IVA myths and the facts

Most IVA myths come in two flavours: sales claims that make an IVA sound better than it is, and outdated rules that make it sound worse. Both can lead people into the wrong decision. Here is what is actually true in September 2026.

Myths about what an IVA is

“An IVA is a government scheme”

It is not. An IVA is a legally binding agreement with your creditors under Part VIII of the Insolvency Act 1986, set up and run by a private, licensed insolvency practitioner. The Government does not run, fund or back individual IVAs. The FCA warns that some adverts misleadingly call debt solutions “government backed”, and the advertising regulator has upheld complaints about similar claims.

“An IVA writes off a set percentage of your debt”

There is no set percentage. You pay what you can afford for 5 or 6 years, and whatever is still owed on the included debts at the end of a successful IVA is written off. How much that is depends on your income, your fees and what your creditors accept. It is not guaranteed, and if the IVA fails nothing is written off at all. The advertising regulator has ruled headline write-off percentages misleading where the advertiser could not show real evidence for them.

“IVAs are free” or “there are no fees”

IVAs have fees, usually a set-up fee and a handling fee each time you pay, taken out of your monthly payments rather than paid upfront. There is no legal cap. Citizens Advice says they are around £5,000 on average, and the key facts document warns that your first payments cover more of the fee than your debts. The only fee set by law is a £15 registration fee. See how much an IVA costs.

“You need a certain amount of debt, or anyone can get one”

Neither is true. There is no legal minimum debt or payment. As guidance, the IVA Protocol 2025 says protocol IVAs usually suit people with debts of £7,000 or more, and Citizens Advice suggests more than £10,000 and at least £100 a month spare. But plenty of people should not have one: for example, someone who meets the criteria for a debt relief order, or whose income is mainly benefits. IVAs are available in England, Wales and Northern Ireland only; Scotland has different solutions.

Myths about getting an IVA approved

“A court has to approve your IVA”

Not for a normal IVA. Since 2003 you can propose one without going to court first, and your creditors decide.

“You have to face your creditors at a meeting”

You almost certainly will not. Since 6 April 2017 creditors usually vote electronically or in writing. A physical meeting only happens if enough creditors ask for one.

“Every creditor has to agree, and anyone who does not vote counts as a yes”

Both wrong. Approval needs 75% by value of the creditors who vote, and it fails if more than half of the debt owed to unconnected creditors votes against it. Creditors who do not vote are not counted either way, but once the IVA is approved they are bound by it. See how creditors vote on an IVA.

Myths about your home and money

“You will have to sell your home or remortgage”

Out of date for new IVAs. Under the IVA Protocol 2025, which applies to protocol IVAs approved from 1 July 2025, you are not asked to sell your home or release equity. If your share of the equity is £10,000 or more, the IVA runs for 72 months instead of 60. The “remortgage in year five” rule applied to older IVAs agreed under the 2021 Protocol. Very high equity, a second property or a buy-to-let usually means a protocol IVA is not suitable.

“All your assets are protected”

Overstated. Things you would keep in bankruptcy, broadly what you reasonably need for work and your household, are excluded. Other assets can be included, and your supervisor can claim a windfall or inheritance worth more than £500 received during the IVA, up to what is needed to repay creditors in full. See your home and belongings in an IVA.

“Once your payment is set, it never changes”

It does. Your income and spending are reviewed every year, and if your spare income rises, your payment goes up by half of that rise. It can also go down: your supervisor can agree payment breaks worth no more than 9 months in total, and cut your payment by no more than 20%, without a creditor vote.

“You cannot be a company director in an IVA”

There is no law saying so. The legal ban on acting as a director applies to bankruptcy and debt relief orders, not IVAs. Your own IVA terms, your employment contract or your professional body’s rules could still restrict it, so check.

Myths about creditors

“Creditors can never contact you again”

Creditors bound by your IVA cannot take action over the debts included in it. But the key facts document says they may still write to you to confirm balances. Secured creditors, such as your mortgage lender, keep their rights over your home, and debts that cannot go into an IVA, such as child maintenance and student loans, can still be chased. If you have joint debts, creditors can still chase the other person.

“Frozen interest is gone for good”

Only if your IVA completes. If it fails, creditors can add back the interest and charges that built up while it was running.

Myths about your credit record

“Your IVA disappears from your credit file when it ends”

It does not. The key facts document says an IVA stays on your credit file for 6 years from the date it starts, and finishing early does not shorten that. If your IVA lasts longer than 6 years, some credit reference agencies keep it until it ends. See how long an IVA stays on your credit file.

“Everyone will find out”

Your IVA is on the public Individual Insolvency Register while it runs and for about 3 months after it ends, so anyone who searches your name can see it. But the process itself involves only you, your insolvency practitioner, your creditors and the Insolvency Service. Unless your employer, a friend or a relative is one of your creditors, they would have to go looking.

Myths about when things go wrong

“If your IVA fails, you are automatically made bankrupt”

No. The supervisor or a creditor may ask the court to make you bankrupt, and only the court can decide. It is a real risk, not an automatic step.

“You can walk away from an IVA whenever you like”

You can ask your supervisor to end it, but you will not get back what you have paid, and creditors can chase the rest again, with frozen interest and charges. Of the IVAs registered in 2016 to 2018, about one in three was terminated. See what happens if an IVA fails.

“Leftover debt is written off whatever happens”

Only when the IVA completes and you receive a completion certificate. If it is terminated, you owe whatever is left.

What to do next

1. Read the honest pros and cons of an IVA, then compare it with the alternatives in the debt solutions comparison.
2. If a firm has made any of the claims above to you, treat that as a warning sign.
3. For a view from someone with nothing to sell, a free, impartial adviser at MoneyHelper, StepChange, Citizens Advice or National Debtline can go through your options. See where to get free debt advice, or go back to IVAs explained.