IVA (Individual Voluntary Arrangement)

With an IVA, you could have:

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One affordable repayment towards your unsecured debts

An IVA makes unmanageable debts affordable again. By reducing your unsecured debt repayments to an affordable level and combining them into one monthly payment, you can be sure you'll have enough left over for your bills and other commitments.

As part of an IVA, you will have restrictions on your expenditure. Creditors will expect you to give up anything they see as an unnecessary luxury, such as gym memberships.

Writes off the unsecured debt you can't afford

Once you've made your final IVA payment (normally after five years), the rest of your unsecured debts included in the plan will be written off. Anything not included in the IVA will remain outstanding.

Your secured debts - such as a mortgage or any loans secured against property - would not be included in the IVA and you would have to keep making your monthly payments as normal. At the end of the IVA, your secured debt would not be written off.

Your credit rating will be affected for at least six years, and your IVA will appear in the publicly available Individual Insolvency Register.

Stops demands from lenders

An IVA is legally binding - so once it's agreed your lenders can't take any further action against you, as long as you keep up with your payments (and stick to the other terms).

How an IVA works

An IVA is an agreement with your lenders that can make your unaffordable debts affordable again and help you avoid bankruptcy.(Although your IVA could lead to bankruptcy if it isn't successfully completed.)

We'll contact your lenders to arrange lower monthly payments towards your unsecured debts, based on what you can afford. They don't have to agree to this, but there's a very good chance they will if it's clear your debts really are unaffordable. As long as the proposed terms are accepted by lenders who account for at least 75% of the debt by value, your IVA can go ahead.

The agreement lasts for an agreed period - normally five or six years, depending on your circumstances. Once you've made your final payment, any outstanding unsecured debt included in your IVA will be written off. Any remaining unsecured debt not included in your IVA will remain outstanding.

If you're a homeowner, you may have to release equity from your home in the final year of your IVA to help repay your debts. If you're unable to remortgage, your IVA could be extended by up to a year so you can make more monthly payments instead.

Is it right for me?

An IVA could make a big difference if you simply can't afford to repay your debts in full within a reasonable period of time.

A lot of people think bankruptcy is the only option for dealing with unaffordable debts, but an IVA is an alternative that could help you to stay in your home and, in some cases, repay more of what you owe.

But your lenders will only accept an IVA if you really need it, you must still be able to commit to regular monthly payments - and since they'll expect you to pay as much as you can every month, they may ask you to cut back in certain areas if you're spending more than they consider reasonable.

Final points

An IVA could offer a way out if you're struggling with unmanageable debt. However, it will affect your credit rating, so you may find it difficult to obtain a mortgage or other credit - and if you are successful, you might end up paying a higher rate of interest.

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Read more about the fees involved with each of the solutions we provide.

Download the Insolvency Service guide to dealing with creditors.

Read here for information about our Complaints Procedure and referring a complaint to the Financial Ombudsman Service.

Subject to eligibility and acceptance. Fees Payable. Debt write off applies to unsecured debts only and on completion of an IVA, alternative solutions may be offered. If your IVA fails, it could lead to Bankruptcy. Your ability to obtain credit will be affected for the medium to long term. Homeowners may be required to release the equity in their property.
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