01
Formal Arrangement
An IVA is a formal insolvency procedure with defined terms. It is different from an informal arrangement made directly with individual creditors.
Individual Voluntary Arrangements · England & Wales
Individual Voluntary Arrangements A Formal Agreement With Your Creditors.
An Individual Voluntary Arrangement (IVA) is a formal and legally binding agreement between you and your creditors to repay all or part of what you owe over an agreed period. It must be arranged and supervised by a licensed insolvency practitioner.
What Is an IVA?
A Structured Agreement to Deal
With Unmanageable Debt.
Your financial circumstances are assessed and a proposal is made to your creditors. If the required creditor approval is obtained, the IVA becomes binding and you must comply with its agreed terms.
This page explains Individual
Voluntary Arrangements in England
and Wales. Different insolvency
procedures apply in Scotland and
Northern Ireland.
Formal Insolvency Arrangement
Proposal. Creditor Approval.
Agreed Payments.
An IVA is not an informal payment plan. It is a formal insolvency arrangement with defined terms, responsibilities and consequences.
Legal Status
Legally Binding
A formal arrangement between you and your creditors.
Professional
Insolvency Practitioner
An IVA must be arranged and supervised by a licensed IP.
Creditor Approval
75% by Debt Value
The required proportion of voting creditors must approve the proposal.
Payments
Based on Affordability
Contributions are based on the agreed proposal and financial circumstances.
Understanding IVAs
What Is an Individual Voluntary Arrangement?
An Individual Voluntary Arrangement, usually called an IVA, is a formal insolvency procedure that allows an individual to make an agreed proposal to creditors for dealing with debts they cannot afford to repay as they originally agreed.
Direct Answer
A Formal Agreement With Creditors.
An IVA is a legally binding agreement between an individual and their creditors to repay all or part of what is owed under agreed terms. It must be arranged through a licensed insolvency practitioner and requires the necessary creditor approval before it takes effect.
The Core Features
What Makes an IVA Different?
02
Licensed Insolvency Practitioner
A licensed insolvency practitioner is required. The practitioner has formal responsibilities when proposing and supervising the arrangement.
03
Creditor Approval
Creditors are given the opportunity to consider and vote on the proposal. The IVA only begins if the required voting threshold is achieved.
04
Binding Terms
Once approved, the IVA binds the creditors covered by it. Both the individual and creditors must operate within the terms of the arrangement.
The Basic Structure
From Proposal to Formal Arrangement
The detailed process can vary, but an IVA broadly moves through four stages.
01
Financial Position
Income, expenditure, debts, creditors and assets are considered.
02
IVA Proposal
A formal proposal setting out the terms offered to creditors is prepared.
03
Creditor Decision
Creditors consider the proposal and the required voting process takes place.
04
IVA Begins
If approved, the arrangement takes effect and is supervised by the insolvency practitioner.
Before Approval
The Nominee
The insolvency practitioner acting as Nominee assists with the IVA proposal and the process of putting that proposal to creditors.
After Approval
The Supervisor
Once the IVA has been approved, the insolvency practitioner acting as Supervisor oversees the arrangement, receives contributions and distributes funds to creditors in accordance with its terms.
Important Distinction
An IVA Is Not Simply a Debt
Write-Off Scheme.
An IVA is an insolvency procedure involving an agreed proposal, creditor approval and ongoing obligations. Depending on the terms, an individual may make regular contributions and may also have to account for certain changes in income, windfalls or other financial circumstances. Any qualifying balance dealt with by the arrangement is only addressed in accordance with the IVA's terms and successful completion.
Next
So How Does an IVA Work in Practice?
How an IVA Works →
The IVA Process
How Does an IVA Work?
An IVA turns a proposed way of dealing with your debts into a formal arrangement. Your finances are assessed, a proposal is put to creditors and, if approved, the arrangement is supervised by a licensed insolvency practitioner.
Direct Answer
One Formal Arrangement.
Agreed Terms.
In a typical contribution-based IVA, you make the agreed payments to the insolvency practitioner supervising the arrangement. After the costs and fees of the IVA are accounted for, funds are distributed to creditors in accordance with the arrangement. You must continue to comply with the IVA's terms until it is completed.
Step by Step
The IVA Journey
The exact terms depend on the proposal, but a consumer IVA broadly follows this process.
01
Assessment
Your Financial Position Is Reviewed
Your income, household expenditure, debts, creditors and assets are examined. For a Protocol IVA, affordability should be based on a sustainable household budget.
Purpose
Establish what can realistically
be afforded.
02
Proposal
The IVA Terms Are Prepared
A formal proposal explains how the IVA would operate, including the proposed contributions, expected duration, treatment of assets and how payments are expected to be distributed.
Prepared Through
A licensed insolvency
practitioner.
03
Creditor Decision
Creditors Consider the Proposal
The proposal is sent to creditors and they are given the opportunity to vote. The statutory voting threshold must be achieved before the IVA can take effect.
Approval
Based on the value of debt
represented in the vote.
04
IVA Begins
The Arrangement Becomes Binding
Once approved, the IVA takes effect and creditors bound by it must operate within its terms. The insolvency practitioner becomes the Supervisor of the arrangement.
Effect
Covered creditors are bound
by the arrangement.
05
During the IVA
You Make the Agreed Contributions
You make payments in accordance with the IVA and must comply with its other obligations. Your financial circumstances are reviewed during the arrangement.
Protocol IVA
Income and expenditure are
reviewed annually.
06
Completion
The IVA Is Completed
Once all agreed payments and other obligations have been satisfied, the Supervisor completes the arrangement and issues a completion certificate. Debts dealt with by the IVA are then treated in accordance with the completed arrangement.
Final Stage
Completion certificate issued.
2025 Protocol IVAs
How Long Does an IVA Last?
While the IVA Is Running
An IVA Requires Ongoing Cooperation.
Make Agreed Payments
Contributions must be made in accordance with the arrangement. Missing payments without dealing with the issue can place the IVA at risk.
Annual Reviews
For a Protocol IVA, income and expenditure are reviewed around each anniversary. Supporting evidence can be required.
