What is an IVA?
An IVA (individual voluntary arrangement) is a legally binding agreement with your creditors to pay what you can afford towards your debts for a fixed period, usually 5 or 6 years, through a licensed insolvency practitioner.
It is a formal insolvency procedure, not a loan and not a government scheme. You pay an agreed monthly amount, your creditors cannot take further action over the debts included, and if you complete it, whatever is left of those debts is written off. If it fails before the end, creditors can chase what is still owed, plus the interest and charges that were frozen.
What does an IVA actually do?
In practical terms, an IVA replaces all your separate unsecured debt payments with one monthly payment. That payment goes to an insolvency practitioner acting as your “supervisor”, who takes their fees and shares the rest between your creditors.
Once creditors have approved it:
- interest and charges on the debts included are frozen
- creditors bound by it cannot take further action to recover those debts, though they may still write to you with statements
- you pay the agreed amount each month for the agreed term, usually 60 or 72 months
- at the end you receive a completion certificate, and you no longer owe the debts included in the IVA
gov.uk puts it simply: “An Individual Voluntary Arrangement (IVA) is an agreement with your creditors to pay all or part of your debts.” You pay an insolvency practitioner, who divides the money between your creditors.
Is an IVA legally binding?
Yes. In England and Wales, IVAs are set up under Part VIII of the Insolvency Act 1986. In Northern Ireland the equivalent is Part VIII of the Insolvency (Northern Ireland) Order 1989. Only a licensed insolvency practitioner can put the proposal to your creditors and supervise it. Doing so without a licence is a criminal offence.
A court is not normally involved. Your creditors decide, usually by electronic vote or by post. The proposal is approved if creditors holding at least 75% of the debt, by value, of those who vote say yes. It fails if more than half, by value, of the creditors who are not connected to you vote against it. Creditors who do not vote are not counted.
Once approved, the IVA binds every creditor who was entitled to vote, including those who voted against it and those who did not vote.
It is a private, licensed procedure set out in law, not a government scheme. The Financial Conduct Authority warns that some adverts wrongly describe IVAs as “government backed”. If you see that wording, treat it as a warning sign.
Which debts can you include in an IVA?
Most unsecured debts can go in. Some cannot, and some usually do not.
| Usually included | Usually not included |
|---|---|
| Credit cards, store cards and catalogues | Mortgages and secured loans (unless the lender agrees, which is rare) |
| Personal loans, payday loans and overdrafts | Rent, and usually rent arrears |
| Council tax, gas, electricity and water arrears | Student loans |
| Income tax and National Insurance arrears | Magistrates’ court fines |
| Tax credit and benefit overpayments | Child support and court-ordered maintenance arrears |
| Money owed to family and friends | Social Fund loans |
| Other bills, such as solicitors’ or vets’ bills | TV licence arrears |
Two catches are worth knowing. First, an IVA covers one person only, so on a joint debt the other person stays liable for the whole amount. Second, Citizens Advice notes that if most of your debts are owed to HMRC, an IVA may not be the right option, because HMRC often will not agree to one.
What is a protocol IVA?
The IVA Protocol is a voluntary, standard framework for consumer IVAs, agreed between insolvency practitioners and creditors. It sets standard terms so that straightforward IVAs do not have to be negotiated from scratch. It does not change the law.
The current version, the IVA Protocol 2025, applies to protocol IVAs from 1 July 2025. The main points:
- a protocol IVA lasts 60 months, or 72 months if your share of the equity in your home is £10,000 or more
- you will not be asked to sell your home or release equity from it
- you must be given a key facts document before you sign your proposal
- any windfall, inheritance or other asset worth more than £500 that you receive during the IVA can be claimed for your creditors, but only as much as is needed to repay them in full plus costs
- your income is reviewed every year, and half of any rise in spare income is added to your payment
IVAs agreed before 1 July 2025 on the 2021 Protocol terms keep those terms, which can include trying to release equity from your home in year five. If your finances are more complicated, for example you own more than one property, a “bespoke” IVA with different terms may be proposed instead. See how an IVA works for the full rules.
What does an IVA cost, and what are the catches?
There is no fee cap in law. Insolvency practitioners charge a fee for setting the IVA up and a fee for running it, and both come out of your monthly payments rather than being paid upfront. Citizens Advice says IVA fees are around £5,000 on average. The only fee set by law is a £15 registration fee. Our guide to IVA fees explains how the money is split and why your first payments go mostly on fees.
Beyond the fees, an IVA is a serious commitment, and it does not work out for everyone:
- it stays on your credit file for 6 years from the start date, and on the public Individual Insolvency Register until about 3 months after it ends
- you cannot borrow more than £500 without your supervisor’s written permission
- about one in three IVAs started between 2016 and 2018 ended without completing
- if yours fails, creditors can chase the full balances again, including frozen interest and charges, and your supervisor or a creditor can ask the court to make you bankrupt
The pros and cons of an IVA are set out side by side in a separate guide.
Want to know whether an IVA could work for you? Answer a few questions about your debts and income. It takes about 3 minutes, and it is free and confidential.
Can you get an IVA in Scotland?
No. IVAs are available in England, Wales and Northern Ireland only. Scotland has its own system, and the nearest equivalent is a protected trust deed, which works differently. See debt solutions in Scotland.
What people often get wrong
- “A court has to approve it.” Not for a normal IVA. Your creditors decide.
- “All my debt is written off automatically at the end.” Only if you complete it. If it fails, you owe the full balances again.
- “Creditors are banned from contacting me.” Creditors bound by the IVA cannot take action over included debts, but they may still send statements, and secured lenders are not bound.
- “It’s a type of loan.” It is not. Nobody lends you money. It is a legal arrangement to repay part or all of what you already owe.
There is more of this in our guide to IVA myths, and every other IVA topic is listed on our IVAs explained page.
What to do next
- Get free, impartial advice before you commit to anything. MoneyHelper, StepChange, Citizens Advice and National Debtline all offer it: see where to get free debt advice.
- Compare an IVA with the alternatives. IVA or debt management plan? is a good place to start if you can afford regular payments.
- If you are still considering an IVA, read who qualifies and ask any insolvency practitioner you speak to for the key facts document before you sign anything.
Common questions
Is an IVA the same as bankruptcy?
No. Both are formal insolvency procedures and both go on the public insolvency register, but in an IVA you pay from your income under terms your creditors have voted for, and nobody takes control of your assets. In bankruptcy a trustee deals with your assets and your home can be at risk.
Will creditors stop contacting me?
Creditors bound by the IVA cannot chase you or take further action over the debts included in it, although they may still send statements. Secured lenders, such as your mortgage lender, and debts that cannot be included are outside it.
Does an IVA cover my partner?
No. An IVA covers one person. If you have joint debts, the other person stays responsible for the whole amount unless they deal with it themselves, for example through their own IVA.
Can I cancel an IVA once it has started?
You can ask your supervisor to end it, but you will not get back what you have paid, you lose the protection, and creditors can pursue the full balances, including interest and charges that were frozen.
Related guides
- How does an IVA work? Step by step: assessment, creditor vote, monthly payments, reviews and completion.
- Pros and cons of an IVA The real advantages and disadvantages of an IVA, side by side, with how it compares to other options.
- Who qualifies for an IVA? Minimum debt, spare income, benefits, homeowners and the situations where an IVA rarely fits.
- IVA or debt management plan? How a DMP and an IVA compare on cost, protection, length and credit file, with examples.