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An IVA (Individual Voluntary Arrangement) lets you repay a portion of your debt over 5–6 years — typically 25–50% of what you owe. The rest is legally written off. About 70,000 IVAs are approved each year in England and Wales.
How an IVA Works
- Consult an Insolvency Practitioner (IP) — they must be licensed
- IP assesses your finances and proposes a payment plan
- Creditors vote — 75% (by value) must approve
- You make fixed monthly payments for 5–6 years
- Remaining debt is written off at the end
- Creditors cannot contact you or pursue legal action
IVA Examples
| Total Debt | Monthly Payment | Duration | Total Repaid | Written Off |
|---|---|---|---|---|
| £20,000 | £150 | 5 years | £9,000 | £11,000 (55%) |
| £30,000 | £200 | 5 years | £12,000 | £18,000 (60%) |
| £50,000 | £300 | 6 years | £21,600 | £28,400 (57%) |
| £80,000 | £400 | 6 years | £28,800 | £51,200 (64%) |
Eligibility
| Requirement | Details |
|---|---|
| Minimum debt | £6,000–£10,000 (practical minimum) |
| Number of creditors | At least 2 (typically) |
| Regular income | Must afford monthly payments |
| Residency | England, Wales, or Northern Ireland |
| Type of debt | Unsecured only (credit cards, loans, overdrafts) |
IVA Pros and Cons
| Pros | Cons |
|---|---|
| Write off 50–75% of debt | Credit rating affected for 6 years |
| Fixed monthly payment | Appears on Insolvency Register (public) |
| Legal protection from creditors | Homeowners may need to release equity |
| Keep your home | If you fail, could lead to bankruptcy |
| No more interest or charges | IP fees come from your payments |
| One affordable payment | Lasts 5–6 years (long commitment) |
IVA vs. DMP vs. Bankruptcy
| Factor | IVA | DMP | Bankruptcy |
|---|---|---|---|
| Debt written off | Yes (50–75%) | No | Yes (most) |
| Duration | 5–6 years | Until repaid | 1 year |
| Legally binding | Yes | No | Yes |
| Creditor protection | Yes | No | Yes |
| Credit impact | 6 years | 6 years | 6 years |
| Home at risk | Equity may be required | No | Yes |
| Cost | IP fees in payments | Free (use free provider) | £680 application fee |
Bottom Line
An IVA is the best middle ground for UK residents with £10,000+ in debt who can’t repay in full but want to avoid bankruptcy. You typically repay 25–50% over 5–6 years, and the rest is legally eliminated. Always consult a free debt advisor (StepChange) before an IP, as they’ll help you find the right solution.
See our DMP guide for a less formal option, or bankruptcy guide if an IVA isn’t feasible.
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