Report Relevant Changes
Changes such as increased income, redundancy, inheritances or other financial changes may need to be reported and dealt with under the IVA terms.
Cooperate With the Supervisor
Information reasonably required to administer and review the IVA must be provided. Failure to cooperate can put the arrangement at risk.
Important
Not Every IVA Has Identical Terms.
The 2025 IVA Protocol provides a standard framework for straightforward consumer IVAs, but bespoke IVAs can also exist. The proposal and its terms should therefore be read carefully. Duration, contributions, assets, variations and other obligations can depend on the particular arrangement.
Next
Who Is an IVA Designed For?
IVA Eligibility & Suitability →
IVA Eligibility & Suitability
Who Can Get an IVA?
Unlike a Debt Relief Order, an IVA does not have one simple set of financial eligibility limits. Whether an IVA is appropriate depends on the individual's debts, income, assets, affordability and wider circumstances.
Direct Answer
Suitability Depends on the
Full Financial Position.
For a straightforward Protocol IVA, a suitable person will typically have multiple debts, sustainable income and enough disposable income to maintain an arrangement, while being unable to repay their debts in full within the proposed IVA period. Other debt solutions must also be considered before an IVA is proposed.
2025 IVA Protocol
Typical Indicators of a Straightforward Protocol IVA
These are indicators from the current IVA Protocol rather than an automatic eligibility checklist.
Multiple Debts
A person suitable for a Protocol IVA will usually have multiple debts with a combined total of £7,000 or more.
Sustainable Income
There should normally be a regular and sustainable source of income capable of supporting the proposed contributions.
Contributions
The arrangement must be sustainable. The ability to make the required payments and complete the IVA must be considered.
Financial Position
Straightforward Protocol IVAs are generally intended for people with uncomplicated assets and debts that are not subject to known disputes.
Other Options Considered
Someone who qualifies for a Debt Relief Order is unlikely to be suitable for a Protocol IVA.
£7,000
Important Distinction
£7,000 Is Not a Universal Legal
Minimum for Every IVA.
The 2025 Protocol says that people suitable for a straightforward Protocol IVA will generally have multiple debts totalling £7,000 or more. Where debts are below this level and a Protocol IVA is still proposed, the reasons why it is considered the most appropriate solution should be clearly explained.
Factors Supporting Suitability
When Might an IVA Be Considered?
The complete circumstances must be assessed, but relevant factors can include:
-
01
Debts Cannot Be Repaid in Full
The individual cannot realistically repay the debts in full within the proposed IVA period.
-
02
Sustainable Income
There is sufficient reliable income to support affordable contributions.
-
03
Multiple Creditor Debts
The person has several debts that need to be dealt with through a coordinated arrangement.
-
04
Straightforward Assets
Assets and financial circumstances are sufficiently uncomplicated for a Protocol IVA.
-
05
Arrangement Is Sustainable
There is a realistic prospect of maintaining the arrangement through to completion.
Additional Assessment Required
When Might a Protocol IVA Be Unsuitable?
The 2025 Protocol identifies several circumstances requiring particular caution or where another solution may be more appropriate.
-
01
Very Low Disposable Income
Very small monthly contributions may make a Protocol IVA unsuitable or unsustainable.
-
02
Eligible for a DRO
Someone who meets the DRO criteria is unlikely to be suitable for a Protocol IVA.
-
03
Disputed Debts
Known disputes over the amount or enforceability of debts can make the case unsuitable for the standard Protocol.
-
04
Complex Assets or Property
Investments, very high property equity, multiple properties or buy-to-let interests can fall outside straightforward Protocol circumstances.
-
05
Other Routes Could Repay More
A DMP capable of clearing the debts over a similar period with a significantly higher creditor return can make a Protocol IVA less appropriate.
Income & Benefits
What if Your Main Income Is Benefits?
Receiving benefits does not create an automatic prohibition on an IVA. However, the 2025 Protocol says people whose income is primarily made up of State benefits or State pension may not be suitable for a Protocol IVA. The reasons for those benefits, whether they are expected to continue and whether contributions would remain genuinely affordable should be considered carefully. Disability and caring-related costs should also be properly reflected in household expenditure.
Eligibility vs Suitability
Meeting These Indicators Does Not
Mean You Should Enter an IVA.
An IVA is a formal insolvency arrangement with costs, obligations and long-term consequences. The insolvency practitioner must consider the available alternatives and whether the proposed IVA is sustainable and appropriate for the individual's circumstances. A bespoke IVA may also be possible where a straightforward Protocol IVA is not appropriate.
Next
How Much Would You Pay Into an IVA?
IVA Payments & Costs →
IVA contributions are not based on a single fixed percentage of your debt. Income, reasonable household costs, disposable income and the terms of the proposal all matter.
IVA Payments & Costs
How Much Do You Pay Into an IVA?
There is no single standard IVA payment. The proposed contribution is based on your income, reasonable household expenditure and what remains affordable after essential living costs have been taken into account.
Direct Answer
Your Payment Should Be Based
on Sustainable Affordability.
For a Protocol IVA, the insolvency practitioner works with you to prepare a household budget using the Standard Financial Statement. Your regular contribution should be sustainable throughout the IVA and should not cause hardship.
How Affordability Is Assessed
The Payment Starts With Your Household Budget.
An IVA contribution is not calculated simply by applying a percentage to the amount of debt you owe.
Step 01
Household Income
Relevant income available to the household is identified and verified.
Step 02
Reasonable Living Costs
Housing, food, utilities, transport and other reasonable household expenditure are taken into account.
Step 03
Disposable Income
What remains helps establish the contribution that can sustainably be proposed.
Standard Financial Statement
What Expenses Are Taken Into Account?
A realistic budget should reflect reasonable household needs rather than leaving someone without enough to meet essential living costs. Individual circumstances matter, including disability and caring needs where relevant.
Housing
Rent, mortgage and relevant housing costs.
Utilities
Energy, water and essential household bills.
Food & Housekeeping
Reasonable everyday household expenditure.
