Individual voluntary arrangements - help and advice

Individual voluntary arrangements

An IVA is a binding agreement between you and your creditors (the people you owe money to) to repay your outstanding debts, either in full or in part. Creditors will usually agree to wipe out some of what you owe in exchange for you committing to repay the rest.

An IVA is often described as an alternative to bankruptcy. IVAs have to be administered by a licensed insolvency practitioner, who is usually a qualified lawyer or accountant. For the IVA to go ahead, creditors representing at least 75% of the total value of your debts must agree to it. If they do, the details of the IVA are filed in court and displayed on a publicly accessible online register, the Individual Insolvency Register.

How do IVAs affect your ability to obtain credit?

An IVA is not an easy way out of debt and has serious implications. It will appear on your credit report for a minimum of six years from the date of arrangement, and longer if the arrangement lasts more than six years. During your IVA, reputable organisations will almost certainly ask for information about your situation and may refuse to give you credit.

What happens when your IVA ends?

Once your IVA ends, the Insolvency Service will let the credit reference agencies know. The agencies will then update the IVA entry on your credit report to show it has been 'completed'. The entry then stays on your credit report for six years from the date the IVA began. You might continue to experience difficulties getting credit and other financial services because you were in an IVA in the past. If you do manage to find someone who will lend to you, it is likely that they will see you as a high-risk customer and may charge you a higher interest rate as a result.

Who can find out about your IVA?

An IVA is a matter of public record. Landlords and employers can look at the 'public' information on your credit report, such as court judgments, bankruptcy orders and IVAs. As a result, entering into an IVA may affect your chances of renting a home or getting the job you want.

Are IVAs available in Scotland?

No, a Protected Trust Deed is the equivalent of an IVA in Scotland. Like an IVA, this is a legally governed procedure by which you can repay your debt over a specified period of time. Monthly payments are based on what you can afford. If you live in Scotland, you can get more information about Protected Trust Deeds and other debt repayment tools from a local money advice agency.

Who should consider IVAs?

If you are struggling to meet payments, get in touch with your creditors and tell them about your situation. Many lenders will be sympathetic and you may be able to make an informal agreement directly with them to make reduced payments for a while.

An IVA may still be a sensible way for some people to sort out their debts, though it should only ever be considered after receiving professional, impartial advice. This could be from a , , , , a solicitor, a qualified accountant, an authorised insolvency practitioner, a reputable financial adviser or a debt advice centre.

An insolvency practitioner will charge you for setting up and supervising an IVA, so talk to several before deciding which one to use. You should be absolutely sure that the person, company or organisation you choose to represent you on such a serious matter is properly qualified and reputable. Some of the companies that advertise IVAs as a way out of debt should be avoided as they could give you poor advice and make matters worse. You can find more detailed advice about alternatives to bankruptcy and IVAs on website.

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