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Seek debt advice: We’ve partnered with PayPlan, who can help find the best debt solution for your needs. They offer free debt advice and can arrange various debt solutions, including a Debt Management Plan or an Individual Voluntary Agreement.
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What is an IVA?
Emma Hayzen-Smith, Legal Services Manager, Thursday, 29 June 2023
Updated: Tuesday, 20 August 2024
Updated: Tuesday, 20 August 2024
An Individual Voluntary Arrangement (IVA) can help if you’re struggling with unaffordable debt. An IVA is a legally binding agreement to repay your debts with one manageable monthly payment.
But how does an IVA affect you? You might be worried about how it impacts your credit score and ability to get approved for things like vehicle finance. Our guide explores what an IVA is, how it works, and answers your common questions.
In this guide
An Individual Voluntary Arrangement (IVA) can help if you’re struggling with unaffordable debt. An IVA is a legally binding agreement to repay your debts with one manageable monthly payment.
But how does an IVA affect you? You might be worried about how it impacts your credit score and ability to get approved for things like vehicle finance. Our guide explores what an IVA is, how it works, and answers your common questions.
In this guide
What is an IVA?
IVA stands for ‘Individual Voluntary Arrangement’. It’s a formal debt solution that helps you combine and repay many different debts in one monthly payment. You’ll make a legal agreement to pay off part or all of your debts to your creditors in an affordable way.
IVAs are the most popular debt solution in the UK, with 64,050 Individual Voluntary Arrangements registered in England and Wales in 2023.
While IVAs are available to people in England, Wales, and Northern Ireland, in Scotland, this type of debt solution is known as a Trust Deed. An IVA and a Trust Deed work in a similar way, but the key differences are the duration and the amount of minimum unsecured debt required to qualify for each.
What debts can an IVA cover?
Whether an IVA is suitable depends on how much debt you have and how many creditors you have (a creditor is someone you owe money to).
What is an IVA?
IVA stands for ‘Individual Voluntary Arrangement’. It’s a formal debt solution that helps you combine and repay many different debts in one monthly payment. You’ll make a legal agreement to pay off part or all of your debts to your creditors in an affordable way.
IVAs are the most popular debt solution in the UK, with 64,050 Individual Voluntary Arrangements registered in England and Wales in 2023.
While IVAs are available to people in England, Wales, and Northern Ireland, in Scotland, this type of debt solution is known as a Trust Deed. An IVA and a Trust Deed work in a similar way, but the key differences are the duration and the amount of minimum unsecured debt required to qualify for each.
Above: A video from our sister company, Vanquis, explains what an IVA is.
What debts can an IVA cover?
Whether an IVA is suitable depends on how much debt you have and how many creditors you have (a creditor is someone you owe money to).
Some common debts that can be included in an IVA are:
- Overdrafts
- Store cards
- Personal loans
- Credit cards
- Gas, electricity, and water arrears
- Council Tax, Income Tax, and National Insurance arrears
There are some types of debt that you can’t include in an IVA, such as:
- Magistrates’ court fines
- Student loans
- Child support arrears
- Vehicle finance and secured car loans
- TV licence fee arrears
- Logbook loans
Some common debts that can be included in an IVA are:
- Overdrafts
- Store cards
- Personal loans
- Credit cards
- Gas, electricity, and water arrears
- Council Tax, Income Tax, and National Insurance arrears
There are some types of debt that you can’t include in an IVA, such as:
- Magistrates’ court fines
- Student loans
- Child support arrears
- Vehicle finance and secured car loans
- TV licence fee arrears
- Logbook loans
Above: A video from our sister company, Vanquis, explains what an IVA is.
How does an IVA work?
An IVA will freeze your debts and allow you to pay them off over an agreed period.
During the IVA, your creditors should stop charging interest or chasing you for your debts. Any money that you owe after the agreed period will be written off.
To get an IVA, you will need some spare money each month to pay your creditors. The amount needed varies depending on your IVA, the number of creditors you have, and how much debt you have. Your insolvency practitioner will be able to discuss this with you.
If your creditors agree to the IVA, once it is set up, you will make a monthly payment to your insolvency practitioner, who will then pay the agreed amount to each of your creditors.
Once you’ve made all the payments, your insolvency practitioner will give you an IVA completion certificate confirming your IVA has finished and your debts have been cleared.
How long does an IVA take to set up?
