What is an IVA?

What an IVA is

An IVA is an agreement between you and your creditors. You agree to make regular payments. In return, your creditors agree to take part of what you owe, or sometimes all of it, over a set time.

How it works

1. An insolvency practitioner looks at your income, your spending, your debts and what you own.
2. They work out what you can afford to pay and how long the IVA should last.
3. They ask creditors to vote. Approval normally needs at least 75% by value of the creditors who respond to vote in favour. This is not 75% of every debt you owe.
4. You pay the agreed amount each month. The creditors in your IVA stop asking you for payment, though they may still write to you from time to time.
5. When you have made all the payments, you get a “certificate of completion”. You no longer owe the debts that were in the IVA.

There is a separate voting condition: approval is blocked if more than half, by value, of the non-associate creditors vote against. For this test, the total is the admitted voting claims of creditors who are not your associates. Associates are legally defined connected people, such as some relatives. The practitioner applies the full voting rules.

Once approved, the arrangement binds creditors entitled to vote, including those who would have been entitled if they had notice. It does not clear every kind of debt. A secured creditor’s right to enforce security, such as a mortgage, cannot be affected without that creditor’s agreement. Mortgage payments and debts excluded by law or your arrangement still need separate attention. Ask the practitioner to identify what is included and excluded in writing.

Most consumer IVAs follow a standard set of rules called the IVA protocol. A new version applies to all protocol IVAs from 1 July 2025. Some IVAs are not protocol IVAs and can have different terms. Always read the papers you are given.

What it costs

In a protocol IVA, the practitioner’s fees are included in your monthly payments rather than charged upfront. Check the written fees for your own proposal. In the first months, more of each payment usually goes on fees than on your debts. You must be told what the fees will be before you agree.

Read more about IVA costs

How long it lasts

A standard (protocol) IVA usually lasts 5 years. It lasts 6 years if your equity in your home is £10,000 or more. Your payments can be extended if you miss payments or take a payment holiday.

The time on your credit file is a separate question. See how an IVA affects your credit record.

Your home

Under the protocol, you will not need to sell your home or use the equity in it to pay for your IVA. Equity is the part of your home you own outright. It is the home’s value, less what you still owe on loans secured on it. The protocol works this out using 85% of the home’s value.

If your equity is £10,000 or more, your payments last longer instead. IVAs that are not protocol IVAs, and older IVAs, can be different. If you already have an IVA, your own terms apply.

Risks and limits

• An IVA lasts for years, and you must keep up the payments.
• Fees take a large share of your early payments.
• It shows on your credit file for 6 years from the day it starts. It also goes on a public register.
• If your IVA is cancelled, your creditors can chase you again. They can add interest and charges that were frozen while the IVA ran. The practitioner can make you bankrupt.
• If you share a debt with someone else, their creditor can still ask them for the money.

Read the full benefits and risks

When an IVA may not suit

The Insolvency Service says an IVA may not be a good fit if:

• your debts are very low,
• you can only afford a small payment each month, or
• your income is mainly benefits.

A standard protocol IVA is also unlikely to suit you if you could get a Debt Relief Order. A debt adviser can check this with you. See IVA or Debt Relief Order? and IVA or bankruptcy?

Already in an IVA?

If you are finding it hard to keep up, talk to your insolvency practitioner as soon as you can. Do not wait until you have missed a payment. See what to ask about missed payments. A free adviser can help you too.