What is an IVA?

An Individual Voluntary Arrangement (IVA) is a legally binding agreement between a debtor and their creditors to repay debts over a fixed period, typically five to six years. It is a formal insolvency procedure available in England and Wales under the Insolvency Act 1986 and must be set up by a licensed Insolvency Practitioner (IP) who acts as the nominee and, once approved, the supervisor of the IVA. The debtor makes monthly contributions to the IP, who distributes them to creditors. After the IVA successfully completes, any remaining eligible debt is written off. For an IVA to be approved, creditors representing at least 75% of the value of the debt must vote in favour. Once approved, it is binding on all unsecured creditors who were notified of the proposal, including those who voted against. An IVA is registered on the Insolvency Register and appears on your credit file for six years. It can affect your ability to obtain credit and in some cases your employment (particularly in financial services). While an IVA protects your home from immediate sale (unlike bankruptcy), your equity may need to be released in the final year. IVAs come with fees — both nominee and supervisor fees are paid from your contributions. You should get independent advice from a free debt charity (such as StepChange or National Debtline) before entering an IVA, as they can assess whether it is the most appropriate debt solution for your circumstances.