An IVA is a formal debt solution that acts as an alternative to bankruptcy and allows a person with debts above £10,000 an opportunity to agree reduced payments with their creditors for a fixed term, which is normally 5 years.

Where do IVAs come from

IVAs were introduced in 1986 as part of the Insolvency Act of England, Wales and Northern Ireland and have since become a powerful weapon in the fight against consumer debt problems.

Must I open a new bank account for my IVA

Yes, in most cases you will need to open a Basic Bank Account as your old bank account will be included in the IVA's list of creditors.

Who pays the IVA fees

An IVA's fees are drawn out of the IVA contributions. Therefore the creditors pay the fees of the IVA out of the money that has been repaid.

What debts can go into an IVA

An IVA can only deal with unsecured debts, such as bank loans, credit cards, store cards and overdrafts.

How much will the IVA payments be

Payments into an IVA are based on affordability for the applicant and will vary depending on the personal circumstances of each applicant.

What will happen to my home in an IVA

An IVA protects your home and allows you to stop creditors from taking legal actions to make you sell it.

What will happen to my car in an IVA

An IVA protects your motor vehicles of a modest value. Your creditors forfeit the right to take legal action against you as a way of seizing your assets such as your car. Once the IVA is agreed, your car is safe.

Can I still pay into my pension with an IVA

Yes, although your creditors may insist that your pension contributions are reduced to the minimum contribution levels.

Will my employer be told of my IVA

Your IVA is a private agreement between you and your creditors and your employer will not be notified, unless they are actually one of your creditors.

Can I include a business loan in my IVA

Yes. If you are a sole trader and have an outstanding business loan, then it will included in your IVA, just the same as all your other unsecured debts.

What if I have payment problems during my IVA

If you experience payment problems during your IVA, your first response should be to contact your IVA Supervisor. Protocol compliant IVAs give your supervisor the discretion to provide you with assistance, to help protect the IVA from falling into arrears. There are primarily 2 options available to the supervisor should they agree your circumstances require assistance. They can provide a modest reduction to your IVA payments or they can provide a payment break of up to 9 months.

Can my IVA include overpaid benefits

Yes. Your IVA can include overpaid benefits if they have been overpaid in error. What's more, if your benefits have been temporarily reduced, your benefits will be returned to the full level of income, helping you afford your IVA contributions more easily.

Can an IVA include an Inland Revenue Tax bill

Yes. H.M. Revenue & Customs debts can be included into your IVA along with all your other unsecured debts and will be treated in just the same manner.

Can I do an IVA if I receive Disability Living Allowance DLA

Yes. Receiving DLA does not preclude you from applying for an IVA as it is a living allowance and therefore not considered in the same way as state benefit.

How does an IVA affect credit rating

An IVA will affect your credit rating for 6 years, beginning at the start date of the IVA. Your IVA will not impact on your partner's credit rating or other people you live with, so long as you do not have any 'shared', or joint accounts.

Can I do an IVA if I am unemployed

Yes. Technically speaking, there's nothing to say that you can't enter an IVA if you are unemployed. However, we feel it would be inadvisable for you to enter into an IVA if your income is solely based on unemployment benefit. A household income which has partial reliance on unemployment benefit can be considered.

What happens at the end of an IVA

When your IVA successfully completes, any unpaid debts are legally written-off and you will be completely debt free. You will be give a certificate of completion to inform the credit reference agencies and your name will be removed from the insolvency register and you will once again be able to apply for credit.

Sometimes two people living at the same address whilst sharing financial resources, can propose a Joint IVA to clear their shared and individual debts. These are also sometimes referred to as Interlocking IVAs.

What happens if my IVA fails

If an IVA is deemed to have failed, the client is no longer under the legal protection of the IVA and becomes responsible once again for arranging payments to their creditors.

What will happen to equity in my home

Creditors will expect homeowners to agree to the release the equity in their home at some point within the IVA, however, this clause comes with certain conditions, designed to protect the IVA applicant from having to sell their property.

