An Individual Voluntary Arrangement is a formal insolvency procedure available in England, Wales and Northern Ireland. If creditors approve it and you complete it, remaining qualifying unsecured debts are written off.
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.
An IVA is a legally binding agreement between you and your unsecured creditors, supervised by a licensed insolvency practitioner. It lets you avoid bankruptcy and usually keep your assets, including your home, as long as you keep up the agreed payments.
Your monthly payment is based on what you can afford after an assessment of your income and expenditure. Once at least 75% of creditors (by debt value) who vote agree, all your creditors are bound by it. Once the IVA is approved, interest and charges on the included debts are frozen and those creditors must stop contacting you directly. It usually lasts 60 months (72 if you’re asked to release equity and can’t). Remaining qualifying debts included in the arrangement are written off only if you complete it successfully.
Your payment isn’t fixed for the whole term. Your income and spending are reviewed every year, and if your income rises your payment can go up. You’ll be expected to live on an agreed budget, and windfalls such as inheritances or large bonuses usually have to be paid into the IVA.
An IVA is recorded on your credit file for six years from the date it starts and is listed on the public Individual Insolvency Register while it runs. Getting credit will be harder and usually more expensive, and some jobs and professional roles can be affected.
If you fail to keep up payments, the IVA may fail and you could be back where you started, which in some cases can lead to bankruptcy. Homeowners may be asked to release equity in the final year. Only the unsecured debts included in the IVA can be written off — secured debts must still be paid.
There are no upfront fees. An IVA has two main fees: the nominee’s fee, for preparing your proposal and putting it to your creditors, and the supervisor’s fee, for running the IVA until it ends. Both are taken from your monthly payments once the IVA is approved, rather than charged on top — which means less of what you pay reaches your creditors.
My Debt Plan Ltd’s total fees are currently £3,650, although creditors may change this when they vote on your proposal. The fees are charged by My Debt Plan Ltd, a commercial, profit-making business, and are set out in writing in your proposal before you agree to anything.
These are rough indicators only, not qualifying criteria:
A full assessment also checks whether a DRO, a debt management plan or bankruptcy would suit you better, whether you could repay through a DMP over a similar period, any equity in your home, whether your income is stable, whether you rely on benefits and whether any debts are disputed. If you live in Scotland, IVAs aren’t available — see the Accountant in Bankruptcy.
Talk to My Debt Plan about your options. Free, impartial advice is also available from MoneyHelper.
Free, independent debt advice is also available from MoneyHelper, StepChange, National Debtline and Citizens Advice.
