IVAs in Depth

Most of us experience money troubles in our life, usually more than once. For the majority of us, it’s a brief hiccup along the road and we’re able to get ourselves sorted again. But this is not the case for everyone. Some people, for various reasons, descend further and further into a situation it’s hard to escape from. And if you aren’t able to sort out your money worries yourself, third party help may be necessary. In in the most extreme cases, this means that you could end up with an IVA (Individual voluntary Arrangement).

An IVA is, as the name suggests, a solution agreement whereby you owe money to creditors. It is enacted through a third party insolvency organisation. The idea is that you are able to repay debtors, but not necessarily by the amount you know, nor the timeframe that would ordinarily be enforced. You form an agreement to repay a lesser sum consistently but over a larger period of time. IVAs can often last for 5 years, 6 years, sometimes even longer. The payments you make are centralised to the IVA practitioner and then divided to be sent our to your debtors in a logical fashion.

To give you a better idea of just what IVAs are all about, let’s have a look at some of the most eye-opening statistics:

– In 2019, IVAs made up 63.8% of total individual insolvencies

– The proportion of IVAs as insolvenices has risen year on year, being less than 25% in 2004.

– Just under 78,000 people started an IVA in 2019, the highest number on record.

– In 2019, over 90% of IVAs that were started were operated between just 14 IVA providers.

– The percentage of IVAs failing within the first year is at it’s highest level since 2002.

– IVA proposals are not always accepted.

How is an IVA arranged?

The process is not entirely simple and has a few steps involved. You’ll first need to appy to the courts for an interim order to give to time to sort things out. Then you approach IVA practitioner(s) once you have worked out your finances, and give them a proposal.

Between the two of you, you will hone your finances and what it is you think you will be able to pay to each creditor over an arranged period of time. Once your proposal is agreed upon, you and the IVA practitioner approach your creditors. It is not essential that they all agree with the proposal, but you need a minimum of 75% agreement by vote for it to be approved. Once approved, it becomes legally binding.

After this point, your finances are assessed continually over time to make sure things go according to plan and your creditors will receive progress reports.

What are the impacts of being in an IVA?

This really varies depending upon your situation. In rare circumstances, IVAs may affect your job. Solicitors or accountants may no longer be able to practice, or be subject to restrictions, for instance. You may want to check with your place of employment how being put on an IVA will reflect upon your work.

Financially the impact is, of course, significant. Whatever income you get is highly regulated, with you receiving a fixed portion of the income you earn which you will have to make do with. Any assets you have are also factored into the repayment plan so you will have to make them clear and available. Your everyday items are not affected by having an IVA, but you can consider selling valuable items to balance the payments.

From the perspective of your credit rating, you may find it more difficult to get credit in the short term. You may be able to get credit for your business but be charged higher interest rates. Importantly, if you’re looking to get in excess of £500 in credit, you must have written permission from the IVA practitioner unless it’s for essentials.

Details of your IVA are public knowledge for the entire duration of the IVA, and for 3 months after it has ended. This may affect the individual’s sense of self-worth and therefore impact mental health. There are always outlets for those in financial difficulty to express themselves and talk about their problems; the NHS, Citizen’s Advice and more. Read more about the pros and cons here.

What debts can/can’t be included in an IVA?

Unfortunately, not all debts can be centrilised under an IVA. Here are some of the debts that can, and those that can’t be included.


  • Credit cards
  • Overdrafts
  • Gas, water, electricity bill arrears
  • Personal Loans
  • Store cards
  • Any other outstanding debts


  • Mortgages
  • Student Loans
  • Court Fines
  • TV licence arrears
  • Other secured loans

Final thoughts

Nobody wants to get in a position where an IVA is necessary, or even an option, but sometimes it is the best one. The ability to centrilise some or all of your debts and have an arranged way of paying it off can take so much worry off your mind. Not only does it mean you don’t have to deal with multiple creditors, but you know exactly how much to pay, and someone else takes care of getting the money to them.

Interest and charges are frozen for the duration of the IVA, all debt not repaid will be written off by the end of it and it prevents you from being subject to subsequent action by creditors even if they disagree with the deal. On the bad side, you’ll be subject to strict spending restriction, new money that you come into will automatically fall into the arrangement as it has to be declared and it’s more than possible to fail the IVA if you don’t keep up payments. Whether or not it proves to be a good choice will depend on how consistently you can adhere to the terms. And not adhering can put you in a worse position than you were in before.

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