IVAs explained — and how to start one

An IVA — short for Individual Voluntary Arrangement — is one of the most powerful debt solutions available in England, Wales and Northern Ireland. It lets you repay what you can genuinely afford for a set period, freezes interest, stops creditor contact, and writes off the balance once the agreement completes. This page walks through what an IVA is, who qualifies, the debts it covers, what it costs, the honest pros and cons, and how to start one.

Who an IVA is for

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An IVA is designed for people who have unsecured debts they cannot realistically clear in a reasonable timeframe, but who can still afford a monthly contribution after essential living costs. Most providers expect:

• Total unsecured debt of around £7,000 or more for a typical protocol IVA. Lower-debt cases can be considered only where the proposal clearly explains why an IVA is still suitable.
• A regular sustainable income from employment, self-employment, pension or a stable mix of income. If your income is mainly made up of benefits, an IVA may not be suitable and should be compared carefully with a DRO or DMP.
• A realistic monthly surplus after rent or mortgage, utilities, food, transport, childcare and other essentials. Very low disposable income is a warning sign because the IVA has to stay affordable for five or six years.
• No realistic route to repaying the debt in full within 5–6 years through a standard repayment plan.

If your income is very low or unstable, a Debt Relief Order or bankruptcy may be a better fit. If your debts are smaller and you can clear them within five years, an informal Debt Management Plan may be cheaper. The free check at the top of this page asks the questions an Insolvency Practitioner would ask, before any commitment.

Debts an IVA can include

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An IVA must include all of your unsecured debts. The most common ones an IVA can settle are:

• Credit cards, store cards and catalogue accounts
• Personal loans and bank overdrafts
• Payday and short-term loans
• Outstanding debts with debt collectors such as Lowell, Cabot and PRA Group
• HMRC tax debts (self-assessment, tax-credit overpayments)
• Council tax arrears
• Utility-bill arrears (gas, electric, water)
• Mobile-phone contract arrears
• County Court Judgements (CCJs)
• Most gambling debts

Debts an IVA cannot include

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Some debts sit outside the IVA framework and continue to be owed in full:

• Secured loans and mortgages on a property you still occupy
• Hire purchase or car-finance agreements you want to keep
• Court fines and magistrates’ fines
• Student loans
• Child-maintenance arrears (CSA / CMS)
• TV-licence fines
• Most parking penalty charges

If most of your problem debt is unsecured, an IVA can still be the right answer even when a few items have to sit outside it.

How long an IVA lasts

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A standard IVA term is 60 monthly payments — five years. If you have a beneficial interest of £10,000 or more in a property under the current IVA Protocol, the term is normally 72 monthly payments — six years — instead of being asked to release equity. Missed payments can be made up by extending the term, usually by up to 12 months.

What an IVA costs — and three worked examples

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You only pay what you can genuinely afford, calculated against the Standard Financial Statement that lenders, debt charities and Insolvency Practitioners all use. In practice that means:

• Budget-based monthly payment calculated from verified spare income after essential living costs.
• No upfront fee. Insolvency Practitioner fees and disbursements are taken from the monthly payments you’d be making anyway, so creditors — not you — effectively fund the cost.
• No fee if creditors reject the proposal. A reputable provider only earns once your IVA is approved.

To make the abstract numbers concrete, here are three worked examples — typical UK debt sizes, typical monthly contributions, and the resulting write-off at the end of a five-year term.

Example 1 — £12,000 of unsecured debt, £100 a month for 5 years

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This is a fairly common shape for a first-time IVA — modest debt, modest income, a 5-year term and a substantial write-off at the end.

Example 2 — £25,000 of unsecured debt, £180 a month for 5 years

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The headline write-off figure is similar in percentage terms to Example 1 — that’s because IVA outcomes are mostly governed by what you can afford, not the size of your debt.

Example 3 — £45,000 of unsecured debt with home equity, £220 a month for 6 years

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When the IVA Protocol applies and you have a beneficial interest in a property of £10,000 or more, the term is normally six years instead of five — in exchange you avoid being asked to release equity to settle the debt. The trade-off is twelve more months of payments rather than risking the home.

What you actually pay and don’t pay

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You don’t pay an upfront fee. You don’t pay a brokerage fee for the introduction. You don’t pay separately for the IP’s time. You don’t pay for the creditor vote. Every penny of cost comes out of the agreed monthly payment, and the Insolvency Practitioner discloses the fee structure in the proposal before creditors vote. You should always read the proposal in full before agreeing to it.

What percentage of debt is written off?

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Across all completed UK IVAs, the average write-off lands in the 60–70% range, although individual outcomes can be higher or lower depending on:

• Your monthly contribution relative to your debt size — a smaller payment against a larger debt produces a larger write-off
• Whether you receive any windfalls during the IVA (inheritance, redundancy, PPI, court awards) — those are paid into the IVA on top of normal payments
• Whether you complete the term or the IVA fails — failure means the original balance is owed again
• Whether your IVA is extended — for example if you have payment breaks that get added to the term

The UK Insolvency Service publishes quarterly statistics on the number of IVAs registered and completed each year. Over the past decade roughly half of registered IVAs have completed successfully; among completed cases, the typical write-off has consistently been in the 60–70% range. If your IVA fails, the protection from creditors evaporates and the original debt — minus any payments already made — becomes pursuable again, which is one of the reasons an honest affordability assessment up front matters.