Transport
Reasonable travel and vehicle-related costs.
Children & Family
Relevant family and dependent expenditure.
Health & Caring
Relevant disability, medical and caring costs.
IVA Costs
Does an IVA Have Fees?
Yes. Insolvency practitioners charge for establishing and administering an IVA. The fees must be explained before the arrangement is agreed.
Fees Are Built Into the Arrangement
For a Protocol IVA, the insolvency practitioner's fees are included within the arrangement rather than being an additional upfront payment by the consumer.
Your Creditors Do Not Receive Every Pound
Fees and permitted costs are deducted before the remaining funds are distributed to creditors in accordance with the IVA.
Understand the Fees Before Agreeing
The insolvency practitioner should explain the fees and costs. In a Protocol IVA, early payments will typically cover a greater proportion of fees than the debts themselves.
During a Protocol IVA
Your Payment Can Change.
Your financial position is not simply assessed once at the start. Protocol IVAs include ongoing affordability reviews.
Annual
Income & Expenditure Review
Around each anniversary you must provide information requested by the Supervisor, which can include payslips, P60s, bank statements and other evidence.
50%
Increase in Disposable Income
Under the 2025 Protocol terms, the regular contribution increases by 50% of any increase in disposable income following the annual review.
↓
Payments Can Also Reduce
If circumstances worsen, the Supervisor has defined powers under the Protocol to agree certain reductions or payment holidays, subject to the terms of the arrangement.
Simple Illustration
What Does the 50% Review Rule Mean?
Suppose an annual review established that your disposable income had increased by £100 per month compared with the previous assessment. Under the standard 2025 Protocol terms, the regular IVA contribution would increase by £50 per month. This is only an illustration of the Protocol rule; the actual review depends on your verified income and expenditure and the terms of your IVA.
Important
An IVA Payment Should Not Be
Treated as Permanently Fixed.
Income, expenditure and wider financial circumstances can change during an IVA. Depending on the arrangement, increased income, windfalls, inheritance, redundancy payments or reduced affordability can affect what must be paid. If your circumstances change, you should tell the Supervisor rather than simply stopping or changing payments yourself.
Next
Receiving Letters About Your Debts?
Check Your Letter →
LetterChekr™
Receiving Letters About Debts You May Be Considering for an IVA?
If you are exploring an Individual Voluntary Arrangement, you may already be receiving letters from creditors, debt collectors, solicitors or other organisations. Upload your correspondence to LetterChekr™ for a structured, plain-English explanation of what the document appears to be and the important information it contains.
01
Upload your letter
Choose a PDF, JPG or PNG copy of the creditor, debt collection, solicitor or other debt-related correspondence you have received.
02
LetterChekr™ analyses the document
The tool looks for key information including the sender, amount, reference, dates or deadlines and the type of correspondence you appear to have received.
03
Get a plain-English explanation
See what the document appears to mean, the important points identified from it and general information about possible next steps.
LetterChekr™ provides an automated explanation of uploaded correspondence. It does not determine whether an IVA is suitable for you, whether a particular debt would be dealt with by an IVA or what debt solution you should enter. It is not a substitute for regulated legal or financial advice.
Stop Your Debt UK
LetterChekr™
Upload a creditor, debt collection,
solicitor or other debt-related letter
and get a clear, plain-English
explanation of what the document
appears to mean and what may need
attention.
Choose your letter
PDF, JPG or PNG • Maximum 10MB
Book a Call With a Consultant
Complete your details below and one of our consultants can discuss the correspondence with you, help organise the surrounding information and identify where specialist or regulated support may be required.
Property & Assets
What Happens to Your Home, Car & Assets in an IVA?
One of the biggest concerns for anyone considering an Individual Voluntary Arrangement is what happens to the things they already own. Your assets must be disclosed and considered when an IVA is proposed, but entering an IVA does not automatically mean losing your home, car or ordinary household possessions.
Direct Answer
An IVA does not automatically
mean giving up everything you own.
Your financial position — including property, vehicles, savings and other assets — is considered when an IVA proposal is prepared. How an asset is treated depends on the terms of the arrangement. Under the current 2025 Consumer IVA Protocol, a qualifying family home is excluded from the protocol IVA rather than requiring the homeowner to release equity into the arrangement.
01 · Your Home
Can You Keep Your Home in an IVA?
A protocol IVA does not require the family home to be sold or its equity released.If you own your family home, your beneficial interest and the equity in the property will still be assessed when the IVA is proposed.
Under the 2025 IVA Protocol, however, the proposal does not require you to realise your interest in the family home in order to contribute that equity to the IVA.
Important:
Very high equity, ownership of more than one property or a buy-to-let property may mean a standard protocol IVA is not appropriate and a different or bespoke approach needs to be considered.
02 · Your Vehicle
Can You Keep Your Car in an IVA?
A vehicle is not automatically taken because you enter an IVA.Your vehicle forms part of the overall assessment of your financial circumstances. Its value, how it is financed and whether it is reasonably required should all be disclosed.
A car subject to hire purchase, PCP or another finance agreement may also require consideration of the finance terms and whether the ongoing payments are reasonable within your household budget.
The proposal matters:
Treatment of a vehicle depends on the circumstances and the terms of the IVA. Do not assume that all vehicles are treated in exactly the same way.
03 · Other Assets
What About Savings & Other Assets?
Assets must be disclosed when the IVA is being prepared.Savings, investments, valuable assets and other property can be relevant to whether an IVA is appropriate and to the terms that may be proposed to creditors.
Under the standard 2025 Protocol terms, assets are generally subject to the arrangement unless they are excluded by the terms or would be excluded from a bankruptcy estate.
Full disclosure matters:
The insolvency practitioner will need accurate information about assets and liabilities when assessing and preparing the proposed arrangement.
Homeowners & the 2025 IVA Protocol
Your Home Can Affect the Length of a Protocol IVA
Under the 2025 Protocol, available equity is calculated using 85% of the property's value and then subtracting secured borrowing such as the mortgage.
