An IVA (Individual Voluntary Arrangement) is a formal, legally binding agreement between you and your creditors to repay all or part of your debts through regular payments over a set period. It’s arranged and supervised by a licensed insolvency practitioner. This guide covers IVAs in England and Wales. Scotland has protected trust deeds instead, and Northern Ireland has its own IVA rules.
Get free debt advice first. An IVA isn’t the right answer for everyone, and some companies are paid for referring people into IVAs. Before agreeing to anything, speak to a free, regulated debt adviser such as StepChange, National Debtline or Citizens Advice. They can compare an IVA with options like a debt relief order, a debt management plan or bankruptcy.
How do IVAs work?
You make one monthly payment to the insolvency practitioner (the “supervisor”), who takes their fees from it and shares the rest between your creditors. If enough creditors vote to accept your proposal, the IVA becomes binding on all the creditors included in it.
Once it starts, those creditors stop chasing you for payment and can’t add interest or charges. When you’ve made all the agreed payments, you get a certificate of completion and you no longer owe the debts included in the IVA. Any debt left over is written off.
Protocol IVAs and bespoke IVAs
Most consumer IVAs in England and Wales are protocol IVAs. They follow a standard framework set out in the IVA Protocol, which insolvency practitioners and creditors agree to follow. The current version is the IVA Protocol 2025, updated by the Insolvency Service on 1 April 2025. The protocol is voluntary and doesn’t override the law.
If a protocol IVA isn’t suitable, for example because your finances are complicated or you have a lot of equity in property, an insolvency practitioner may suggest a bespoke IVA with terms tailored to you, or another debt solution.
If you’re already in an IVA, it continues on the terms you and your creditors agreed. A newer version of the protocol doesn’t rewrite an existing arrangement.
Who is an IVA suitable for?
There’s no fixed legal minimum debt for an IVA, and you don’t have to own property. But under the 2025 protocol, a protocol IVA is usually suitable for someone who:
- has a regular, sustainable income that isn’t mainly state benefits or a state pension
- has several debts adding up to £7,000 or more
- has straightforward assets
- couldn’t otherwise repay their debts in full within the IVA period
- isn’t eligible for a debt relief order
These are general suitability guidelines, not legal tests. The protocol says protocol IVAs aren’t usually suitable for people with very low debts or very low spare income. People who qualify for a debt relief order, or who could clear their debts through a debt management plan over a similar period, may also be better served by those. Because the payments must be sustainable for the whole term, your insolvency practitioner should check that you can realistically keep them up.
Things that can make a protocol IVA unsuitable include disputed debts, investments, an expected lump sum, being a sole trader with trade debts, very high equity in your home, or owning more than one property or a buy-to-let.
The IVA process step by step
- Get free, regulated debt advice to check whether an IVA is right for you.
- If it is, an insolvency practitioner (the “nominee”) works through your income, spending, debts and assets with you. They should give you the protocol’s key facts document before you sign anything.
- Together you draw up a proposal, which is sent to your creditors.
- Your creditors vote on it. If enough of them accept, the IVA is approved and binds all the creditors included.
- You make your monthly payments to the supervisor, who pays your creditors after deducting fees.
- Your income and spending are reviewed each year, and your payments may go up or down.
- Once you’ve made all the agreed payments and met the other terms, you receive a certificate of completion.
How long an IVA lasts, and what happens to your home
Under the 2025 protocol, a protocol IVA normally lasts 60 months (5 years), or 72 months (6 years) if your share of the equity in your family home is £10,000 or more.
A protocol IVA won’t require you to sell your family home or release equity from it to pay into the IVA. Instead:
- Your home is valued, and the available equity is worked out as 85% of the property’s value, minus any mortgage or other secured borrowing.
- Your own beneficial share of that equity is then assessed. If you own the home jointly with someone else who is also entering an IVA, each person’s share is assessed separately.
- If your share is less than £10,000, the home is excluded and the IVA is normally 60 months.
- If your share is £10,000 or more, the home is still excluded, but the IVA is normally extended to 72 months to make up for it.
- The equity isn’t reviewed again once the IVA has started.
If you have very high equity, or own more than one property or a buy-to-let, a protocol IVA is unlikely to be appropriate. A bespoke IVA or another solution may be suggested, and different terms about your home could apply. Older IVAs agreed under earlier versions of the protocol, and bespoke IVAs, may include different equity terms, so check your own agreement.
How are IVAs priced?
Insolvency practitioners charge fees for setting up and running an IVA. In a protocol IVA, these fees are taken from your monthly payments, not paid upfront. The insolvency practitioner must explain what they will charge before you agree. The proposal must show how your payments will be split between fees and payments to creditors, and when.
Fees vary, so there’s no standard amount. In the early months, more of your payments usually goes towards fees than towards your debts. If an IVA fails early, you may have cleared less of your debt than you expected. Always ask for the full fee breakdown and compare it with free alternatives.
Advantages of IVAs
- Affordable payments: your monthly payment is based on what you can afford, and it’s reviewed each year.
- One payment: most unsecured debts, such as credit cards, loans and overdrafts, are included.
- Protection: creditors in the IVA stop chasing you and can’t add interest or charges.
- Your home: a protocol IVA won’t require you to sell your family home or release equity from it.
- Debt written off: anything left at the end of a completed IVA is written off.
Disadvantages
- Keeping up payments: if you miss payments or don’t co-operate, your IVA can fail. Creditors can then chase you again, including for interest and charges that were frozen.
- Credit file: an IVA stays on your credit file for 6 years from the date it starts. It’s also on the public Individual Insolvency Register until 3 months after it ends.
- Longer term if you own a home: under the 2025 protocol, a share of home equity of £10,000 or more normally means a 6-year IVA instead of 5.
- Extra income: if your income rises or you inherit money, you may have to pay more into the IVA.
- Fees: part of what you pay goes on the insolvency practitioner’s fees.
How using an IVA can help you and your debt journey
For the right person, an IVA gives a structured way out of problem debt. You get one affordable payment, legal protection from the creditors included, and a clear end date after which the remaining included debt is written off. It suits people with a steady income who can’t clear their debts in full but can afford regular payments for 5 or 6 years.
Final Thoughts
An IVA is a serious, long-term commitment. Under the current 2025 protocol, most consumer IVAs in England and Wales last 5 or 6 years and won’t require you to sell or release equity from your family home. Suitability depends on your income, your debts and the other options open to you, and existing or bespoke IVAs may work differently. Get free, regulated debt advice before you decide.
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