# Individual Voluntary Arrangements explained: a formal route out of debt

> Debt help · Last updated 23 June 2026

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## Quick answer

An Individual Voluntary Arrangement (IVA) is a formal agreement to pay an affordable amount toward your debts for five to six years, after which remaining unsecured debt is written off. It is a form of insolvency with serious consequences for your credit and finances.

An IVA is a legally binding debt solution for people who cannot afford to repay their debts in full but can make regular payments. An insolvency practitioner manages the arrangement, and creditors vote on whether to accept it. If approved, you make one monthly payment for five to six years, then remaining unsecured debt is written off.

## Key facts

- An IVA typically lasts five to six years with one affordable monthly payment
- Remaining unsecured debt is written off at the end if you complete the IVA
- IVA fees are paid from your contributions — typically £3,000–£5,000 over the term
- An IVA stays on your credit file for six years and on the public Insolvency Register

## How an IVA works

An insolvency practitioner assesses your finances and proposes an IVA to creditors. At least 75% of voting creditors (by debt value) must approve.

You pay one monthly amount to the practitioner, who distributes it to creditors after deducting fees. Payments are based on what you can afford, not the full debt amount.

## What an IVA covers and excludes

IVAs cover unsecured debts: credit cards, personal loans, store cards, and some HMRC debts. They do not cover mortgages, secured loans, student loans, or court fines.

If you own a home, you may need to remortgage or pay extra in the final year to release equity. Your car is usually protected if it is essential and not excessively valuable.

## IVA vs other options

Compared to a DMP: an IVA writes off remaining debt at the end and binds all participating creditors. A DMP requires repaying in full with no legal protection.

Compared to bankruptcy: an IVA lets you keep more assets (like your home, depending on equity) but lasts longer and costs more in fees.

## Frequently asked questions

### How much debt do I need for an IVA?

There is no legal minimum, but IVAs are typically used for debts of £6,000 or more owed to two or more creditors.

### Can I keep my house in an IVA?

Usually yes, but you may need to release equity through remortgaging or a lump sum in the final year. If remortgaging is impossible, the IVA may be extended by 12 months.

### What happens if I miss IVA payments?

Missing payments can lead to IVA failure, meaning creditors can pursue you for the full debt again. Contact your insolvency practitioner immediately if you are struggling.

## Primary source

https://www.gov.uk/options-for-paying-off-your-debts

## Related

- [Bankruptcy explained](https://moneyguide.org.uk/debt-help/bankruptcy-explained/)
- [DRO, IVA and bankruptcy compared](https://moneyguide.org.uk/debt-help/dro-iva-bankruptcy-compared/)

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Independent UK money guidance from [Money Guide](https://moneyguide.org.uk). Information only — not regulated financial advice.