Your individual beneficial interest is then considered. That figure can determine whether the proposed protocol IVA lasts 60 months or 72 months.
Key Equity Threshold
£10,000
The threshold applies to the individual's beneficial interest in the family home under the current Consumer IVA Protocol.
Beneficial Interest
Less Than £10,000
Under the standard 2025 Protocol, the proposed IVA term is normally 60 months and the family home remains excluded from the IVA.
Beneficial Interest
£10,000 or More
Under the standard 2025 Protocol, the proposed IVA term is normally extended to 72 months in lieu of the individual's equity interest, while the family home remains excluded from the IVA.
Important — Current IVA Rules
Older Information About Remortgaging May No Longer Reflect the Current Protocol
Previous versions of the IVA Protocol contained provisions dealing with the potential release of equity from a homeowner's property. The 2025 Protocol changed the standard approach. A protocol IVA will not contain a proposal requiring the consumer to realise their interest in the family home for the purpose of contributing to the IVA. Instead, qualifying home equity can affect whether the proposed term is 60 or 72 months. Bespoke IVAs can have different terms, so the actual proposal should always be checked carefully.
Your Full Financial Position
What Else Needs to Be Considered?
An IVA is based on more than monthly debt payments. Your insolvency practitioner needs to understand your wider financial position before preparing a proposal for creditors.
01
Savings & Investments
Savings, shares, investments and other financial assets should be disclosed. Significant investments can also be an indicator that a standard protocol IVA may not be suitable.
02
Valuable Property
Valuable items or other property may need to be considered as part of the proposal. The treatment depends on the nature of the asset and the terms agreed with creditors.
03
Assets Received During the IVA
If you receive money or property during the arrangement — for example through an inheritance or another after-acquired asset — you should tell the IVA Supervisor. The terms of the IVA determine how it is treated.
04
Changes in Income
Changes to income can also affect an IVA. Pay rises, bonuses, overtime or other additional income may need to be reported and can affect the amount paid into the arrangement.
The Terms of the IVA Matter
The 2025 Consumer IVA Protocol provides a standard framework for protocol IVAs, but not every IVA will fall within that framework. Bespoke arrangements can contain different provisions. The treatment of property, vehicles, assets and changes in circumstances should therefore be confirmed from the actual IVA proposal and discussed with the licensed insolvency practitioner responsible for the arrangement. Stop Your Debt UK provides general information, practical support and case coordination; where regulated debt advice or formal insolvency work is required, the relevant assessment or work must be undertaken by an appropriately authorised or licensed professional.
During an IVA
What Happens if Your Circumstances Change During an IVA?
An IVA can last for several years, so your financial circumstances may not remain exactly the same throughout. Changes in income, employment, expenditure or assets can affect the arrangement and should be reported to the IVA Supervisor when required.
Direct Answer
An IVA Can Adapt — But You
Must Keep the Supervisor Informed.
A change in circumstances does not automatically mean your IVA will fail. Depending on what has changed and the terms of the arrangement, contributions may increase or reduce, a payment holiday may be available, or creditors may need to consider a formal variation. Significant changes in income or assets should be reported rather than dealt with by changing payments yourself.
Changes During the Arrangement
What Might Affect Your IVA?
Both improvements and difficulties in your financial circumstances can be relevant during a Protocol IVA.
Your Income Increases
A pay rise or other sustained increase in income can affect your disposable income. Protocol IVAs are reviewed annually and regular contributions can increase following that review.
You Receive Extra Income
Overtime, bonuses, commission and similar additional income can be subject to separate reporting and contribution requirements under the standard Protocol terms.
Your Income Falls
Reduced hours, loss of employment, illness or another change may make the existing contribution difficult to maintain. The Supervisor should be contacted as soon as possible.
Your Costs Increase
Genuine increases in reasonable household expenditure can affect disposable income and may be considered when affordability is reviewed.
Additional Income Rule
10%
What Happens to Overtime, Bonuses or Commission?
Under the standard 2025 Protocol terms, additional income such as overtime, a bonus or commission must be reported where it exceeds 10% of your normal take-home pay.
Disclosure should normally be made to the Supervisor within 14 days of receiving it. You are then required to pay 50% of the additional amount above that 10% threshold into the IVA within 14 days of the disclosure.
Simple Illustration
How Might That Work?
If normal take-home pay were £2,000, the 10% threshold would be £200. If qualifying additional income in the relevant period were £400, the amount above the threshold would be £200. Under the standard Protocol rule, 50% of that excess — in this example £100 — would be payable into the IVA. The actual calculation should be confirmed with the Supervisor responsible for the arrangement.
If You Can No Longer Afford the Payment
There May Be Ways to Adjust a Protocol IVA.
The available response depends on the scale and expected duration of the change. The important step is to engage with the Supervisor before arrears become unmanageable.
Under the 2025 Protocol, the Supervisor has discretion to reduce regular contributions by no more than 20% cumulatively from the original proposal or last creditor-approved variation, without referring the reduction back to creditors.
A temporary payment holiday may be available in appropriate circumstances under the Protocol terms. Missed contributions will normally need to be dealt with through an extension or otherwise made good.
If a larger or more substantial change is required, the Supervisor may need to propose a variation of the IVA for creditors to consider and vote upon.
Employment Changes
What if You Are Made Redundant?
Under the standard 2025 Protocol terms, you should tell the Supervisor within 14 days of receiving notice of redundancy and keep them informed about your employment position.
Where a redundancy payment is received, the standard terms allow an amount equivalent to up to six months' net take-home pay to be retained. Any redundancy payment above that amount is payable to the Supervisor in accordance with the Protocol terms.
Assets & Windfalls
What if You Receive an Inheritance or Other Asset?
The standard Protocol defines certain assets, windfalls and inheritances received during the IVA as after-acquired assets. These can become subject to the arrangement. You should tell the Supervisor as soon as reasonably possible if you receive money, property or another relevant asset.
Protocol Definition
>£500
The standard terms define an after-acquired asset as a relevant asset, windfall or inheritance with a value of more than £500, subject to the exclusions and terms of the arrangement.
