Individual Voluntary Arrangement (IVA) - Complete UK Guide 2025

An Individual Voluntary Arrangement (IVA) is the UK’s most popular debt solution, helping over 67,000 people in 2024 alone become debt-free. If you’re struggling with unmanageable debts, an IVA could reduce what you owe by up to 70% while protecting your home and assets.

What is an Individual Voluntary Arrangement?

An Individual Voluntary Arrangement is a legally binding agreement between you and your creditors that allows you to:

• Reduce your debt burden - Pay back only what you can afford over 5-6 years
• Write off remaining debt - Any unpaid balance is legally forgiven at completion
• Stop creditor harassment - All collection activities cease once approved
• Protect your assets - Keep your home, car, and essential belongings
• Freeze interest and charges - No more mounting debt from fees

How Popular Are IVAs?

IVAs have become the dominant debt solution in England and Wales:

• 2024: 67,100 new IVAs (57% of all insolvencies)
• 2023: 64,019 new IVAs (62% of all insolvencies)
• 2022: Record 87,849 new IVAs (74% of all insolvencies)

This popularity stems from IVAs offering a middle ground between informal debt management and the severity of bankruptcy.

Who Uses IVAs? Key Demographics

Age Groups

IVAs are most common among working-age adults:

• Peak usage: Ages 35-44 (28 per 10,000 adults)
• Women aged 35-44: Highest IVA rate at 30.3 per 10,000
• Under 55s: IVAs are the most common insolvency solution
• Over 55s: More likely to use Debt Relief Orders

Gender Patterns

• Women: Slightly more likely to enter IVAs (higher insolvency rate: 26.5 vs 22.1 per 10,000)
• Men: More likely to choose bankruptcy when insolvent
• Trend: Women’s insolvency rates have exceeded men’s for 11 consecutive years

Income and Employment

Contrary to stereotypes, most IVA users are employed:

• 56% are in employment (StepChange data)
• Average monthly income: £1,558 take-home
• Average surplus for debt: Only £73 after essential costs
• Common profile: “Working poor” - employed but insufficient income

Regional Variations Across the UK

IVA usage varies dramatically by location, reflecting economic conditions:

Highest IVA Rates (2024)

• North East England: 18.1 IVAs per 10,000 adults (highest nationally)
• North East Lincolnshire: 26.5 per 10,000 (highest local authority)
• Hull and Blackpool: 50+ per 10,000 adults

Lowest IVA Rates (2024)

• London: 9.1 IVAs per 10,000 adults (lowest nationally)
• Kingston upon Thames: 9.5 per 10,000
• City of London/Westminster: 2-3 per 10,000

National Average: 13.7 IVAs per 10,000 adults (2024)

These patterns reflect higher household debt distress in northern and industrial areas versus lower rates in affluent southern regions.

Why Do People Need IVAs? Common Causes

Based on debt charity data, the main triggers for IVA applications are:

1. Cost of Living Crisis (2022-2024)

• 25% of new clients cite rising living costs as primary cause
• Energy bills: One-third behind on payments in 2022
• Inflation impact: Wages not keeping pace with essential costs

2. Income Shocks

• Job loss or redundancy: Traditional leading cause
• Reduced working hours: Affecting payment ability
• COVID-19 impact: 23% still cited pandemic effects in 2022

3. Health Issues

• Mental health: 20% cite as primary debt cause
• Physical illness: Leading to income loss or high expenses
• Vicious cycle: Debt stress worsens mental health

4. Multiple Credit Commitments

• Average debts: 5-6 different credit sources per person
• Mean debt: £13,941 unsecured debt per client (2022)
• Credit cards: Most common debt type (66% of clients)
• Personal loans: Second most common (47%)

IVA Eligibility Criteria

While there are no strict official guidelines, Insolvency Practitioners typically require:

What Debts Can Be Included in an IVA?

✅ Debts You CAN Include

Note: Scottish residents need a Trust Deed - the Scottish equivalent of an IVA.

❌ Debts You CANNOT Include

IVA Success Rates: What Are Your Chances?

Based on official government data, IVA outcomes show:

Overall Success Rate: 66% Complete Successfully

Key Insight: If you can maintain payments for the first 3 years, you’re very likely to complete successfully.

What Happens if an IVA Fails?

• Creditors resume collection activities
• Interest and charges restart accumulating
• Bankruptcy often follows as the next option
• All previous payments were still beneficial to creditors

IVA Application Process

Applying for an IVA involves several key steps:

1. Free consultation - Speak with a licensed Insolvency Practitioner
2. Financial assessment - Review your income, expenses, and debts
3. Proposal preparation - Your IP creates a formal proposal to creditors
4. Creditor approval - 75% of creditors (by value) must approve
5. Implementation - Begin your affordable monthly payments

The entire process typically takes 2-4 weeks from initial consultation to approval.

