An IVA can cover both personal and business debts, let you keep trading, and stay private — here’s how it works for the self-employed.
May not be suitable in all circumstances. Fees apply, read more. Your credit rating may be affected, read more.
An IVA is a formal insolvency procedure. It must be approved by your creditors, stays on your credit file for six years, fees are taken from your payments, and debts are only written off if you complete it. It isn’t right for everyone.
Before IVAs came along, the main option for business owners with serious debt was bankruptcy — which usually meant closing the business, laying off staff and selling assets. An IVA changed that.
An IVA can include both your personal and business debts — including overdue taxes (VAT) and National Insurance owed to HMRC, plus loans and credit cards in your company name. It can’t be used for secured debts such as mortgages or Hire Purchase agreements, so keep up those payments to avoid repossession.
Your day-to-day operations are largely, or completely, unaffected. If a bank loan or overdraft is included you’ll need to close those accounts and open new ones, but otherwise you can usually carry on as normal — keeping your finance agreements, assets and staff in place.
An IVA is more private than bankruptcy. The details appear on the public Individual Insolvency Register, but not in the newspapers, so it’s unlikely clients will find out unless you tell them.
See which debt solutions you could qualify for. Checking your options won’t affect your credit score.
An IVA commits you to a set monthly payment, usually for five years. You’ll need to show the insolvency practitioner dealing with your IVA that you can afford the payments, by presenting accounts and cashflow projections. If you hit a dip, your IP may be able to vary your payments for a while if creditors agree — but the IVA will fail if you don’t meet the agreed obligations.
There’ll be limits on your spending, you probably won’t be able to take on more credit while it’s in place, and your credit rating will be affected for up to six years. If you own property, you may be asked to remortgage or release equity during the IVA, usually in year four.
If an IVA isn’t suitable, a Debt Management Plan might be. You’d generally need more than £2,000 of unsecured debt and be able to repay around £100 a month. See how the two compare in our guide to an IVA vs a Debt Management Plan.
See which debt solutions you could qualify for.
