IVA Advice: How They Work, Costs & Eligibility 2026

If you're searching for information on IVAs, you're likely weighing up a formal debt solution against alternatives like a debt management plan, bankruptcy, or a Debt Relief Order. An Individual Voluntary Arrangement (IVA) is a legally binding agreement between you and your creditors to pay back part of what you owe over a fixed period — usually five or six years — after which any remaining unsecured debt covered by the arrangement is written off.

Because an IVA is a formal insolvency procedure set out in the Insolvency Act 1986, it can only be set up and administered by a licensed Insolvency Practitioner (IP). The information below covers how IVAs work in England, Wales and Northern Ireland, who tends to qualify, the costs involved, and the trade-offs to weigh up.

What an IVA actually is

An IVA is a contract proposed by you (the debtor) to your creditors, supervised by an Insolvency Practitioner. You agree to pay an affordable monthly contribution — or sometimes a lump sum — for a set term. At the end of the arrangement, any unsecured debt included in the IVA that hasn't been repaid is legally written off.

According to GOV.UK, an IVA must be approved by creditors holding at least 75% by value of the debt of those who vote at the creditors' meeting. Once approved, the IVA binds all included creditors — even those who voted against it — meaning they cannot continue chasing the debt, add further interest, or take court action over it while the arrangement is in force.

Who tends to be eligible

There is no fixed statutory minimum debt level for an IVA, but in practice Insolvency Practitioners typically only propose an IVA where:

• Total unsecured debt is usually £7,000 or more (lower amounts are rarely viable due to fees)
• You owe money to two or more creditors
• You have a regular income that allows a sustainable monthly contribution after essential living costs
• You live in England, Wales or Northern Ireland (Scotland has a separate equivalent called a Protected Trust Deed)

Debts that can typically be included are credit cards, personal loans, overdrafts, store cards, catalogue debts, council tax arrears, HMRC tax debts, and some benefit overpayments. Debts that cannot be written off through an IVA include student loans, court fines, child maintenance arrears, and secured debts such as a mortgage.

How an IVA is set up — the stages

1. Initial assessment

An Insolvency Practitioner reviews your income, essential expenditure, assets and total debts to work out whether an IVA is realistically viable. They calculate the maximum sustainable monthly payment using the Standard Financial Statement (SFS) budgeting framework used across the UK debt advice sector.

2. Drafting the proposal

The IP drafts a formal proposal setting out exactly how much you'll pay, for how long, what assets (if any) will be realised, and what creditors can expect to receive. This document is what creditors vote on.

3. Interim order and creditors' meeting

An interim order from the court may be obtained to pause creditor action while the proposal is circulated. At the creditors' meeting (now usually conducted by correspondence or virtually), creditors vote. If 75% by value approve, the IVA is in force.

4. The arrangement runs

You make monthly payments to the supervising IP, who distributes funds to creditors after deducting fees. The IP reviews your income each year and may adjust payments if your circumstances change significantly.

5. Completion

At the end of the term — usually 60 or 72 months — provided you've met the terms, the IP issues a completion certificate and any remaining qualifying debt is written off.

What it costs

An IVA carries Insolvency Practitioner fees, but these are taken out of your monthly contributions rather than paid upfront. There are two main components:

• Nominee fee — covers setting up and drafting the proposal
• Supervisor fee — covers ongoing administration over the life of the IVA

Fees vary by provider but are paid from the money you would have paid to creditors anyway — so the headline monthly figure you pay does not change because of fees. Creditors effectively absorb the cost through reduced returns. This is why free debt advice charities such as StepChange and Citizens Advice can set up IVAs at no separate cost to you.

The trade-offs to weigh up

Potential benefits

• A single affordable monthly payment replaces multiple creditor demands
• Interest and charges on included debts are frozen
• Creditors bound by the IVA cannot take further court or enforcement action over included debts
• Any remaining included debt is written off at the end
• Unlike bankruptcy, you can usually keep your home (subject to equity rules) and there are no restrictions on holding certain professional roles

Potential drawbacks

• Your IVA appears on the public Individual Insolvency Register for the duration plus three months
• It is recorded on your credit file for six years from the start date, severely affecting borrowing
• If you own a home with equity, you may be required to attempt to remortgage in the final year to release equity towards creditors
• Failure to keep up payments can lead to the IVA failing and potentially to bankruptcy
• Annual income reviews mean payments can rise if your income grows
• It is a long-term commitment — typically 5 to 6 years

How an IVA compares to other formal options

An IVA is one of several formal debt routes available in the UK. The right route depends on debt level, income, assets and personal circumstances — which is why a regulated adviser will look at the whole picture before any recommendation is made.

• Debt Relief Order (DRO) — for people with debts up to £50,000, very low income and minimal assets. Cheaper and shorter (12 months) but stricter eligibility.
• Bankruptcy — typically shorter (usually discharged after 12 months) but with greater impact on assets and certain professions.
• Debt Management Plan (DMP) — informal, flexible, no debt write-off, no creditor binding. Interest is not legally frozen.
• Protected Trust Deed — the Scottish equivalent of an IVA.

Where to get regulated IVA advice

An IVA is a serious, long-term legal commitment and can only be properly assessed against your full financial picture by a regulated debt adviser or Insolvency Practitioner. UKDT does not provide debt advice — we connect people with regulated debt advice firms who can review your situation properly and explain whether an IVA, or another route, fits your circumstances.