Employment Impact of an IVA

Good news: Most jobs are completely unaffected by an IVA. There’s no legal requirement to inform your employer, and they won’t be notified by your Insolvency Practitioner.

Jobs That May Be Affected:

• Financial services (banking, financial advice, accounting)
• Legal profession (solicitors, barristers)
• Company directors and senior executives
• Police officers and security roles

What You Should Do:

Check your employment contract for clauses about insolvency arrangements. If your role involves financial responsibility, consider discussing with HR before proceeding.

Important: The vast majority of people continue working normally throughout their IVA without any employment issues.

How an IVA Affects Your Partner

If Debts Are in Your Name Only:

• No impact on your partner’s credit score
• No public record linking them to your IVA
• Complete confidentiality - your partner need not be involved
• Their finances remain separate and unaffected

If You Have Joint Debts:

• Joint debts must be disclosed in your IVA proposal
• Partner becomes liable for the full joint debt amount
• Creditors may pursue your partner for joint debts
• Consider a joint IVA if both parties are struggling

Practical Considerations:

While legally your partner isn’t affected by your individual debts, you may need to discuss household budgeting as your disposable income will be committed to IVA payments.

Credit Score Impact

During Your IVA:

• Severe credit score impact - typically 200-300 point drop
• No new credit without IP permission (over £500)
• Existing credit accounts will likely be closed
• Publicly listed on the Insolvency Register

Credit File Timeline:

• 6 years from IVA start date (not completion)
• IVA marker remains even after successful completion
• Some lenders may still consider applications during this period

After IVA Removal:

• Gradual score improvement over 6-12 months
• Specialist lenders available immediately after completion
• Mainstream lenders typically available 12-24 months post-completion

Tip: Start rebuilding credit with a secured credit card after IVA completion.

Required Documentation for IVA Application

To apply for an IVA, you’ll need to provide:

Essential Documents:

• Photo ID - Passport or driving licence
• Proof of address - Recent utility bill or council tax statement
• 3 months’ bank statements - All accounts including current and savings
• Income evidence - 3 recent payslips, P60, or benefits confirmation
• Debt statements - Recent statements from all creditors

Additional Documents (if applicable):

• Mortgage statement - If you’re a homeowner
• Rental agreement - If you rent your home
• Vehicle finance agreements - For cars, motorbikes, etc.

Processing Time: Most IVAs are approved within 2-4 weeks of submitting complete documentation.

IVA Duration and Timelines

Standard IVA Duration:

• 5 years (60 monthly payments) is the typical term
• 6 years for homeowners unable to release equity
• Early completion possible with lump sum settlement

Important Dates:

• Credit file removal: 6 years from IVA start date
• Insolvency Register: Removed after 3 months (or completion if sooner)
• Annual reviews: IP assesses income changes yearly

IVA Costs and Fees

Initial Consultation:

• Free debt advice - No upfront costs for initial assessment
• No obligation - Only proceed if IVA is suitable for you

IVA Fees Structure:

• Nominee fee: £1,000-£3,000 (taken from first payments)
• Supervisor fee: 15% of monthly payments ongoing
• No hidden costs - All fees disclosed upfront
• Paid from your contributions - No additional out-of-pocket expenses

Creditor Approval Process

Most creditors accept IVA proposals because they receive more money than in bankruptcy. Your approval chances depend on:

• Realistic payment offer - Affordable and sustainable monthly amount
• Complete disclosure - All debts and assets declared honestly
• Professional presentation - Licensed IP handles negotiations
• 75% creditor approval required by debt value (not number of creditors)

Success Rate: Over 95% of properly prepared IVA proposals are approved.

IVAs and Homeownership

Protecting Your Home:

• No forced sale - IVAs are designed to let you keep your home
• Equity considerations - May need to release equity in year 5 or extend to year 6
• Mortgage payments continue - Included in your essential expenses
• Joint ownership - Only your share of equity is considered

Equity Release Options:

1. Remortgage to release funds (if possible)
2. Third-party contribution from family/friends
3. 12-month extension instead of equity release

Key Point: Over 90% of homeowners successfully complete their IVA without losing their property.

Ready to Start Your IVA Journey?

If you’re considering an IVA, take the next step with our free resources:

• Use our IVA Calculator to check your eligibility and see how much debt you could write off
• Compare IVA Companies to find the best licensed insolvency practitioner for your needs
• Read IVA Pros and Cons to understand all advantages and disadvantages
• Learn about IVA Costs and what fees you’ll pay

Alternative Debt Solutions

An IVA might not be right for everyone. Consider these alternatives:

• Debt Management Plan - Informal arrangement with creditors
• Debt Relief Order - For those with low income and assets
• Trust Deed Scotland - Scottish equivalent to an IVA

Need Help with Debt Collectors?

If you’re being contacted by debt collection agencies, we have detailed guides:

• Debt Collectors Directory - Know your rights with each agency
• Bailiffs Information - Understand bailiff powers and your protections