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Published 06 September 2022

What Is an IVA?

Individual Voluntary Arrangements, or IVAs, are legal agreements that can help you pay off your debt at a more affordable rate. Read on to find out how they work and whether they could be an option for you.

An Individual Voluntary Arrangement (IVA) is a legal agreement between you and your creditors to help you repay your debts at an affordable rate.

IVA repayments are managed by an insolvency practitioner (usually a qualified lawyer or accountant). IVAs are only available in England, Wales and Northern Ireland. Scotland offers a similar debt management solution called a ‘protected trust deed’.

How does an IVA work?

An IVA is set up and managed by an insolvency practitioner. They work out your repayment plan, which will include details about how much you’ll pay each month and how long the plan will last. They also act as an intermediary between you and your creditors. Only 75% of your creditors need to agree to the repayment plan for the IVA to proceed.

Once your insolvency practitioner has proposed a repayment plan to your creditors and the terms of the IVA are agreed, you pay the insolvency practitioner each month and they are responsible for splitting the money between your creditors.

What debts can you include in an IVA?

Debts that can be included in an IVA are:

Priority debts are not included in an IVA. They count towards your monthly household expenses instead. Priority debts include:

How much does an IVA cost?

The cost of an IVA varies between insolvency companies. However, typically insolvency practitioners charge two fees for an IVA:

If you decide an IVA might suit you, it’s always worth getting quotes and estimates from several insolvency specialists to compare costs.

Does an IVA affect your credit score?

Having an IVA will negatively affect your credit score. That’s because an IVA shows that you’ve had difficulty keeping up with repayments in the past.

Lenders are reluctant to approve applications from high-risk borrowers, which may lead to an application being rejected or charged higher interest. An IVA stays on your credit file for six years from the date that your IVA was agreed.

Do you have to declare an IVA to your employer?

Certain jobs may require you to declare an IVA to your employer. These include jobs in finance, law, property and accountancy. If you are unsure about whether you’ll need to disclose an IVA to your employer, it’s worth:

Pros and cons of getting an IVA

Some of the advantages of getting an IVA include:

Some of the drawbacks of getting an IVA to consider include:

Should I get an IVA?

An IVA may be worth considering if you have a sizable amount of debt that you are not able to pay off. It may also be an option to consider if you would like to prevent creditors from taking your assets through bailiff action or repossession.

If you have the funds to repay your debts, alternative debt repayment options may be worth considering first. In any case, all options should be explored fully and great care should be taken before deciding on a course of action to take due to the inflexible nature of an IVA and the implications this can have.

Alternatives to an IVA

There are several alternative options to consider instead of going through with an IVA:

You can apply online to become bankrupt in England and Wales, while you apply through the courts if you live in Scotland and Northern Ireland. For more information on trust deeds, bankruptcy or alternatives to an IVA in Scotland, visit Accountant in Bankruptcy (AiB), Scotland’s Insolvency service. and StepChange Scotland. For more on Northern Ireland, visit

Image source: Getty Images

About the Author

Brean Horne

Brean was a writer and spokesperson for NerdWallet who covered a variety of topics including money-saving tips, credit scores and managing debt. With over five years' experience in finance, she…

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  1. IVA Pros & Cons Debt Advice Bureau
  2. What is an IVA StepChange
  3. Clearing your debt with an IVA Experian
  4. Individual voluntary arrangements National Debtline
  5. Options for paying off your debts
  6. Bankruptcy nidirect
  7. Trust Deeds
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