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.