What happens if I receive a Windfall during my IVA

A windfall will most often arrive in the shape of some good fortune, such as a Lottery win or a prize, but it can also come about as a result of misfortune too. Redundancy payments, an Inheritance or Insurance payouts are also classed as financial windfalls.

Will my creditors agree to my IVA

Creditors understand that a small proportion of their customers will fall on hard times and be unable to maintain their financial commitments. They make allowances for such events and have strategies in place to minimise their losses when this happens.

How long does an IVA last

In the vast majority of cases an IVA will last for 5 years, though this can vary depending on the individual circumstances of each case.

IVA Questions and Answers

The most important aspect of asking for help with a debt problem is being sure you are asking the right people to help you.

IVAorg are the right people to approach when it comes to IVAs, because helping people learn about IVAs is what we do better than anybody else.

You can call our IVA helpline on 0800 856 8569 or complete the form below where we aim to respond to your IVA questions within 2 hours.

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IVA Frequently Asked Questions (FAQs)

Here are a list of some of the most frequently asked questions we have received about an IVA. We have provided a brief answer with a link to an more in depth response if you wish to know more. Please feel free to call our helpline 0800 856 8569 at any time to have your IVA questions answered.

What is an IVA An IVA is a formal debt solution that acts as an alternative to bankruptcy.

It allows a person with debts above £10,000 an opportunity to reach a new arrangement with their creditors to reduce their monthly repayments to an affordable level.

The IVA has a fixed repayment term of normally 5 years, after which any remaining debt is written off.

N.B. Some homeowners should expect their IVA to be extended by 12 months, increasing the term from 5 years to 6 years, when it is determined their share of any equity is above £10,000. Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
Where do IVAs come from IVAs were introduced as part of the 1986 Insolvency Act of England, Wales and Northern Ireland.

Since their introduction they have grown to become the UK's most favoured formal debt solution, and have become a powerful weapon in the fight against consumer debt problems. Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
Must I open a new bank account for my IVA If you have debts with your current bank account provider, such as a loan, a credit card or an overdraft, it will be necessary to open a ‘Basic Bank Account’.

This is because the debts owed to your bank will be included in the IVA.

And once your bank are made aware of your intention to enter an IVA they will withdraw your banking facilities.

This is why it's a good idea to prepare yourself by opening a new bank account before your IVA begins. Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
Who pays the IVA fees An IVA’s fees are drawn out of the payments made into the IVA.

In most cases this means that the IVA fees are paid by the creditors because they recover less of the money you pay back.

However, if you receive a windfall during your IVA, resulting in you being able to repay your original debts in full, then you will also be expected to pay any outstanding IVA fees. Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
What debts can go into an IVA An IVA can only deal with unsecured debts.

Examples of unsecured debts are bank loans, payday loans, Buy Now - Pay Later loans, catalogue debt, credit cards, store cards and overdrafts.

IVAs are also able to deal with debts created by mortgage or secured loan shortfall from the sale of a property, personal guarantees and any outstanding HMRC debts.

Other debts that can be included are council tax arrears and arrears from utility bills. Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
How much will the IVA payments be Payments into an IVA are based on affordability and vary depending on the personal circumstances of the applicant.

Before the IVA starts, every effort is made to establish what size payment is affordable and sustainable for each applicant. Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
What will happen to my home in an IVA An IVA is designed to protect your home.

Once an IVA has been accepted, creditors must refrain from taking legal actions to recover their debt.

This means that creditors must refrain from pursuing a Charging Order being put against your home. Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
What will happen to my car in an IVA An IVA protects motor vehicles from debt enforcement actions by creditors.

Once the IVA has been accepted, creditors forfeit the right to take legal action against you to recover their debt.

Once the IVA has been accepted, your car is safe. Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
Can I still pay into my pension with an IVA Yes, you are allowed to pay into your pension pot whilst in an IVA.

