What Is An IVA?


An IVA is an Individual Voluntary Arrangement. It's a formal insolvency process and an alternative to bankruptcy.


They are available in England, Wales, and Northern Ireland. They are not available if you live in Scotland.


You repay what you can afford for an agreed period of time. This period of time may be 5 years but can be longer. In return, your creditors will write-off the debt that remains unpaid. Write-off occurs if you complete the IVA.


Subject to some rules, your assets may be a factor in an IVA. This is true for assets you acquire after an IVA begins. Your assets may be used to help repay your debts.


Couples can enter a joint IVA. This joint plan is known as an “interlocking IVA”.


This debt solution may get you out of debt faster than debt management. It depends on your debt level and how much you can pay.


How Does An IVA Work?


Firstly you need debt advice. An adviser finds out your personal and your money status. They can tell you if an IVA will work for you.


Pros and cons apply to this debt plan. They vary according to your situation. Your adviser will tell you about them and you can ask questions. Other options may exist, each with their own pros and cons.


To proceed, you'll need the help of an “insolvency practitioner” (IP). A licensed insolvency practitioner is the pro that can run your IVA.


You agree a proposal to go to your creditors. This includes the amount you will pay. You'll need some creditor support for your IVA to go ahead. Their response to your offer takes a few weeks.


If approved, your IP runs the plan until it ends. They contact you to do reviews. They work with your creditors. They collect your payment, and they send payment to your creditors as required.


If you complete your part of the deal, the IVA will end. Your IP will issue your completion certificate. A write-off of your unpaid debt happens. Your former creditors cannot seek payment from you.


Debt write-off only applies to debts that were included in your IVA.


Advantages of an IVA


Common benefits include:


• Avoid becoming bankrupt.

• Might protect your home.

• Legal protection from your unsecured creditors.

• An expert deals with your creditors for you.

• Make a single payment towards all of your debts.

• Smaller creditors that object to an IVA may get bound by it.

• A legal write-off of debt if you complete the plan.

• A budget to cover your bills and other costs.

• May involve a shorter payment term than a DMP.

• Frozen interest (exceptions can apply).


Negatives of an IVA


Some possible downsides include:


• Personal details on a public register.

• Negative effect on your credit rating.

• May have to release equity from your home. Your IVA may run for a further year if you cannot obtain a loan.

• When you stop paying creditors yourself, you will fall into arrears. Existing arrears may increase.

• If your IVA fails you will remain liable the balance of your debt. You may be liable for IP fees.

• IVA failure could result in you being made bankrupt.

• An employment contract might forbid insolvency. Some professions also forbid insolvency.

• Creditor objections to approving your IVA are possible. They could stop your IVA from being approved.

• Restrictions on your budget while your IVA continues.

• Cannot include every type of debt.


IVA Fees


An IP charges fees for their work on an IVA. The IP takes their fees from your payments.


The “nominee fee” covers setting-up your IVA. This may be a fixed sum of money. The work will include holding a client meeting, fact-finding, and giving advice. It involves preparing a statement of affairs, gathering supporting documents, and writing the IVA proposal. They send the IVA proposal to creditors and hold a “creditor’s meeting”.


The “supervisor’s fee” covers work after the IVA is approval. This may be a percentage of your payment. The work includes collecting your payments, agreeing creditor claims, and dealing with your creditors. It involves sending payment to your creditors, annual reporting, and the closure of the IVA.




An IVA can help you to avoid bankruptcy. It can help you to resolve a serious debt problem.


It may be attractive if you own your home. It may be attractive to employees who cannot become bankrupt.


It may deal with your debts sooner than using a debt management plan.


Bright Oak does not provide IVAs directly. We work with our partners, The Debt Advisor Ltd.


An IVA is a serious formal personal insolvency process. Get good advice before you proceed.


For further help, please contact our friendly advice team today.


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