The 2025 IVA Protocol — what changed

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The IVA Protocol is a voluntary code of conduct agreed between Insolvency Practitioners and creditors that governs the typical “consumer IVA”. Most providers and major lenders sign up to it because it makes the process faster and more predictable than the bare statutory framework in the Insolvency Act 1986.

The 2025 update introduced several changes that matter to anyone considering an IVA:

• Standardised home-equity threshold of £10,000. If you have a beneficial interest in a property of £10,000 or more, the IVA term defaults to six years instead of five. There is no longer a “release equity in year 5 or extend the term” coin-flip — the protocol prescribes the six-year route.
• Cleaner payment-break rules. You can take up to 9 months of payment breaks in total across the life of the IVA, and breaks are added to the end of the term rather than reducing the total amount paid.
• More transparent fee disclosure. Providers must spell out their fees, disbursements and any subcontractor arrangements at the proposal stage. This makes it easier to compare providers like-for-like.
• Annual review documentation. The annual review your IP carries out must now be backed by specified evidence, which reduces ambiguity about whether your contribution should change when your income changes.
• Statement of affairs format. The standardised format required by the protocol means that switching IPs mid-IVA is more straightforward than it used to be.

The protocol is voluntary but in practice almost every consumer IVA in the UK runs under it. If you are offered an IVA that materially deviates from the protocol — a longer term, higher fees, unusual treatment of windfalls — that’s a flag worth questioning before you sign.

Jobs and professions where an IVA may have implications

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For most jobs an IVA is invisible to your employer and has no effect on your employment. However, certain regulated professions require you to disclose insolvency proceedings, and some have explicit restrictions. The list below is general guidance; always check your contract of employment, professional-body rules and any specific regulator before making the IVA decision.

If your role is on this list, the right move is to read the employer / professional-body rules before applying for the IVA — not after — so the IVA proposal can be drafted with the right disclosures in place. Failing to disclose where disclosure is required is almost always treated more seriously than the IVA itself.

Honest pros and cons

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Why people choose an IVA

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• Predictable outcome. A fixed monthly payment for a fixed term, with the rest written off at completion.
• Legal protection. Creditors must stop contact, freeze interest, and cannot pursue court or bailiff action on included debts.
• Home usually protected. Unlike bankruptcy, your home is not normally at risk.
• One payment, one point of contact. Your Insolvency Practitioner manages every creditor on the list.

Trade-offs to weigh up

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• Credit file impact. An IVA stays on your credit file for six years from the start date and makes new borrowing difficult during that time.
• Borrowing restrictions. You cannot take out credit over £500 without your IP’s permission while the IVA is live.
• Windfalls go to creditors. Inheritances, redundancy lump sums, PPI refunds and similar windfalls above £500 must go into the IVA.
• Public register. Your name and a partial address appear on the public Insolvency Register while the IVA is active.
• Failure has consequences. Roughly one in three IVAs fail, usually due to lost income. If yours fails, creditors can pursue the original balance again.
• Some professions. Police officers, armed-forces personnel and some financial-services roles face restrictions if they enter an IVA — check with your employer first.

A good adviser walks you through both sides before you commit, not just the upside. For the fuller comparison, see IVA pros and cons.

How an IVA affects your home, job and credit file

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• Your home. You will not normally need to sell. The 2025 IVA Protocol asks you to release a portion of equity in year five only if affordable; in most cases the term simply extends to six years instead.
• Your job. An IVA does not affect most jobs. Police, armed-forces and some financial-services roles do have restrictions. Check your employment contract.
• Your bank account. A standard current account is unaffected. If you bank with a creditor that’s part of your IVA, you should switch to a basic account before the proposal is approved.
• Your credit file. Expect a six-year mark from the IVA start date. Once it falls off, you can rebuild — many people qualify for a mortgage two to three years after completion.

IVA versus other debt solutions

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If you’re unsure, the free 2-minute check compares your numbers against each route before pointing you toward the best fit.

Common reasons IVAs fail — and how to avoid them

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Roughly one in three UK IVAs fail before completion, almost always for the same handful of reasons. Knowing them up front is the single best predictor of whether your IVA will see you through to a write-off.

• Loss of income. Redundancy, hours cut, illness or relationship breakdown all reduce what’s coming in. Most IVAs allow a payment-break (up to 9 months in total under the 2025 Protocol) before this becomes a default — but you have to ask for it formally, in writing, before you fall behind.
• Unbudgeted essentials. A rent rise, a higher utility bill or a sudden child-care cost can put the agreed payment out of reach. If essentials genuinely have moved, ask your IP for an annual-review variation rather than missing payments.
• Windfalls not declared. Inheritances, redundancy lump sums, PPI payments, court awards, gifted cash and similar windfalls above £500 must be paid into the IVA. Hiding a windfall is a clear breach and is one of the more common causes of an IVA being terminated outright.
• A new debt taken on without permission. You cannot take credit over £500 during the IVA without your IP’s permission. New unsecured debt is a breach.
• Failing to provide the annual review information. Your IP needs payslips, bank statements and a current expenditure breakdown each year. Failure to supply these can lead to suspension and ultimately termination.
• Choosing the IVA in the first place when it didn’t fit. This is the saddest cause: an IVA was wrong for the situation, was sold anyway, and falls apart in year two when the gap between the agreed payment and reality becomes obvious. The free check at the top of this page exists to make this less common.

