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IVA Complete Guide: Everything You Need to Know 2026

Written by Jessica on . Posted in News.

Introduction

Facing an overwhelming debt can stir up a mix of emotions: stress, fear, embarrassment, and even despair. If you’re in this situation, it’s essential to know that you’re not alone. Many people in England and Wales face financial difficulties, and there are solutions available. One such solution is an Individual Voluntary Arrangement (IVA), which could help you write off up to 80% of your debt. However, it’s a significant commitment and not a decision to be taken lightly. This comprehensive guide will provide you with all the necessary details about an IVA, allowing you to make an informed decision.

What is an IVA?

An Individual Voluntary Arrangement (IVA) is a formal agreement between you and your creditors to pay back a portion of your debt over a set period, usually five years. If you stick to the terms of your IVA, any remaining debt is written off at the end of this period.

How does an IVA work?

An Insolvency Practitioner (IP) will work with you to develop a proposal detailing how you’ll pay back your debt. This proposal is then presented to your creditors. If the majority (75% or more) agree to the plan, all creditors are bound by it, including those who voted against or did not vote.

Pros and Cons of an IVA

Benefits of an IVA

  • Repayments are based on what you can afford, taking into account your income and essential living costs.
  • All interest and charges on your debts are frozen.
  • Creditors cannot take further action against you once the IVA is in place.
  • An IVA can write off a significant amount of your debt.

Drawbacks of an IVA

  • IVA fees can be high, and these are taken from your monthly payments.
  • Your credit rating will be negatively affected for six years.
  • If you’re a homeowner, you may have to release equity from your home to pay into the IVA.
  • Failure to adhere to the IVA terms can lead to bankruptcy.

Is an IVA right for you?

Choosing an IVA is a significant decision that impacts your financial future. Therefore, it’s essential to consider whether this debt solution aligns with your circumstances.

Consider an IVA if:

  • You have unsecured debts of £15,000 or more.
  • You have two or more creditors.
  • You have a regular income and can afford to make monthly payments.
  • You want to avoid bankruptcy.

An IVA may not be suitable if:

  • Your debts are less than £15,000.
  • You only have one creditor.
  • Your income is unpredictable or you cannot afford to make regular payments.
  • You’re not comfortable with the impact on your credit rating.

How to Apply for an IVA

If an IVA seems like the right solution for your financial situation, the next step is to contact a reputable Insolvency Practitioner (IP). They will guide you through the process, helping you to draft your proposal and presenting it to your creditors.

Conclusion: Taking the Next Step

While an IVA is not to be taken lightly, it can provide a structured and manageable way to tackle your debts and move towards a more secure financial future. If you’re considering an IVA, it’s vital to seek professional advice to ensure it’s the right decision for you.

As a starting point, you can reach out to the National Debtline on 0808 808 4000 or StepChange Debt Charity on 0800 138 1111 for free, impartial advice. If you’d prefer face-to-face guidance, Citizens Advice Bureau also offers free debt counselling.

Remember, the journey to financial recovery may be challenging, but it’s entirely possible with the right support and tools. By seeking help and considering all your options, including an IVA, you’re already taking significant steps towards regaining your financial freedom.