Individual voluntary arrangement (IVA)

An IVA could allow you to make affordable repayments to your debts over a fixed period, with the remaining debt written off at the end.

An individual voluntary arrangement (IVA) is a formal agreement allowing you to make affordable payments to your debts, usually over five or six years. At the end of your IVA any unsecured debt left is written off. You can also make a one-off payment known as a lump-sum IVA.

Benefits of an IVA

  • You make affordable monthly payments, usually over five or six years
  • If you’re a homeowner you’ll usually be able to keep your home, as long as you maintain the mortgage payments and any secured loans on your property
  • There are no set up fees to be paid before your IVA is agreed
  • There are fees once your IVA is in progress, but these will be included in your monthly repayments and are set by your creditors
  • If you have a lump sum to offer, this can be paid as a one-off ‘full and final’ settlement, or a combination of a lump sum payment followed by monthly payments
  • Once you’ve made your final payment any remaining unsecured debt is written off and your creditors can’t pursue you for payments

Risks of an IVA

  • If there’s equity in your home, you’ll need to try to re-mortgage which may result in a higher interest rate
  • If you’re unable to re-mortgage you can make a maximum of 12 extra payments or a third party can offer a sum equivalent to the equity
  • If your IVA fails, creditors may request the supervisor of your IVA petitions for your bankruptcy
  • Your credit rating will be negatively affected
  • Your creditors may not approve your IVA
  • At the end of your IVA, only unsecured debts included will be written off, any not included will remain outstanding
  • Your IVA will be recorded on a public register
  • Once your IVA is set up your spending will be restricted until the IVA comes to an end