | 3-10 years | Can repay in full, need structure |
| Bankruptcy | Yes — after 12 months | 12 months | Large debt, last resort |
Want to compare all UK debt solutions in one place? Full UK debt relief guide →
Is an IVA Right for You?
An IVA may be right if:
- You have £6,000 or more in unsecured debt
- You have a regular income and some disposable income
- You cannot realistically repay in full but can afford something monthly
- You want to avoid bankruptcy
- You can commit to 5 to 6 years of consistent payments
An IVA is probably not right if:
- Your income is unstable or zero
- Your debt is under £6,000 — a DMP or DRO may be better
- You own significant assets you cannot risk
- You cannot commit to years of restricted spending
Always get free regulated advice before entering an IVA. Never go directly to a fee-charging IVA company without first speaking to StepChange or National Debtline. They will tell you honestly if an IVA is right for you — or if another solution is better.
Frequently Asked Questions
How much debt do I need for an IVA?
Most Insolvency Practitioners require at least £6,000 to £7,000 in unsecured debt across two or more creditors. Some will consider lower amounts depending on your circumstances.
Will an IVA affect my job?
Most jobs are not affected. However some professions — particularly in finance, law, and certain licensed roles — have restrictions. Check your employment contract or speak to your employer’s HR team before applying.
Can creditors refuse an IVA?
Yes — but if 75% by value agree, the IVA is binding on all creditors including those who voted against it. The IP will negotiate with creditors on your behalf.
What happens if I miss a payment?
Contact your IP immediately. Missing one payment does not automatically fail the IVA — but repeated missed payments can. Your IP may be able to arrange a payment holiday or revise the arrangement if your circumstances have genuinely changed.
Does an IVA write off all my debt?
It writes off the remaining unsecured debt included in the IVA after you complete your agreed payments. Debts excluded from the IVA — student loans, child maintenance, court fines — still need to be paid.
Can I get an IVA if I am self-employed?
Yes. Self-employed people can enter an IVA. The process is more complex as income verification is harder and payments may need to be more flexible. Work with an experienced IP who understands self-employment.
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Start My Free Plan →Disclaimer: DebtShift is an educational platform, not a debt advice firm. We are not regulated by the FCA. For free regulated debt advice contact StepChange at stepchange.org or call 0800 138 1111. All information is for general guidance only.