You can expect it to take about 6 weeks to set up an IVA. This depends on how complex your situation is, how quickly you provide the necessary evidence to your insolvency practitioner, and whether any creditors want to change the terms of the proposed plan. This is according to the Debt Advice Foundation.
How much does it cost to set up an IVA?
To set up an IVA, you will be charged a fee by your insolvency practitioner, which varies depending on whom you choose. This fee includes the cost of drafting and presenting the IVA proposal to your creditors, a supervisor fee if your IVA is approved to cover ongoing costs, and any other relevant expenses.
Some insolvency practitioners charge a fee upfront, while others take it from your monthly debt repayments. It is important to ask your insolvency practitioner about the fees involved and whether you will need to pay a fee if your IVA proposal is rejected.
Do most creditors accept an IVA?
Once your insolvency practitioner has created a proposal, they will call a creditors’ meeting to vote on it. The IVA will be accepted only if creditors representing over 75% of the debts you owe vote ‘yes’.
For example, let’s say you have £50,000 debt divided among 4 creditors:
- Creditor A (£3,500)
- Creditor B (£35,000)
- Creditor C (£10,000)
- Creditor D (£1,500)
Creditors A, B, and D agree to the IVA, but Creditor C does not.
Even though Creditor C does not agree, because Creditors A, B, and D represent over 75% of your total debt and have voted for it, the IVA is accepted and all creditors must adhere to its terms.
How much does an IVA leave you to live on?
The amount your IVA payments will be depends on your household income and expenses. Your IVA payment will usually be the amount you have left over once all of your essential costs are taken out of your income. For example, if you earn £1,500 a month and your total living costs are £1,300, then your IVA payment might be £200.
Remember, this can vary depending on your circumstances and what is considered an essential cost. It’s also worth noting that if your income changes or you receive a windfall during your IVA, your insolvency practitioner will review this and may take more of the money to pay your creditors.
How long does an IVA last?
An IVA usually lasts for 5 years, but it could be extended to 6 years if you are a homeowner. This is because you may need to remortgage if you have equity in your house or make extra payments if you cannot remortgage.
How does an IVA work?
An IVA will freeze your debts and allow you to pay them off over an agreed period.
During the IVA, your creditors should stop charging interest or chasing you for your debts. Any money that you owe after the agreed period will be written off.
To get an IVA, you will need some spare money each month to pay your creditors. The amount needed varies depending on your IVA, the number of creditors you have, and how much debt you have. Your insolvency practitioner will be able to discuss this with you.
If your creditors agree to the IVA, once it is set up, you will make a monthly payment to your insolvency practitioner, who will then pay the agreed amount to each of your creditors.
Once you’ve made all the payments, your insolvency practitioner will give you an IVA completion certificate confirming your IVA has finished and your debts have been cleared.
How long does an IVA take to set up?
You can expect it to take about 6 weeks to set up an IVA. This depends on how complex your situation is, how quickly you provide the necessary evidence to your insolvency practitioner, and whether any creditors want to change the terms of the proposed plan. This is according to the Debt Advice Foundation.
How much does it cost to set up an IVA?
To set up an IVA, you will be charged a fee by your insolvency practitioner, which varies depending on whom you choose. This fee includes the cost of drafting and presenting the IVA proposal to your creditors, a supervisor fee if your IVA is approved to cover ongoing costs, and any other relevant expenses.
Some insolvency practitioners charge a fee upfront, while others take it from your monthly debt repayments. It is important to ask your insolvency practitioner about the fees involved and whether you will need to pay a fee if your IVA proposal is rejected.
Do most creditors accept an IVA?
Once your insolvency practitioner has created a proposal, they will call a creditors’ meeting to vote on it. The IVA will be accepted only if creditors representing over 75% of the debts you owe vote ‘yes’.
For example, let’s say you have £50,000 debt divided among 4 creditors:
- Creditor A (£3,500)
- Creditor B (£35,000)
- Creditor C (£10,000)
- Creditor D (£1,500)
Creditors A, B, and D agree to the IVA, but Creditor C does not.
Even though Creditor C does not agree, because Creditors A, B, and D represent over 75% of your total debt and have voted for it, the IVA is accepted and all creditors must adhere to its terms.
How much does an IVA leave you to live on?
The amount your IVA payments will be depends on your household income and expenses. Your IVA payment will usually be the amount you have left over once all of your essential costs are taken out of your income. For example, if you earn £1,500 a month and your total living costs are £1,300, then your IVA payment might be £200.