However, creditors may request that your pension contributions are maintained at modest levels whilst the IVA is ongoing. Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
Will my employer be told of my IVA Not normally.

Your IVA is a private agreement between you and your creditors.

An employer would not normally be notified about an IVA unless they are actually one of the creditors.

However, if you are subjected to mandatory employment security clearance checks, then you need to know that your IVA will be visible on your credit file, should it be searched. Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
Can I include a business loan in my IVA Yes, if you have a sole trader business, the IVA will help.

IVAs are designed to help with all unsecured debts, even if the funds were used to finance a business.

If you are a sole trader and have an outstanding business loan, a business credit card or outstanding credit with suppliers, then they will included in your IVA.

They are treated just the same as all your other unsecured debts. Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
What if I have payment problems during my IVA If you experience payment problems during your IVA, your first response should be to contact your IVA Supervisor.

Protocol compliant IVAs give your supervisor the discretion to provide you with assistance, to help protect the IVA from falling into arrears.

There are primarily 2 options available to the IVA Supervisor, should they agree your circumstances require assistance.

They have the discretion to offer a reduction to your IVA payments or a payment break of up to 9 months if that's deemed to be more appropriate. Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
Can my IVA include overpaid benefits Yes. Your IVA can include overpaid benefits if they have been overpaid in error.

What's more, your benefits will be returned to your full entitlement once the IVA has been accepted, further easing the pressure on your household budget. Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
Can an IVA include an Inland Revenue Tax bill Yes. H.M. Revenue & Customs debts can be included into your IVA.

Unpaid Self-Assessment tax is treated in line with all other unsecured debts.

However, unpaid VAT bills and outstanding Employer's PAYE are given a preference within an IVA, which can impact the feasibility and viability of some IVAs as a solution.

It is advisable to raise this with an IVA advisor at the earliest opportunity to determine whether this might negatively impact your application. Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
Can I do an IVA if I receive DLA or PIP Yes. Receiving either DLA or PIP does not preclude you from applying for an IVA.

However, both of these benefit entitlements are provided to help cover the cost of living with a long term health condition.

So, the suitability of an IVA for someone receiving DLA or PIP should always be questioned, particularly if it means some of their benefit will be lost to repay debt.

As with all applications, we're always happy to find a better solution if one can be found. Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
How does an IVA affect credit rating An IVA will affect your credit rating for a minimum of 6 years, beginning at the start date of the IVA.
Your credit rating may continue to be affected for longer if your IVA is extended beyond 6 years, with the adverse affect being felt for up to 2 months beyond the final closure date of your IVA, whenever that may be.

Fortunately, your IVA will not impact on your partner's credit rating or other people you live with, so long as you do not have any 'shared', or joint accounts. Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
Can I do an IVA if I am unemployed Yes. Technically speaking, there's nothing to say that you can't enter an IVA if you are unemployed.

However, we feel it would be inadvisable for you to enter into an IVA if your income is solely based on unemployment benefit.

IVAs work best when they are built on a stable and sustainable foundation.

If you are unemployed but want to apply for an IVA, it is probably best to hold off making an application until you have found a reliable income.

A household income which has partial reliance on unemployment benefit can be considered. Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
What happens at the end of an IVA When your IVA successfully completes, any unpaid debts are legally written-off and you will be completely debt free.

You will be give a Certificate of Completion to evidence the end of your IVA. Keep this certificate for your future reference and send a copy to the credit reference agencies.

Your name will be removed from the insolvency register and you will once again be free to apply for credit. Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
What is a Joint IVA Sometimes two people who live together can join forces and propose a ‘Joint IVA’ to clear their debts.

These IVAs are also sometimes referred to as ‘Interlocking IVAs’ and be a very useful way of solving a joint debt problem. Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
What happens if my IVA fails If an IVA fails, the customer is no longer legally protected by the IVA.

The customer becomes liable for their original outstanding debt, and once again must take control over making payments to their creditors. Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
What will happen to equity in my home Homeowners will have the level of equity in their home assessed before the IVA begins.

