IVA Advice UK: How They Work & Who Qualifies

If you're researching IVA advice, start with the rules

If you've typed "debt IVA advice" into a search engine, you're probably weighing up whether an Individual Voluntary Arrangement could be a way to deal with debts you can't realistically clear. Before considering any formal solution, it helps to understand exactly what an IVA is, what it commits you to, and the eligibility rules set out by the Insolvency Service.

An IVA is a formal, legally binding agreement between someone in debt and their creditors. It's overseen by an Insolvency Practitioner (IP) authorised under the Insolvency Act 1986. Once approved, it locks in monthly payments — typically for 5 or 6 years — after which any remaining qualifying unsecured debt covered by the arrangement is written off.

How an IVA actually works

According to GOV.UK, an IVA can only be set up by an authorised Insolvency Practitioner. The IP drafts a proposal showing what you can afford to pay each month after reasonable living costs, then puts that proposal to your creditors at a virtual meeting.

For the IVA to be approved, creditors holding at least 75% by value of those who vote must agree. Once approved, all unsecured creditors listed in the proposal are bound by it — even those who voted against it. Interest and charges on the included debts are frozen, and creditors cannot take further enforcement action while you keep up payments.

What debts can be included

IVAs typically cover unsecured debts such as:

• Credit cards and store cards
• Personal loans and overdrafts
• Catalogue and payday loans
• Council tax arrears (in most cases)
• HMRC debts (subject to HMRC's voting policy)
• Old utility bills

Some debts cannot be included. Student loans, court fines, child maintenance arrears and debts secured against your home (such as a mortgage) fall outside the scope of an IVA.

Who is eligible for an IVA

There is no single statutory debt threshold for an IVA, but in practice most Insolvency Practitioners will only propose one where total qualifying debts are at least around £6,000 to £10,000 and spread across two or more creditors. Below that level, other options such as a Debt Relief Order (DRO) or a Debt Management Plan (DMP) may be more proportionate.

The Insolvency Service sets out that to enter an IVA you must:

• Live in England, Wales or Northern Ireland (Scotland has a separate equivalent called a Trust Deed)
• Have a regular, sustainable income — usually from employment, self-employment or pension
• Have enough disposable income to offer creditors a meaningful monthly contribution after essential living costs
• Have unsecured debts your IP believes creditors will accept a partial repayment on

Living costs and the SFS

Insolvency Practitioners use the Standard Financial Statement (SFS) — the same budgeting framework used by free advice charities — to calculate what counts as reasonable living costs. This determines the monthly contribution you'd offer creditors. Anything left after essential bills, food, transport and a modest allowance for things like clothing and household goods is what flows into the IVA.

What an IVA costs

IVA fees are not paid upfront by the person in debt. Instead, the Insolvency Practitioner's fees are taken from the monthly contributions you pay into the arrangement. There are usually two main fees agreed by creditors:

• The Nominee's fee — covering the work of setting up the IVA and drafting the proposal
• The Supervisor's fee — covering ongoing management for the full term of the arrangement

Because these fees come out of what you'd otherwise be paying creditors, an IVA is not "free" — creditors effectively absorb the cost through receiving less of each pound paid in. This is one reason creditors will only vote yes where the proposal offers a better return than they'd expect from bankruptcy.

The risks and trade-offs

An IVA is a serious, long-term commitment. The Insolvency Service is clear that anyone considering one should understand the consequences before signing.

Credit record impact

An IVA is recorded on your credit file for 6 years from the start date, and your name appears on the public Individual Insolvency Register for the duration of the arrangement. This will affect your ability to get credit, and may affect some types of employment or renting.

If you own a home

If you have equity in a property, the IVA proposal will usually require you to try to release some of that equity in the final year — typically by remortgaging. If you can't, the IVA is normally extended by 12 months in lieu of the equity contribution.

If you can't keep up payments

If your circumstances change and you can't maintain payments, the Supervisor may be able to vary the arrangement, take a payment break, or in some cases reduce contributions. However, if the IVA fails, creditors can resume collection action and may petition for your bankruptcy. The debts return in full, minus payments received.

How an IVA compares to other formal options

An IVA is one of several formal debt solutions in England and Wales. The right route depends entirely on your circumstances — income, assets, debt level and housing situation.

• Debt Relief Order (DRO) — for people with debts up to £50,000, less than £75 disposable income per month, and assets under £2,000. The £90 fee was scrapped in 2024.
• Bankruptcy — a faster route (usually discharged after 12 months) but with a £680 application fee and stricter consequences for homeowners and certain professions.
• Debt Management Plan (DMP) — an informal arrangement to pay debts in full at a reduced rate. No write-off, but flexible and reversible.
• Trust Deed — the Scottish equivalent of an IVA, with its own statutory framework.

Where to get proper IVA advice

Only an authorised Insolvency Practitioner can set up an IVA, but there are several places to get impartial information first. Free, independent debt advice is available from MoneyHelper, StepChange, Citizens Advice and National Debtline — all of which can talk through whether an IVA, DRO, bankruptcy, DMP or informal arrangement might suit your situation.

Because an IVA locks you into 5 or 6 years of payments and has lasting credit implications, taking time to compare it against the alternatives — with someone who can review your full financial position — is generally considered an important step before signing anything.