Individual Voluntary Arrangements (IVAs): how they work, costs and risks

What is an IVA?

An IVA is a formal insolvency procedure under Part VIII of the Insolvency Act 1986. You make one affordable monthly payment to an insolvency practitioner (IP), who shares it between your creditors. You may also pay in a lump sum, for example from equity in your home or the sale of an asset.

At the end of the IVA, usually after five or six years, any remaining unsecured debt included in it is written off, as long as you’ve kept to the terms.

IVAs are the most common form of personal insolvency in England and Wales. 71,841 IVAs were registered in 2025, and IVAs made up around 59% of all individual insolvencies in the 12 months to August 2026 (Insolvency Service).

Who might an IVA suit?

There’s no legal minimum debt, but an IVA is usually only considered if:

• you owe a significant amount (usually several thousand pounds or more) to two or more creditors
• you can afford a regular monthly payment after your essential living costs
• your income is reasonably stable
• you want to protect your home, or you have assets that would be at risk in bankruptcy
• you live in England, Wales or Northern Ireland (Scotland has Protected Trust Deeds instead)

If you have little or no spare income and few assets, a free Debt Relief Order may be more suitable. If your debts are smaller or your situation is temporary, an informal payment arrangement or debt management plan might be better. A good adviser will explain all of these.

How an IVA is set up

1. Advice. A debt adviser looks at your full situation and explains all your options, including free ones.
2. The proposal. An insolvency practitioner (acting as your “nominee”) helps you prepare a proposal, setting out your income, spending, assets, debts and what you can pay.
3. The creditor decision. Your creditors vote. The IVA is approved if creditors holding at least 75% of the debt (by value of those who vote) agree, and no more than half of the unconnected creditors who vote are against it.
4. Approval. If approved, it’s binding on all creditors who were entitled to vote, even those who voted no or didn’t vote.
5. Supervision. The IP (now your “supervisor”) collects your payments, reviews your income and spending each year, and pays your creditors.

Setting up an IVA typically takes a few weeks. During that time creditors aren’t legally stopped from taking action, so if bailiffs are involved, your adviser may suggest Breathing Space first.

How an IVA stops bailiffs

Once your IVA is approved, the creditors bound by it can’t take enforcement action to recover the debts included – including sending bailiffs. They must deal with the insolvency practitioner instead.

Council tax arrears can usually be included in an IVA, but you must keep paying your current council tax. Some debts can’t be included, such as magistrates’ court fines, so bailiffs collecting those could continue. Read our article: can an IVA stop bailiffs?

What an IVA costs

IVA fees are paid to the insolvency practitioner, usually from your monthly payments, so you don’t normally pay anything upfront. There are two main fees:

• a nominee fee for preparing the proposal and getting it approved
• a supervisor’s fee for running the IVA, often a percentage of what’s collected

Together these often add up to several thousand pounds over the life of the IVA. Because fees come out of your payments, they reduce how much goes to your creditors. Ask the adviser for a clear breakdown, in writing, before you agree to anything.

The risks and downsides

• Your credit rating. An IVA stays on your credit file for six years from the start date, and is shown on the public Individual Insolvency Register until three months after it ends. Getting credit will be difficult.
• Your home. If you’re a homeowner, you’ll usually be asked to try to release equity (by remortgaging) towards the end of the IVA. If you can’t, the IVA is usually extended by up to 12 months.
• It’s a long commitment. Five or six years is a long time. If your circumstances change, payments can sometimes be reduced, but not always.
• It can fail. If you can’t keep up the payments or break the terms, the IVA may fail. Your creditors could then chase the remaining debts, and the supervisor could apply to make you bankrupt.
• Windfalls. If you receive an inheritance, bonus or other windfall during the IVA, you’ll usually have to pay it in.
• Not all debts can be included, for example magistrates’ court fines, student loans, child maintenance and secured debts like a mortgage.
• Some jobs may be affected, especially in financial services, law or certain public roles.

IVA vs the alternatives

See debt solutions compared for more detail.

More about IVAs

• IVA eligibility: who qualifies?
• IVA fees explained: what an IVA really costs
• Is an IVA a good idea? The honest pros and cons
• IVAs and your home: equity release explained
• IVA vs debt management plan
• IVA vs bankruptcy
• Missed IVA payments and what happens if an IVA fails
• Can I keep my car in an IVA, DRO or bankruptcy?
• Can debt be written off in the UK? The legitimate ways

Frequently asked questions

Is an IVA a government scheme?

No. IVAs are set out in law (the Insolvency Act 1986) and run by licensed insolvency practitioners, but they’re not a government scheme, and nobody should describe them that way.

Can I include council tax arrears in an IVA?

Usually, yes. Council tax arrears can normally be included, but you must keep paying your current council tax.

Can I get an IVA if I rent?

Yes. You don’t need to own a home to have an IVA.

What happens to my IVA if I lose my job?

Tell your insolvency practitioner straight away. They may be able to reduce or pause payments, or the IVA may need to be varied or ended. Getting advice early gives you the most options.

How long does an IVA stay on my credit file?

Six years from the date it starts, even if it ends sooner.

Sources

• Insolvency Act 1986, Part VIII
• GOV.UK, Individual Voluntary Arrangements
• Insolvency Service, Individual insolvency statistics, December 2025
• Insolvency Service, Individual insolvency statistics, August 2026
• FCA, Unauthorised or unsuitable debt advice