Whilst not suitable for everyone, an IVA is a solution that can help clients with debts going through difficult times, and help them avoid the severity of bankruptcy. It is a legally binding agreement with your creditors which normally lasts five years. During this time you pay back what you can afford on a monthly basis, based upon your financial circumstances. This may include releasing some assets, as well as, regular contributions of your income. The IVA usually includes a degree of debt forgiveness which varies from case to case.


Assessment of suitability for an IVA will require a full disclosure of assets, liabilities, income and expenditure. In return the creditors will write off a percentage of your debt; this will never be more than 90% of what you owe.

Every case is based on an individual assessment; no two cases are the same so the more accurate the information you provide, the greater are the  chances of the IVA succeeding.

There are different stages of the IVA that you need to follow:

  • Assessment over the phone
  • Assess paperwork on return
  • Consultation call
  • IVA approved/declined

How much do you have to pay?

This is dependent on your individual income and expenditure. You are expected to pay your disposable income into the arrangement and the IVA practitioner will pay the collected monies to the creditors.


The arrangement can fail if you do not maintain your part of the bargain. It is important to be realistic about what you can afford to avoid the agreement breaking down at a later stage.

A Simplified Example of an IVA with your situation:

If your debt level is £20,000 and you do not have any assets and your disposable income level is £166 per month. That is the amount payable every month for the five year period. From those contributions we take our fees and pay the balance to the creditors. As part of the agreement the creditors will then write off the remaining balance owed.

Debt level = £20,000

Term- 60 months @ £166 = £10,000 resulting in approximately 50% of your total debt level being written off.




Creditors who vote against your proposals are still bound by it. Your IVA is entered on a public register.
Creditors whose lending is unsecured can’t take further action. The insolvency practitioner may require payment in advance for preparing your proposal and getting your creditors agreement.
Interest is usually frozen as long as you keep up your payments. If your IVA fails, you may be made bankrupt
Your insolvency practitioner will help you prepare your proposal, including agreeing the level of your household and personal spending based on the guidelines. Any equity in your home may have to be released, usually after the fifth year of the IVA, by remortgaging your property. If you can’t remortgage you may have to continue making payments for up to another year.
Many insolvency practitioners will allow you to pay their fees for preparing your proposal monthly, as part of the IVA. The IVA may fail if your circumstances fail. You will still owe the creditors the full amount.
You make one payment every month or quarter. Your insolvency practitioner is responsible for redistributing the payments.  The solution is not always guaranteed.
A spouse, partner or relative can buy you out of the net worth of your property.  Only unsecured debts can be included on an IVA.
On completion of the IVA your debts are written off.
You may be able to continue running any businesses that you have.