85% of this value is then used and all secured borrowings are deducted from this value in order to determine the level of equity.

If the applicant's share of remaining equity is assessed at being more than £10,000 then the IVA's term will be automatically extended by 12 months in lieu of the equity, from 5 years to 6 years.

When the applicant's share of equity is very high, it may be necessary to propose a bespoke IVA instead, rather than a protocol compliant IVA. Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
What happens if I receive a Windfall during my IVA An IVA defines a windfall as receipt of any unschedule payment above £500.

It will most often arrive in the shape of some good fortune, such as a Lottery win, a gift or a prize.

However, it can also come about as a result of misfortune too. An Inheritance or an Insurance payouts can also classed as financial windfalls.

Most windfalls are required to be surrendered in full and paid into the IVA for the benefit of creditors.

Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
Will my creditors agree to my IVA Creditors understand that a small proportion of their customers will fall on hard times and be unable to maintain their financial commitments.

They make allowances for such events and have strategies in place to minimise their losses when this happens.

Most lenders are receptive to accepting an IVA, particularly when they can see that the financial outcome is in their best interests. Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
How long does an IVA last In the majority of cases an IVA will last for 5 years, particularly when the applicant is not a homeowner.

Homeowners may find that their IVA is extended from 5 to 6 years due to their equity - See the answer to Question 21.

By contrast, Full and Final Settlement IVAs normally constitute a single payment, after which the IVA enters its closure process, so they last only a few months. Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
Can I do an IVA if I am self employed?
Yes, it's perfectly acceptable to propose and enter an IVA if you are self-employed.

All the normal IVA qualifying requirements still apply, but you'll also be asked to provide some trading accounts or a cash flow forecast, to verify your income.
Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
Will my IVA affect the people I live with?
No, entering into an IVA will have no bearing on other people living at your address.

Credit ratings are personal to each individual and, whilst the individual's address may be known to the Credit Reference Agencies, the actual address is not 'black listed' as may people think.
Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
Who will know about my IVA?
An IVA is a private arrangement and, as such, it is not advertised to the general public.

This can be of great confort to those people who feel embarrassed about their debts and wish to be awarded a degree of privacy.

But every IVA is listed on the Insolvency Register which is a public record that holds the name and detail of every live insolvency in the UK.

The IVA remains on the register for the duration of the agreement, after which it is removed. Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
Can an IVA include a CCJ?
Yes, an IVA takes priority over a County Court Judgement and, as a result, the judgement debt is absorbed into the IVA.

The creditor holding the CCJ loses their priority status and any payment arrangement to the judgement is stopped. The creditor then receive a share of the IVA dividend instead.
Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
Payment problems in an IVA
Payment problems can occur for many different reasons, but any change to your 'fixed' budget is going to be noticeable to you.

First thing you need to do is contact your Insolvency Practitioner and notify them you are experiencing problems with your IVA payments.

They have different options available to help you, so talking to them just as soon as you know you have a problem will give you the best chance of keeping your IVA on track.
Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
Can I change cars in an IVA?
Yes, you can change vehicles whilst in an IVA.

The issues you'll probably experience will be related to the practical aspects of making the change as finding the funds to buy a new car may be difficult.

So, just to ensure you're aware of all the potential issues you may face, it's advisable to liaise with your Insolvency Practitioner beforehand, and discuss your intentions with them prior to jumping in with both feet.
Call us now for free on 0800 856 8569 Apply for an IVA FAQs
Will my IVA be affected if I change my job?
The main consideration relating to your employment is that it provides you with sufficient income to maintain your personal expenditure at a reasonable level, whilst generating enough surplus to make your IVA payments affordable.

If your new income is similar to your old income, then it's unlikely that the change will have any real impact on your IVA.

If your new income is higher, then your Insolvency Practitioner will undertake a new assessment of your personal circumstances to see if your IVA payment should increase but , fundamentally, your IVA would continue as originally agreed.