If your IVA fails, all the protection it gave you ends. Creditors can resume contact, restart interest and, with a Court Order, pursue enforcement against your home or wages. Anything you’ve already paid into the IVA stays distributed; it is not refunded.

After your IVA — completion, certificate and rebuilding credit

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Six months before the end of the term your Insolvency Practitioner reviews payments, confirms there are no outstanding obligations, and prepares the completion certificate. Once issued, the certificate is conclusive: the IVA has finished, the residual debt is written off, and creditors cannot pursue you for the included balance.

The IVA stays on your credit file for six years from the start date, not from completion. So if you took out a five-year IVA in 2026, it will fall off your credit file in 2032 — only one year after completion. A six-year IVA falls off the credit file the same month it ends.

Once the IVA is off your credit file, lenders treat you as someone who simply has no recent borrowing history rather than someone with a record of insolvency. Most people need 18–24 months of clean credit-file activity (a basic-bank account, a small credit-builder card paid in full each month, on-time utility payments) before being approved for unsecured borrowing on normal terms. Mortgage lenders typically want 2–3 years post-completion before considering a residential mortgage, although specialist brokers regularly approve applications sooner with a larger deposit.

How to choose an IVA company

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Almost every consumer IVA in the UK is sold by an introducer (a “lead generator”) and supervised by a licensed Insolvency Practitioner working at a separate firm. There is nothing wrong with that arrangement, but it does mean the company you first speak to is not always the one supervising your IVA. Ask three questions before you sign anything:

1. Who is the licensed Insolvency Practitioner who will supervise the IVA? Ask for their name and IP licence number. You can verify both on the Insolvency Service’s IP register.
2. What is the total fee structure across the term? Reputable providers will give you a clear total of nominee fee, supervisor fee and disbursements as a percentage of payments, and confirm there is no extra fee from the introducer.
3. What happens if my circumstances change? A good answer is “we’ll vary the IVA via an annual review or a formal modification, with no extra charge for the variation.” A bad answer is silence or “you’d need to apply for a new IVA.”

If a provider pressures you to commit on the first call, won’t put fees in writing, or won’t name the supervising IP, that’s enough reason to walk away. The IVA market is large; you have time to compare.

How to start an IVA

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1. Use the free check at the top of this page to see whether an IVA looks like the right solution.
2. Speak to an adviser who can walk through your full income, expenditure and debt list.
3. Receive a draft proposal from a licensed Insolvency Practitioner — this is the document creditors will vote on.
4. Creditor vote. At least 75% of voting creditors by debt value must approve. Most well-prepared proposals are accepted.
5. Make your first payment the month after approval, and continue for the agreed term. Annual reviews keep the payment in line with your circumstances.

You can also read the dedicated guide on how to apply for an IVA.

Frequently asked questions about IVAs

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How much debt do I need for an IVA? Under the 2025 IVA Protocol, a protocol IVA is usually considered where unsecured debts are around £7,000 or more, with regular sustainable income and more than one creditor. Below that, a Debt Management Plan or Debt Relief Order is often a better fit unless there is a clear reason an IVA is still suitable.

Will an IVA stop debt collectors? Yes — once your IVA is approved, all creditors on the proposal must stop contacting you. Your Insolvency Practitioner becomes the single point of contact. See debt collectors for more on what they can and can’t do.

Will an IVA freeze my bank account? No. An IVA itself does not freeze a bank account. If you bank with a creditor named in the IVA, switch to a basic account at a different bank before the proposal is approved. See can an IVA freeze your bank account.

Can an IVA check my bank account? Your IP will ask for bank statements to build the proposal. Once the IVA starts, you self-report your income and expenditure at the annual review. Read can an IVA check my bank account.

Can I keep my credit card during an IVA? No — credit cards form part of the unsecured debt and are closed when the IVA starts. You can use a debit card normally and apply for new credit over £500 only with your IP’s permission.

Can I get a mortgage after an IVA? Yes — many people are approved two to three years after completion, depending on the lender, deposit, and credit rebuild. Specialist brokers handle post-IVA applications regularly.

Can I cancel an IVA? Once approved, an IVA is legally binding. If your circumstances change you can ask your IP to vary the terms — extending the period, reducing the payment or taking a payment break — but a unilateral cancellation usually means failure, after which creditors can pursue the original balance again.

Is an IVA the same as bankruptcy? No. Both are formal insolvency solutions, but bankruptcy puts your assets at risk and lasts around 12 months, whereas an IVA protects your home and runs for 5–6 years. Read is an IVA worth it for a deeper comparison.