IVA

An individual voluntary arrangement (IVA) is a formal and legally binding agreement between you and your creditors to pay back your debts over a period of time. This means it’s approved by the court and your creditors have to stick to it.

While you have an IVA your creditors should stop:

• charging interest on your debts
• chasing you to pay your debts

While you’re in an IVA you must:

• make the agreed payments – this is usually a single monthly payment or a lump sum
• let your IVA provider know if your income increases or you get any other money
• not take out any new credit without permission, for example loans

You can include any amount of debt in your IVA. There are no minimum or maximum limits. The fees for an IVA are high so if your total debt is less than £10,000 an IVA might not be the best option.

If you don’t have a lump sum of money or regular amounts to pay into an IVA, you should check other options for getting out of debt.

An IVA must be set up by a qualified person, called an insolvency practitioner. The insolvency practitioner will charge fees for the IVA.

How the repayments work

If you decide to get an IVA, you’ll work out a repayment plan with the insolvency practitioner. This could be monthly payments, a lump sum or a combination of both.

The repayment plan should be based on an amount you can afford and your creditors will need to agree it. If you’re making monthly payments the IVA will usually last for 5 or 6 years.

You’ll make your payments to the insolvency practitioner. They’ll keep some of this to pay their fees and split the rest between your creditors.

The insolvency practitioner will review your situation each year while you’re on an IVA. If your income changes, your IVA payments might change. For example, if you get a pay rise at work you’ll be expected to pay more into your IVA.

If the payments you make aren’t enough to pay your debts in full by the end of your IVA, you won’t have to pay the rest.

If you get a lump sum of money

If you receive a windfall during your IVA, for example an inheritance, this will usually be taken and paid to your creditors. If you find out that you’re due some money because of something that happened before the IVA, your creditors might have the right to claim it too – even if your IVA has finished.

Check which debts you can include in an IVA

When you get an IVA you can include:

• gas and electricity arrears
• Council Tax arrears
• water arrears
• payday loans
• store cards
• catalogues
• personal loans
• overdrafts
• credit cards
• income tax and national insurance arrears
• tax credit or benefit overpayments
• debts to family and friends
• other outstanding bills, for example solicitor’s costs, invoices for building work and vets bills