Important
Do Not Simply Stop Paying the IVA.
If you are struggling to make a payment, contact the Supervisor. Under the standard Protocol terms, being in arrears equivalent to three or more months of agreed payments without an agreed payment holiday or reduction can constitute a breach of the IVA. A breach does not always mean immediate termination — there is a process for notifying and, where possible, remedying the breach.
Practical Process
What Should You Do if Something Changes?
01
Identify the Change
Income, employment, expenditure, inheritance, assets or another significant financial change.
02
Tell the Supervisor
Report the change promptly and within any specific timeframe required by your IVA terms.
03
Provide Evidence
Payslips, bank statements, redundancy information or other evidence may be requested.
04
Agree the Next Step
Payments may continue, change, pause temporarily or require a creditor-approved variation.
Next
What Happens if an IVA Fails?
If an IVA Fails →
Understanding the consequences of an IVA ending early is important before entering the arrangement.
IVA Failure & Termination
What Happens if an IVA Fails?
An IVA does not automatically fail because you experience one financial difficulty or miss a payment. There is normally an opportunity to address a breach. However, if the arrangement cannot continue and is terminated, the protection it provided against creditors comes to an end.
Direct Answer
If an IVA Is Terminated,
the Remaining Debts Do Not
Simply Disappear.
Once a termination certificate is issued, creditors covered by the IVA are no longer prevented from pursuing the outstanding balances directly. Under the 2025 Protocol terms, you can also become liable for interest and charges that accrued during the period the IVA was in force.
Breaching the Arrangement
What Can Put an IVA at Risk?
The standard 2025 Protocol identifies several circumstances that can amount to a breach of the arrangement.
01
Payment Arrears
Being in arrears equivalent to three or more months of agreed contributions can constitute a breach where a payment holiday or reduced payment arrangement has not been agreed.
02
Not Providing Information
Failure to cooperate with reasonable requests from the Supervisor or to provide information required for administration of the IVA can put the arrangement in breach.
03
Incorrect Information
Materially false or misleading information — or a material omission from information provided for the IVA — can constitute a breach of the arrangement.
04
Other IVA Obligations
Failure to comply with another obligation contained within the arrangement can also result in a breach. The actual IVA proposal and terms should therefore be read carefully.
Before an IVA Is Terminated
A Breach Does Not Necessarily Mean Immediate Failure.
Under the standard Protocol process, the Supervisor considers the breach and there is normally an opportunity to put matters right before the IVA is terminated.
01
A Breach Occurs
For example, significant payment arrears or failure to meet another obligation.
02
Notice of Breach
Unless corrected immediately, the Supervisor can issue a formal notice identifying the breach.
03
Opportunity to Remedy
You may remedy the breach or propose a reasonable way to put it right over a longer period.
04
Decision
If it cannot be resolved, the IVA may be varied, another settlement considered or the arrangement terminated.
Standard Breach Process
1 Month
Time to Respond to a Notice of Breach
Under the 2025 Protocol standard terms, a Notice of Breach normally requires the debtor to act within one month of receiving it — either by remedying the breach, proposing a reasonable longer-term remedy or, where requested, explaining what happened.
If the IVA Ends Early
What Happens After an IVA Is Terminated?
Termination changes the position significantly because the protection created by the arrangement comes to an end.
01
Creditor Protection Ends
Creditors are no longer prevented by the IVA from pursuing repayment of the remaining balances directly.
02
Outstanding Debt Remains
Successful completion releases you from debts subject to the arrangement. If the IVA is terminated instead, that completion release does not take place.
03
Interest & Charges
Under the standard Protocol terms, you become liable for interest and charges that accrued during the period the IVA was in force.
04
Recovery Action Can Resume
Depending on the debt and circumstances, creditors may again use the recovery and legal processes available to them outside the IVA.
05
Your Position Needs Reassessment
You may need regulated debt advice to reassess the remaining debts, income, assets and available debt solutions.
Payments Already Made
Do You Get Your IVA
Payments Back?
Generally, you should not assume that money already paid into an IVA will be returned if the arrangement later fails. Contributions can have been used for approved IVA fees, costs and distributions to creditors.
This also means the reduction in your underlying debts may be smaller than the total amount you have paid into the IVA, particularly earlier in the arrangement when a greater proportion of payments may be applied to fees.
Could Bankruptcy Follow?
IVA Failure Does Not Automatically Make You Bankrupt.
Termination of an IVA and bankruptcy are separate events. However, the standard Protocol preserves the ability of the Supervisor or a creditor to present a bankruptcy petition in circumstances permitted by insolvency law where the debtor has failed to comply with the arrangement. Whether bankruptcy is actually pursued depends on the circumstances.
Understand Bankruptcy
Bankruptcy Guide →
Can an IVA Be Changed Instead of Failing?
Potentially. The correct response depends on why the IVA is becoming difficult and whether the change is temporary or permanent.
The 2025 Protocol expects the Supervisor to review the circumstances surrounding a breach. Where appropriate, options can include adjustments available under the IVA terms, a creditor variation or consideration of a settlement rather than simply allowing the arrangement to fail.
Before Stopping Payments
Speak to the IVA Supervisor First.
Do not assume that cancelling an IVA or stopping contributions is the only option when circumstances change. The licensed insolvency practitioner supervising the arrangement should explain what the IVA terms allow and the consequences of termination. Where wider regulated debt advice is needed, an appropriately authorised debt adviser can assess the available alternatives.
Next
How Does an IVA Affect Your
Credit & Everyday Life?
Credit & Everyday Life →
Before entering an IVA, it is also important to understand its effect on your credit record, borrowing and other aspects of day-to-day finances.
Credit & Day-to-Day Life
How Does an IVA Affect Your Credit & Everyday Life?
An IVA can provide a structured way to deal with unaffordable debts, but it is a formal insolvency procedure. Before entering one, it is important to understand how it may affect borrowing, your credit file and other areas of your financial life.
Direct Answer
An IVA Has Significant
Financial Consequences.
