Individual Voluntary Arrangement (IVA)
What is an IVA?
An IVA is a formal agreement you can make with your creditors to resolve your debt by making reduced payments.
How IVAs work
You and your creditors come to an arrangement to pay off a percentage of what you owe. Then, generally, after five years the debt is classed as settled.
Creditors will vote on whether they accept your payment plan. You need at least 75% (in value) of the votes to proceed.
Who are IVAs for?
People who want to resolve their debt but can’t make the full payments or get a loan.
The advantages of IVAs
- Creditors cannot harass you for more money
- You can avoid bankruptcy
- Your debt will be settled in five years
The disadvantages of IVAs
- If the IVA fails, your creditors can apply to make you bankrupt
- Your IVA will remain on the public register for two years
- Your credit rating will be affected
- It can cost over £2,500 to prepare an IVA
How to proceed with an IVA
An IVA has to be prepared by an Insolvency Practitioner who then presents it to your creditors. It is a legally binding arrangement.
If you’re interested in setting up an IVA, you will need to contact an Insolvency Practitioner. You can find one in the Yellow Pages, or the Consumer Credit Counselling Service can recommend one to you.
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