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Checklist for deciding if an individual voluntary arrangement (IVA) is right for you

This advice applies to England

An individual voluntary arrangement (IVA) is a formal and legally binding agreement between you and your creditors to pay back your debts over a period of time. An IVA must be set up by an insolvency practitioner.

An IVA can be flexible to suit your needs but it can be expensive and there are risks to consider.

IVAs explained

What is an IVA and how does it work?

If you want more information about what an IVA is and how it works, see What is an IVA?.

When an IVA may be right for you

An IVA may be right for you if:

  • you have at least two separate debts
  • you have debts that add up to more than £10,000
  • you have at least two different creditors. Creditors are people you owe money to
  • you don't want to have to deal with your creditors directly

Remember that an IVA can be flexible - if you don't quite match all of these criteria, you may still be able to get an IVA.

Benefits of an IVA

Some benefits of an IVA are:

  • it is legally binding. This means all creditors have to stick to it and they can't chase you for the debt once the IVA is in force
  • an IVA is time limited and you only have to repay for the period of the IVA - usually five years
  • creditors will usually accept that only part of the debts will be repaid - the rest is written off

When an IVA may not be right for you

An IVA may not be right for you if:

  • you work as an accountant or solicitor. You should read the terms and conditions of your contract to find out if you are prevented from continuing to work if you get an IVA
  • your circumstances are likely to change. An IVA usually involves paying a set amount to your creditors each month and it will last for a number of years, normally five. You should be prepared to commit to paying a set amount throughout this time. If your income is irregular or you are on a fixed term contract, an IVA might not be appropriate
  • your debts are less than £10,000
  • you do not have any spare income or a lump sum available to pay your creditors
  • you get support for mortgage interest (SMI) - your SMI payments might stop and you might have to pay back any SMI you’ve had since 6 April 2018

Brexit - if the UK leaves the EU with no deal

An IVA might not be right for you if you owe money to people or businesses in the EU. These debts might not be covered by an IVA.

Your creditors could keep asking you for money, for example by calling you and sending you letters. 

If you live or work in the EU, they could take you to court in the EU. 

Get legal advice if you have creditors in the EU. Find free or affordable legal help.

Other things to think about

Before you go ahead with an IVA, find out about the cost and how it may affect your:

  • home
  • possessions, savings and pension
  • credit rating


IVAs have high costs. This is because they have to be set up by a qualified insolvency practitioner. Costs vary but are around £4000 - £5000 on average. You will usually pay the costs in instalments as part of your IVA payments.


If you own a home, you may have to re-mortgage it at the end of the IVA.

Possessions, savings and pension

If you own a car or other large items,you may have to sell them to pay money into your IVA.

You will probably have to use any savings you have to pay your creditors.

If you have a personal pension, you may have to use that money to pay your creditors as it counts as income.

Getting credit

Getting an IVA will affect your credit rating which may make it more difficult to get credit.

Alternatives to an IVA

Make sure you look at other options to deal with your debts, which may be more suited to your situation:

  • bankruptcy - if you don't own a home, or your home is worth much less than the loans secured on it (negative equity) and you have no assets or spare income
  • debt relief order - if you don’t own a home, your debts are £20,000 or less and you have no assets or spare income
  • a debt management plan - if you have some spare income each month to pay your creditors

Next steps

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