IVA benefits and risks

What an IVA can do for you

• Creditors stop asking for payment. The creditors in your IVA stop asking you for money once it starts. They may still write to you from time to time.
• One payment a month. You pay a set amount to your practitioner. They share it out.
• An end date. When you have made all the agreed payments, you get a certificate of completion. You no longer owe the debts in the IVA.
• More control of your assets than bankruptcy. That is what GOV.UK says. Under the protocol, you will not need to sell your home or use its equity to pay for the IVA.
• You may be able to keep your business running. GOV.UK says this is possible with an IVA.

What can go wrong

• It is a long commitment. A standard (protocol) IVA usually lasts 5 years, or 6 years if your equity in your home is £10,000 or more.
• Fees come first. Your early payments cover more of the fees than the debts you owe. See what an IVA costs.
• Your credit file. An IVA appears on your credit file for 6 years from the day it starts. That may make it hard to get credit. See how an IVA affects your credit record.
• It is public. Your IVA is on an online register for as long as it runs, and for 3 months after it ends.
• Your payments are reviewed every year. If you do not take part in the review, your IVA may be cancelled.
• You must report changes. If you get a pay rise or an inheritance, or you are at risk of redundancy, you must tell your practitioner. You may have to pay more into the IVA.
• Limits on borrowing. You must not take credit of more than £500 without your practitioner’s written approval.
• Joint debts. If you share a debt with someone else, the creditor can still ask the other person to pay.
• Selling your home during the IVA. If you sell your interest in your home while the IVA runs, the IVA may later fail. If it does, your creditors may look at how the money was used.
• No refund if you cancel. If you decide to stop, you do not get back the money you have already paid.

What if I cannot keep up my payments?

Talk to your insolvency practitioner as soon as you can. Do not stay silent. They are the person who can change things.

1. Tell your practitioner. The Insolvency Service says to do this as soon as possible if you can no longer afford your IVA.
2. Ask what can change. Options can include lower payments, a payment holiday, or ending the IVA. Your creditors may need to agree to some changes.
3. Know what a payment holiday means. If you take one, your IVA is extended to make up the missed payments.
4. Get free advice. If the IVA ends, a protocol practitioner should point you to free, regulated debt advice. You do not have to wait for that. Free advisers can help now.

If your IVA is cancelled:

• Your creditors can start to chase you for repayment again.
• They may claim interest and charges that were frozen while the IVA ran.
• You may have repaid less than you expected, because early payments went mostly on fees.
• Your practitioner or a creditor can ask for you to be made bankrupt. See what bankruptcy means.

When an IVA may not suit

• Your debts are very low. A standard protocol IVA is aimed at combined debts of £7,000 or more.
• You can only afford a small payment each month.
• Your income is mainly benefits or a state pension.
• Your income is very uneven, for example if you are self-employed or work irregular hours.
• You could get a Debt Relief Order. Then a standard protocol IVA is unlikely to suit you.
• Your home has very high equity, or you own more than one property. A standard protocol IVA is unlikely to suit you. A different kind of IVA, or another option, may be looked at.

Other options

An IVA is one option, and it will not suit everyone. See how it compares:

• IVA or bankruptcy?
• IVA or Debt Relief Order?
• All your debt options