But, if your new income is lower, and your ability to sustain your agreed IVA payments is reduced, then there will be a negative affect on the IVA. How big an affect will be determined by the size of the reduction.
Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
I'm in an IVA but can I work for myself?
Yes, you can become self employed whilst you're in an IVA.

But, as with any change to your personal circumstances, you should take a moment to consider the implication that making such a fundamental change might have.

IVAs are designed to bring financial stability to any given situation. You should consider what affect such a significant change will have and whether you'll still have the means to keep up with your IVA payments.

It is advisable, therefore, to undertake a thorough analysis of your new business, generate a realistic cash flow and make sure you're aware of all the responsibilities related to being self-employed before you commit yourself.

And, once you're happy you can make the transition without any serious issues, you should inform your Insolvency Practitioner of your plans.
Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
Can I get a mortgage when I'm in an IVA?
Technically, there are no reasons why you can't apply for a mortgage when you're in an IVA but you will require permission from your IP and there will almost certainly be significant practical issues you'll need to overcome.

Any mortgage lender operating in this market place will require a very large deposit and will likely charge higher interest that typical High Street rates.
Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
Full and final settlement calculation
Knowing how much to offer creditors is always difficult to establish, as the figure will be determined by your individual circumstances.

Where the funds are coming from will also have a major influence on the offer you make, be it from 3rd party funds or through the sale of an asset.

Equally, your personal circumstances will determine the strength of the offer through the eyes of your creditors and influence whether they'll be happy with the offer you've put forward.
Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
Can I take a payment break?
Yes, at the sole discretion of the Insolvency Practitioner it is possible to be given up to 9 payment breaks during the course of an IVA.

If you are struggling to maintain your IVA contributions you should talk to your Insolvency Practitioner as soon as possible.

When deemed necessary, they have the means to provide a payment break or even a reduction in your payments, without the need to obtain creditors' consent.
Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
What happens if I receive a windfall during my IVA?
There is a 'Windfall Clause' within an IVA's standard terms and conditions.

The windfall clause obligates you to notify your Insolvency Practitioner if you receive any sum of money above £500, outside of your normal household income.

The clause defines which kind of funds you'd be allowed to retain and which funds you'd be obliged to pass into your IVA for the benefit of your creditors.
Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
What is a IVA Variation Creditors' Meeting
An IVA Variation Meeting provides an opportunity to seek a modification to an ongoing IVA should a change in circumstances require it.

As with the original Creditors Meeting, the customer proposes the variation through their IVA Supervisor.

Creditors then vote on whether or not to accept the variation that's being proposed.
If the variations are agreed, then the IVA is amended accordingly. If not, then the original terms are kept in place as before. Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
Being credit checked whilst in an IVA
It is possible that you may be subjected to a credit check during the term of your IVA if you apply for credit or look to rent a property.

Credit Reference Agencies update their credit files to reflect any new additions to the Insolvency Register.

When you enter an IVA, the IVA will be noted on your credit file and will be visible to anyone looking at it. Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
Understanding your annual IVA review
Insolvency Practitioners are required to undertake an annual review of each IVA they are supervising.

The reviews give the supervisor an opportunity to perform a health check the IVA and ensure that the customer is adhering to all their legal obligations.
Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
Can I finish my IVA early?
Yes, it is possible to bring an IVA to early completion.

The introduction of 3rd party funds is a very common method of bringing an IVA to an early settlement. Creditors are approached with details of the offer and, if they accept, the IVA completes early.

There are other ways in which an IVA might be brought to an early close, perhaps through a windfall payment such as an inheritance, or as a result of a redundancy payment.
Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs
Can I apply for credit in an IVA?
It is against the general terms and conditions of an IVA for you to apply for credit greater than £500, without the expressed permission of your Insolvency Practitioner.

This article outlines the restrictions against obtaining credit during your IVA. It also explains how a new creditor might find out about your IVA if you make an application for new credit.
Read more Call us now for free on 0800 856 8569 Apply for an IVA FAQs