An IVA will be recorded on your credit file and on the public Individual Insolvency Register. It can make obtaining new credit, borrowing or certain financial products more difficult. You must also follow the financial obligations contained in the IVA while the arrangement remains in force.
Credit File
6 Years
From the date the IVA starts under the current Consumer IVA Protocol guidance.
Your Credit Record
How Long Does an IVA Stay on Your Credit File?
The Insolvency Service states that a Protocol IVA will appear on your credit file for six years from the date the IVA starts.
During that period, lenders can take the IVA and the wider information contained in your credit history into account when deciding whether to offer credit and on what terms.
An IVA should therefore not be viewed as a way to deal with debt without affecting your credit record.
Practical Consequences
What Can an IVA Affect?
The precise impact varies by person, provider and circumstances, but these are some of the practical areas to consider before entering an IVA.
01
Loans & Credit Cards
The IVA will be visible on your credit history and can make obtaining new unsecured borrowing more difficult.
While the IVA is active, the arrangement itself also places restrictions on obtaining certain new credit.
02
Mortgages & Borrowing
An IVA can affect your ability to obtain a new mortgage, remortgage or access other forms of borrowing because lenders may carry out affordability and credit checks.
Lending decisions remain a matter for the individual lender and its criteria.
03
Renting a Property
An IVA does not itself mean that someone cannot rent a home. However, landlords or letting agents may carry out affordability or credit checks when considering a new tenancy.
Their requirements vary, so an IVA may make some applications more difficult.
04
Bank Accounts
The effect on banking depends on your bank, the account facilities and whether you owe money to that banking group.
Access to overdrafts and other credit facilities may be affected. A basic bank account may be relevant where someone cannot obtain a standard current account.
05
Employment
An IVA does not create the same general statutory employment and company-director restrictions as bankruptcy.
However, some occupations, professional bodies, regulators or employment contracts can have their own requirements concerning insolvency. Those rules should be checked where relevant.
06
Running a Business
GOV.UK states that you may still be able to keep your business running while in an IVA.
Business debts, trading requirements, access to credit and the structure of the business can all require closer consideration when an IVA is proposed.
Protocol Credit Restriction
£500+
Can You Borrow Money During an IVA?
Under the standard 2025 Protocol terms, you must not obtain credit greater than £500 without the prior written approval of your IVA Supervisor.
The standard terms contain exceptions for public utilities, insurance policies and other contractual payments already provided for in the agreed income and expenditure.
Obtaining credit above the threshold without the required consent can constitute a breach of the IVA.
Public Record
Is an IVA Public?
Yes. IVAs in England and Wales are recorded on the Individual Insolvency Register, which is a publicly searchable register maintained by the Insolvency Service.
The register can contain information including your name, address, date of birth, the date the IVA was approved and details of the IVA Supervisor.
An IVA entry is removed three months after the Insolvency Service receives notice that the arrangement has been completed, terminated or revoked.
01
IVA Approved
Details of the arrangement are provided for registration.
02
During the IVA
The IVA remains searchable on the Individual Insolvency Register while active.
03
After It Ends
The entry is removed three months after the Insolvency Service receives the relevant notice.
Everyday Questions
Does an IVA Stop You Living Normally?
An IVA does not mean that ordinary life stops, but it does mean living within the budget and obligations agreed as part of the arrangement.
01
Household Spending
The IVA contribution is based on an assessment of household income and reasonable expenditure. The budget should therefore allow for reasonable household costs rather than assuming every pound of income is available for creditors.
02
Annual Financial Reviews
Protocol IVAs are reviewed annually. Updated evidence of income and expenditure can be required and contributions may change where your financial circumstances have changed.
03
Joint Finances
An IVA is an individual arrangement. If a debt is jointly owed, the other borrower can still remain liable for the joint debt even where your own liability is dealt with through the IVA.
04
Financial Changes
Pay increases, significant additional income, redundancy, inheritances and other relevant changes may need to be reported to the Supervisor and can affect what happens during the IVA.
When the IVA Is Completed
What Happens to the Records Afterwards?
Once you have met the obligations required for successful completion, you should receive a certificate of completion and will no longer owe the debts dealt with by the completed IVA, subject to the terms of the arrangement.
The Individual Insolvency Register and your credit file operate on different timescales. The public insolvency-register entry is removed three months after the Insolvency Service receives notice that the IVA has ended.
The IVA itself appears on the credit file for six years from its start date. Other credit-file information, such as defaults, can have its own reporting dates and should be checked with the relevant credit reference agencies if anything appears inaccurate.
Before Entering an IVA
Consider the Wider Consequences,
Not Only the Monthly Payment.
An IVA can be appropriate in some circumstances, but affordability is only one part of the decision. The effect on credit, the public insolvency record, borrowing, assets, employment or professional requirements and the obligations lasting throughout the arrangement should all be understood before a proposal is approved. Where regulated debt advice is required, this should be provided by an appropriately authorised professional.
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How Does an IVA Compare With
a DRO, DMP or Bankruptcy?
Compare Debt Options →
An IVA is only one way of dealing with unaffordable debt. The next section explains some of the key structural differences between the main routes.
Comparing Debt Solutions
IVA vs DRO vs DMP vs Bankruptcy
These debt solutions work in very different ways. Some involve repaying debt over time, while others are formal insolvency procedures. The relevant route depends on factors including income, assets, home ownership, debt levels and ability to repay.
Direct Answer
An IVA Is Only One
Possible Debt Solution.
An IVA is a formal agreement with creditors supervised by a licensed insolvency practitioner. A DRO is a formal debt-relief procedure for people meeting specific income, debt and asset criteria. A DMP is a repayment arrangement for unsecured debts, while bankruptcy is a formal insolvency procedure that can place assets under the control of a trustee.
Four Different Structures
How Do the Main Routes Differ?
This is a structural comparison rather than a recommendation. Eligibility, consequences and suitability need to be assessed against the individual's actual circumstances.
