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An IVA (short for Individual Voluntary Arrangement) is a formal debt solution that helps you repay what you owe through affordable monthly payments over five to six years. It’s available in England, Wales and Northern Ireland. The IVA is based on what you can reasonably afford.
An IVA plan is legally binding, so once approved, your creditors can’t chase you for more. It also gives you more control than bankruptcy, letting you protect your assets and even continue running a business.
An Individual Voluntary Arrangement (IVA) is a legally binding agreement with your creditors that helps you repay your debts affordably. It may be right for you if you can pay something each month but not the full amounts creditors are demanding.
If you have a lump sum, you may also qualify for a shorter-term IVA plan.
It’s important to understand the risks as an IVA can impact your job, credit rating and future borrowing. That’s why we always recommend getting expert debt advice before applying.
Speak to one of our debt specialists today, we’ll help you decide if an IVA is the best fit for your situation.
An IVA involves making regular payments to an insolvency practitioner, who distributes the funds to your creditors. Creditors must agree to the IVA proposal, and if accepted, it becomes legally binding. During the IVA, creditors cannot take legal action against you.
An IVA will stay on your credit file for six years from the date it’s approved. During this time, you may find it harder to get credit or new financial products.
If you want to borrow over £500, you’ll need written permission from your insolvency supervisor. Details of your IVA are also recorded on the Individual Insolvency Register, which is publicly accessible.
The impact on your credit rating depends partly on your score before the IVA, but most people see their credit improve in the years after completing their IVA.
Getting a mortgage during an IVA is possible, but it’s difficult. You’ll need permission from your IVA provider, most mortgage lenders will only consider your application once your IVA is completed or nearly finished.
If you do find a lender willing to help, your IVA provider will check that your monthly budget still allows you to make your agreed IVA payments before giving approval.
You can usually change your car during an IVA, especially if it’s essential for work or family life. Creditors understand that having a reliable vehicle is often necessary to maintain your income.
If you need to take out car finance to replace your vehicle, you’ll need permission from your IVA provider first. They’ll check that any additional credit is affordable and won’t affect your IVA payments.
As long as your bank isn’t one of your creditors, you can usually keep your account.
If you owe money to your bank, they may freeze your account once they learn you’re proposing an IVA. In that case, we’ll advise you to open a new account with a bank you don’t owe money to, so your finances aren’t disrupted.
IVAs generally cover unsecured debts such as credit cards, personal loans, overdrafts, and store cards. Secured debts like mortgages and car loans are not included. Some debts, like student loans and court fines, are also excluded.
Disadvantages include a potential negative impact on your credit rating, restrictions on your financial affairs, and the possibility of losing certain assets. An IVA may also affect your ability to obtain credit in the future.
It usually takes 21 to 28 days to set up an IVA. During this time, your insolvency provider will collect details about your income, debts and assets, including things like your home or car.
Once your IVA proposal is ready, you’ll have time to review it carefully before it’s sent to your creditors. They then have at least 14 days to vote on whether to accept it.
At My Debt Plan, we’ll guide you through every step and make sure you feel confident before moving forward.
An IVA typically lasts for five years, though it can sometimes be extended if the debtor’s financial situation requires it. After the agreed period and completion of payments, any remaining debts are usually written off.
If your circumstances change or someone offers financial help, you may be able to settle your IVA early with a lump sum payment.
This lump sum would replace your remaining monthly payments and must be approved by your creditors. They’ll usually agree if it means receiving payment sooner than waiting for the full term.
At My Debt Plan, we can talk you through how to vary your IVA and submit a proposal to end it early.
The cost of an IVA covers setting up the arrangement and managing it over its full term, this is usually five years. These fees are not paid upfront, instead they’re taken from your agreed monthly payment, once your IVA is approved and begins.
There are three types of IVA fees:
At My Debt Plan, the total fee is typically £3,650, although creditors may adjust this slightly. Either way, you’ll never pay more than what’s agreed in your IVA and there are no hidden charges.
In most cases, an IVA won’t affect your job, but it depends on your role and industry. Certain positions like company directors, lawyers, accountants and licensed professionals may have restrictions.
It’s important to check your employment contract, speak to your professional body, or ask your HR department confidentially. If you’re unsure, our advisors can guide you through what to look for.
You are free to change jobs at any time during your IVA. If your income increases when you change your job, you may need to inform your IVA provider, as this may affect the amount of your income contributions payable into your IVA. Your creditors will expect you to agree to increase your contributions by up to 50% of the increase in your net income, but they will also allow you to deduct from this increased payment any additional living expenses or expenses associated with your new employment such as additional travel costs.
Missing a payment can jeopardize your IVA. If you’re unable to make a payment, contact your insolvency practitioner immediately to discuss your situation. They may be able to negotiate a temporary adjustment with your creditors.
When your IVA is completed, you’ll receive a final report confirming it has been successfully concluded. Your IVA provider will also update the Insolvency Register to show that your IVA is finished.
Your creditors will get a copy of the report, which explains how much was repaid and confirms that no more payments are due.
An IVA is a legally binding agreement that protects you from creditor action and can result in a portion of your debt being written off. A Debt Management Plan (DMP) is informal, it can help reduce monthly payments but doesn’t offer legal protection or guarantee debt write-off.
If you need a more structured solution with frozen interest and legal safeguards, an IVA may be more suitable. Our team can help you compare both options.
Once your IVA is approved, it becomes legally binding and offers protection from bailiffs, court claims and most other creditor enforcement actions. Your creditors must stop chasing you and deal directly with your insolvency practitioner.
This protection can offer peace of mind if you’re facing pressure, threats, or legal letters.
You can start the IVA application process online with My Debt Plan. We’ll ask for some basic details about your income, spending and debts. From there, one of our debt specialists will guide you through the next steps.
You won’t be committed to anything until you’ve reviewed and approved your IVA proposal and there are no upfront fees to get started.
Credit Score Pop Up Wording : An Individual Voluntary Arrangement (IVA) is a formal agreement with creditors to repay a portion of your debts over time, but it does have an impact on your credit score and it will be difficult to obtain further credit whilst on an IVA. Once an IVA is approved, it is recorded on your credit report and will typically remain there for six years from the date it starts.
However, it’s important to note this is the case for most debt solutions and your credit score will likely already have been affected by being in debt in the first place.
Once your IVA is complete you will get a fresh start to begin rebuilding your credit rating.
IVA costs are charged for the preparation of your proposal and the administration of the arrangement for the full term (usually 5 years) these costs are charged from the monthly contributions you make into the IVA and are not in addition. Costs will only be recovered on approval of your arrangement and once you commence making payments to it. The fees for preparation of the proposal to creditors and calling the meeting for creditors to vote on its approval are called nominees fees, the fees for running the arrangement once approved are called supervisors fees. There are also some expenses incurred in the running of the arrangement such as the registration fee and the statutory insurance that needs to be taken by law, these are called disbursements. For our arrangements, the total of all of these is £3,650 although this may be adjusted by creditors when they vote on whether to accept. No matter what the end total of costs come to, you can be rest assured that these will be taken from the monthly payment we agree with you.
