Finance glossary
Individual Voluntary Arrangement — IVA
Also known as: IVA
In simple terms
An IVA is a formal, legally binding deal to pay what you can afford towards your debts over a set period — usually five or six years — after which the rest is written off.
On this page
What does IVA mean?
An Individual Voluntary Arrangement is a formal insolvency solution in England, Wales and Northern Ireland. It is a legally binding agreement, set up through a licensed insolvency practitioner, to repay a proportion of your debts over a fixed term.
At the end, any remaining included debt is written off.
How an IVA works
An insolvency practitioner proposes affordable payments to your creditors. If creditors holding at least 75% (by value) of those who vote agree, the IVA is binding on all included creditors — so they cannot pursue you separately.
You usually make set monthly payments for five or six years. There are fees, which come out of your payments, and homeowners may be asked to release some equity near the end.
How could this affect me?
An IVA can stop creditor action and give a clear end date, but it is a serious step: it appears on a public insolvency register, stays on your credit file for six years, and can affect certain jobs.
If you miss payments the IVA can fail, which may lead to bankruptcy — so it is vital the payments are genuinely affordable. Always get free advice before committing.
Things to watch out for
- An IVA is recorded on a public register and on your credit file for six years.
- Fees are involved — get free advice first to check it is right for you.
- If it fails you could end up bankrupt, so payments must be affordable.
Know your rights
- An IVA must be set up through a licensed insolvency practitioner and, once approved, is legally binding on included creditors.
- You can get free, impartial advice first from StepChange, Citizens Advice or National Debtline before entering any formal solution.
General information, not personal advice
Consumer Credit is an independent information service. We do not provide regulated financial advice or sell financial products. For advice on your own situation, speak to an appropriately authorised firm or a free service such as MoneyHelper. About Consumer Credit.
Sources
We checked this page against these official and authoritative sources.
- GOV.UK, Options for paying off your debts — Individual Voluntary Arrangement (opens in a new tab). Accessed 22 Aug 2026.
- MoneyHelper, Individual Voluntary Arrangements (IVAs) (opens in a new tab). Accessed 22 Aug 2026.