IVA
Individual Voluntary Arrangement
Structure
Formal agreement with creditors
Administration
Licensed insolvency practitioner
Payments
Based on agreed affordable contributions
Creditor Position
Binding once the required approval is obtained
Read About IVAs →
DRO
Debt Relief Order
Debt Limit
Less than £50,000
Spare Income
Usually less than £75 per month
Assets
Strict asset and vehicle limits apply
Home
You cannot own your home
Debt Relief Orders →
DMP
Debt Management Plan
Structure
Arrangement to repay unsecured debts
Formal Insolvency
No
Creditor Acceptance
Creditors do not have to agree
Debt Repayment
Designed to repay the debts through contributions
Debt Management Plans →
Bankruptcy
Bankruptcy Order
Application Fee
£680 if applying yourself
Typical Discharge
Usually after 12 months
Assets
Certain assets can vest in the trustee
Income
Contributions may continue where sufficient surplus income exists
Bankruptcy Guide →
At a Glance
Comparing the Main Features
| Feature | IVA | DRO | DMP | Bankruptcy |
|---|---|---|---|---|
| Formal insolvency? | Yes. Formal voluntary insolvency arrangement. | Yes. Formal debt-relief procedure. | No. Repayment arrangement with creditors. | Yes. Formal insolvency procedure. |
| Regular payments? | Commonly based on affordable disposable income under the agreed IVA terms. | Payments towards qualifying DRO debts stop during the normal 12-month DRO period. | Regular affordable payments are distributed between participating creditors. | An income payments agreement or order may apply where sufficient surplus income exists. |
| Typical duration | Protocol IVAs commonly use a 60- or 72-month structure, depending on circumstances and the agreed terms. | Normally 12 months. | No universal fixed term. Duration depends on the debt and payments being made. | Discharge is normally after 12 months, although some obligations can continue afterwards. |
| Home ownership | Homeowners can enter an IVA, but property and equity must be considered under the proposal. | You cannot qualify if you own your home. | Home ownership does not automatically prevent a DMP. | A beneficial interest in a home can form part of the bankruptcy estate and may be at risk. |
| Creditor action | Creditors bound by the IVA cannot pursue the debts contrary to the arrangement. | Creditors of qualifying listed debts are generally prevented from recovery action during the DRO. | Unless the agreement provides otherwise, creditors can still seek full payment or take recovery action. | Bankruptcy changes how creditors pursue debts included in the bankruptcy. |
| Debt remaining afterwards | On successful completion, debts dealt with by the IVA are treated in accordance with the completed arrangement. | Qualifying debts covered by the DRO are normally discharged after the DRO period. | A DMP is intended to repay the debts rather than provide formal insolvency discharge. | Most bankruptcy debts are released on discharge, subject to statutory exceptions. |
IVA vs DRO
Could Someone Qualify for a Debt Relief Order?
A DRO is designed for people who cannot repay their debts and who meet specific financial criteria. It is therefore structurally very different from an IVA that is funded through agreed contributions.
Current eligibility in England and Wales generally requires debts of less than £50,000, less than £75 a month in spare income, assets below the applicable limit and no ownership of a home.
<£50k
Total Debts
Current maximum qualifying debt threshold.
<£75
Monthly Spare Income
Current general disposable income threshold.
<£2k
Assets
Current general asset limit, subject to applicable exclusions.
<£4k
Vehicle
Current vehicle-value threshold following the 2026 change.
IVA
Formal & Binding
An IVA is a formal insolvency arrangement supervised by a licensed insolvency practitioner.
Once the necessary creditor approval is obtained, creditors bound by the IVA must comply with its terms.
DMP
Repayment Arrangement
A DMP is used for unsecured debts and is based on making affordable repayments to creditors.
Creditors do not have to accept a DMP. Unless the agreement says otherwise, they can still request full payment later or take recovery action even where payments are being maintained.
IVA vs Bankruptcy
The Treatment of Assets Can
Be Fundamentally Different.
GOV.UK explains that an IVA can give someone more control over their assets than bankruptcy. An IVA proposal sets out how assets, income and creditor repayments will be dealt with.
In bankruptcy, assets forming part of the bankruptcy estate can pass under the control of the Official Receiver or trustee and may be realised for creditors. This can include a bankrupt person's beneficial interest in a home, depending on the circumstances.
Bankruptcy currently costs £680 to apply for in England and Wales. Discharge is usually after 12 months, although administration of assets and any qualifying income payments can continue beyond discharge.
Looking at the Full Picture
What Needs to Be Considered Before Choosing a Debt Solution?
The monthly payment alone does not show whether a particular route is appropriate. A proper assessment considers the wider financial position and consequences.
01
How much debt is owed and
what types of debt are involved?
02
How much sustainable disposable
income is actually available?
03
Does the individual own a home
or have other significant assets?
04
Could the debts realistically
be repaid over a reasonable period?
05
How would formal insolvency affect
employment, business or assets?
06
Are there eligibility rules that
make some solutions unavailable?
Important
This Comparison Is General Information.
The right debt solution depends on individual circumstances. Stop Your Debt UK provides information, practical support, administration and case coordination. Stop Your Debt UK is not an FCA-authorised debt advice firm or an SRA-regulated law firm. Where regulated debt advice, legal advice, formal insolvency services or another regulated or reserved activity is required, the relevant work is undertaken by an appropriately authorised third-party professional.
Next
How Is an IVA Actually Set Up?
How an IVA Is Set Up →
The next section explains the journey from the initial financial assessment and proposal through to the creditor decision and formal start of the IVA.
The IVA Application Process
How Is an IVA Set Up?
An IVA cannot simply be created by agreeing a monthly payment with your creditors. It is a formal insolvency arrangement that must be proposed and administered through a licensed insolvency practitioner.
Direct Answer
Assessment. Proposal.
Creditor Decision. Approval.
To set up an IVA, your financial circumstances are reviewed and a licensed insolvency practitioner helps prepare a formal proposal for your creditors. Creditors are then given the opportunity to vote. If the required approval is obtained, the IVA takes effect and becomes legally binding on creditors covered by the arrangement.
Step by Step
The Journey From Assessment to IVA
The precise process can vary, particularly for bespoke arrangements, but a consumer IVA will normally move through these core stages.
