What is an Individual Voluntary Arrangement?
An IVA is a legally binding agreement between you and your creditors, supervised by a licensed insolvency practitioner. You agree to make affordable monthly payments over a fixed period – typically five years – and at the end of that period, any remaining unsecured debt covered by the arrangement is written off.
The IVA is governed by the Insolvency Act 1986 and provides formal legal protection once it is in place. Creditors who vote in favour – or are bound by the majority vote – cannot pursue you for the debts included in the arrangement. Once the IVA is approved, you deal with the supervisor and have no further direct contact with your creditors.
The key features of an IVA are:
- A single affordable monthly payment replaces all individual debts covered by the arrangement
- Interest and charges on included debts are frozen from the point the IVA is approved
- Creditor contact, enforcement action, and bailiff visits stop once the IVA is in place
- Any remaining unsecured debt is written off at the end of the arrangement
- You keep your home, car, and other assets in most cases
- You avoid the restrictions and stigma of bankruptcy
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What Debts Can Be Included in an IVA?
Most unsecured personal debts can be included, including credit cards and store cards, personal loans and overdrafts, HMRC debts including personal tax and National Insurance, council tax arrears, utility arrears, and personal guarantees given for business debts.
Secured debts – such as a mortgage – cannot be included in an IVA. If you have significant secured debt, we will factor this into our assessment of whether an IVA is the right route for your situation.
IVA vs Bankruptcy – What is the Difference?
Both an IVA and bankruptcy are formal insolvency procedures that deal with unmanageable personal debt. The right choice depends on your individual circumstances.
An IVA typically lasts five years with monthly payments, allows you to keep your home and assets in most cases, and is less publicly visible than bankruptcy. Bankruptcy, by contrast, writes off most debts after twelve months but involves greater scrutiny of your assets and some restrictions during the bankruptcy period.
An IVA generally suits people with a regular income who want to avoid bankruptcy’s restrictions and protect their assets. Bankruptcy tends to suit people with lower incomes, fewer assets, and a desire for a clean break. We will help you weigh both options based on your specific circumstances during the Clarity Consultation.
IVA Costs and Fees
IVA fees are fixed and transparent. The supervisor’s fees are typically drawn from your monthly contributions throughout the arrangement, meaning there is no large upfront cost. You will know the full fee before committing to anything.
