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Individual Voluntary Arrangement (IVA)

An IVA is an agreement between the debtor and their creditors to repay all or a fraction of their debts. This is conducted through a ‘middle-man’ - an insolvency practitioner - who take payments and divides them between creditors as necessary. 

What is an IVA?

An IVA is a legally binding agreement between you and your creditors whereby you agree to make affordable payments over a defined period.  An IVA is therefore an option for those who want to repay an element of their debts, want legal protection from creditors and want to avoid bankruptcy or a DRO. 

An IVA allows you to pay one affordable monthly payment, usually over five or six years depending on your circumstances.  At the end of the IVA, provided you have complied with all of its terms, any remaining unsecured debt is written off.

Is an IVA right for me?

An IVA may be a suitable solution if you can afford to pay something towards your debts but not the full amount your creditors want. An IVA may impact your personal, financial and professional life so you should carefully consider this option before deciding to apply. An IVA is only available for residents of England, Wales or Northern Ireland. In Scotland, a trust deed is a similar solution.

Is an IVA legally binding?

If the 75% or more (by value) of creditors who choose to vote at the meeting support your proposal, then the IVA become is approved and becomes legally binding on all creditors who were propsoed to be included, whether or not they voted or voted against your proposal.  

How much of my debt will an IVA write off?

With an IVA, a considerable amount of your unsecured debt could be written-off. However, this figure will vary depending on your circumstances. This is because the monthly amount you pay into the arrangement is based on your disposable income. 

Ready to speak to an advisor?

It’s important to remember that no debt solution is perfect and there is no ‘one-size-fits-all,’ which is why we recommend speaking to one of our expert debt advisors about your options and next steps.

About Freeze Debt

Freeze Debt are the UK's multi-award-winning debt advice and solutions app. Since the App launch in 2019 it has helped thousands of users deal with over £30m of debt  

IVA Pros

  • Your monthly IVA repayments will depend on your personal income and expenditure, meaning it will be an amount you can afford each month.​

  • Your payments will usually be made over 5 or 6 years and once you’ve made your final payment, provided you have complied with all other obligations, the remaining unsecured debt will be written off.

  • The contractual interest and charges on your unsecured debt will be frozen and your creditors will no longer be able to contact you.

  • If you're a homeowner, you should be able to keep your home as long as you keep up with your mortgage repayments.​​

  • There are no set-up fees to be paid before your IVA is agreed.

  • If a lump sum is currently available or becomes available to you during the IVA, you may be able to offer creditors this sum to settle your liabilities instead of or in replacement of monthly contributions. These types of IVAs are commonly known as 'full and final settlements'. The suitability and requirements of these types of IVAs can differ slightly from an ordinary contribution-based IVA, so you should speak to an advisor if this is something you are considering.

IVA Cons

  • Creditors don’t have to agree to an IVA, therefore we can’t guarantee your IVA will be accepted.

  • An IVA will remain on your credit file for 6 years from the date your creditors agree to it or until one year after your IVA is complete whichever is the later.

  • Your IVA will be listed on the Individual Insolvency Register maintained by The Insolvency Service.

  • In some cases, if you own your home, you may be expected to re-mortgage to free up some equity for your unsecured creditors.​

  • You will pay fees to the IVA company but they will be included as a part of the one affordable monthly payment.​

  • If your IVA fails, creditors may request the supervisor of your IVA petitions for your bankruptcy.

  • It is important to note that any debts that are not included in your IVA will remain payable during the IVA and after the IVA if not cleared during that time. 

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