01
Financial Review
Understand the Full Position
The starting point is a detailed review of your debts, creditors, income, household expenditure, assets and wider financial circumstances.
An IVA should not be considered in isolation. Other available debt solutions and the likely consequences of each need to be considered before proceeding.
02
Insolvency Practitioner
Work With a Licensed IP
An IVA can only be arranged through a licensed insolvency practitioner.
For a Protocol IVA, the insolvency practitioner assisting with the proposal before creditor approval acts as the Nominee.
03
Affordability
Establish Sustainable Payments
Income and reasonable household expenditure are assessed to establish what contribution, if any, can realistically be maintained.
Under the current Protocol, affordability should be assessed using the relevant financial statement framework and the contribution should be sustainable rather than creating financial hardship.
04
Formal Proposal
The IVA Terms Are Prepared
A formal proposal is prepared explaining how the IVA would operate. This includes the financial position, proposed contributions, treatment of relevant assets, expected costs and how funds are expected to be distributed.
You should understand the proposal and its terms before agreeing for it to be put forward to creditors.
05
Creditor Decision
Creditors Consider the Proposal
The Nominee sends the proposal through the formal creditor decision process. Creditors can consider the proposal and vote on whether it should be approved.
The decision process operates under insolvency legislation and the Insolvency Rules rather than being an informal negotiation between you and each creditor.
06
Approval
The IVA Becomes Effective
If the proposal receives the required creditor approval, the IVA is approved and becomes effective.
The arrangement is then binding on creditors who are bound by the IVA, including relevant creditors who did not vote in favour of the proposal.
07
Supervision
The IVA Is Administered
Once the IVA begins, the insolvency practitioner appointed to oversee its implementation acts as the Supervisor.
The Supervisor administers the arrangement, receives and deals with contributions, distributes funds in accordance with the IVA and monitors compliance with its terms.
Preparing the Proposal
What Information Will Be Needed?
An IVA proposal needs to be based on an accurate picture of your financial circumstances.
GOV.UK states that you will need to provide information about your assets, debts, income and creditors. In practice, supporting information may also be required to verify income, expenditure, liabilities and relevant assets.
01
Income
Wages, benefits, pensions and other household income relevant to the financial assessment.
02
Household Expenditure
Housing, utilities, food, transport, family costs and other reasonable expenditure.
03
Debts
Details of what is owed, balances, account references and the nature of each debt.
04
Creditors
The organisations or individuals owed money and the information needed to identify each claim.
05
Assets
Property interests, vehicles, savings and other assets that may be relevant to the proposal.
06
Financial Circumstances
Information relevant to whether the proposal is realistic, sustainable and appropriate.
Before Approval
The Nominee
Under the 2025 IVA Protocol, the Nominee is the insolvency practitioner who assists the consumer with the proposal and arranges the formal creditor decision process.
Their role exists before the IVA has been approved.
After Approval
The Supervisor
Once the IVA has been approved, the insolvency practitioner appointed to oversee the arrangement acts as the Supervisor.
The Supervisor monitors the individual's obligations, administers funds and implements the terms of the approved arrangement.
Creditor Approval
75%
Approval is determined by debt value through the statutory creditor decision process.
The Creditor Decision
Do All Creditors Have to Agree?
No. An IVA does not require every individual creditor to vote in favour.
The proposal must obtain the required statutory majority through the creditor decision procedure. GOV.UK summarises the main approval threshold as creditors representing 75% by debt value agreeing to the proposal.
The detailed voting calculation is governed by insolvency legislation and the applicable decision procedure, so the 75% figure should not be interpreted simply as “75% of every creditor you owe.”
Creditor Decision
What Happens After Creditors Vote?
The proposal does not become an IVA merely because it has been submitted. The creditor decision determines whether the formal arrangement can take effect.
If Approved
The IVA Begins
Once the required approval is obtained, the arrangement takes effect and the Supervisor administers it in accordance with its agreed terms.
Creditors bound by the IVA must then deal with the covered debts through the arrangement.
If Not Approved
The Proposed IVA Does Not Begin
If the required creditor approval is not obtained, the proposed arrangement does not take effect.
The individual's wider position and available alternatives then need to be considered rather than assuming an IVA can simply be imposed on creditors.
Proposal Terms
Can Creditors Ask for Changes?
The formal IVA framework can allow proposals to be considered with modifications. You should understand and agree to any relevant changes before being bound by them.
For a 2025 Protocol IVA, the Protocol aims to standardise straightforward consumer IVAs and states that modifications to its standard terms should not normally be proposed unless exceptional circumstances exist.
A bespoke IVA can operate differently, so the actual proposal and its terms should always be read carefully.
Effective Date
When Does the IVA Actually Start?
Under the current Protocol standard terms, the arrangement begins when it is approved by creditors under the applicable insolvency legislation and rules. That is its effective date.
From that point, creditors bound by the arrangement are subject to its terms. The Supervisor then administers the IVA and the individual must comply with the obligations contained in it.
01
IVA Takes Effect
The approved proposal becomes the formal arrangement.
02
Creditors Are Bound
Creditors covered and bound by the IVA must operate within its terms.
03
Supervision Begins
The Supervisor administers the arrangement for its duration.
Where Stop Your Debt UK Fits
Information, Organisation & Professional Connection
Stop Your Debt UK does not act as the licensed insolvency practitioner that proposes or supervises an IVA.
We can provide general information, help organise relevant correspondence and documents, support permitted administration and case coordination, and help connect a case with an appropriately authorised professional where regulated debt advice or formal insolvency work is required.
The decision to recommend, propose and formally administer an IVA must remain with the appropriately authorised professionals involved.
Before Signing
Understand the Proposal Before
Agreeing to an IVA.
An IVA is a legally binding insolvency arrangement with ongoing obligations and potential consequences if its terms are not met. Before agreeing to a proposal, make sure you understand the payments, duration, fees, treatment of assets, review provisions, what happens if your circumstances change and the consequences of the arrangement failing.
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Wider Debt Position?
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