Remember, this can vary depending on your circumstances and what is considered an essential cost. It’s also worth noting that if your income changes or you receive a windfall during your IVA, your insolvency practitioner will review this and may take more of the money to pay your creditors.
How long does an IVA last?
An IVA usually lasts for 5 years, but it could be extended to 6 years if you are a homeowner. This is because you may need to remortgage if you have equity in your house or make extra payments if you cannot remortgage.
We've helped thousands of people like Warren
Even when I’ve fallen behind on payments in the past, they have made me feel relaxed about paying it back! I love Moneybarn. They have a real personal touch to the whole process! Thank you – Warren.
We've helped thousands of people like Warren
Even when I’ve fallen behind on payments in the past, they have made me feel relaxed about paying it back! I love Moneybarn. They have a real personal touch to the whole process! Thank you – Warren.
How to apply for an IVA
An IVA must be set up by a qualified insolvency practitioner. An insolvency practitioner is a professional who is licensed to help people in financial difficulty.
How to apply for an IVA
An IVA must be set up by a qualified insolvency practitioner. An insolvency practitioner is a professional who is licensed to help people in financial difficulty.
1
Seek debt advice: We’ve partnered with PayPlan, who can help find the best debt solution for your needs. They offer free debt advice and can arrange various debt solutions, including a Debt Management Plan or an Individual Voluntary Agreement.
2
Find an insolvency practitioner: Check if they’re registered with the Insolvency Practitioners Association, and if they’re part of a debt advice organisation, see if they are regulated by the FCA. You could also use the Insolvency Practitioner directory to find someone suitable.
2
Find an insolvency practitioner: Check if they’re registered with the Insolvency Practitioners Association, and if they’re part of a debt advice organisation, see if they are regulated by the FCA. You could also use the Insolvency Practitioner directory to find someone suitable.
3
Provide the necessary information: You’ll share your current circumstances with your insolvency practitioner. This includes proof of your income and expenses, such as payslips, benefits letters, or bank statements. This helps them understand your situation and draft an IVA proposal.
3
Provide the necessary information: You’ll share your current circumstances with your insolvency practitioner. This includes proof of your income and expenses, such as payslips, benefits letters, or bank statements. This helps them understand your situation and draft an IVA proposal.
4
The creditors’ meeting: This is a remote or in-person meeting, which you can attend if you wish, where the creditors will decide to accept or reject the IVA proposal. If creditors representing more than 75% of your total debt vote in favour, your IVA can go ahead.
4
The creditors’ meeting: This is a remote or in-person meeting, which you can attend if you wish, where the creditors will decide to accept or reject the IVA proposal. If creditors representing more than 75% of your total debt vote in favour, your IVA can go ahead.
5
The result: If your IVA is accepted, you’ll receive a letter confirming it, it will be added to the Insolvency Register, and you will need to keep up with the monthly payments. If the IVA is rejected, your insolvency practitioner can advise on whether the proposal can be amended or if you need to explore another debt solution.
5
The result: If your IVA is accepted, you’ll receive a letter confirming it, it will be added to the Insolvency Register, and you will need to keep up with the monthly payments. If the IVA is rejected, your insolvency practitioner can advise on whether the proposal can be amended or if you need to explore another debt solution.
How long does an IVA stay on your credit file?
An IVA is recorded on your credit file and will be visible for 6 years from the date it was approved. This record won’t be removed if you repay your IVA early, but once it has been repaid, it will be marked as ‘complete’. Any debts included in your IVA may be recorded separately on your credit file, too.
Will an IVA affect my partner?
If you enter into an IVA, it won’t appear on your partner’s credit report and won’t affect their credit score unless you and your partner are financially connected. You’ll only be financially connected if you’ve taken out joint credit, such as a mortgage or joint car finance agreement.
Because an IVA is designed for one person, it might not be the best way to repay joint debt. This is because, even if you are in an IVA for your debt, your partner will still be responsible for repaying the debt. In this case, you might consider an interlocking IVA, which you can read more about in StepChange’s guide.
Can you pass a credit check with an IVA?
While it isn’t impossible to pass a credit check while in an IVA, it will stay on your credit file for six years from the date it was approved, which can affect your ability to get credit. You may need to use a specialist lender who offers car finance for bad credit, and if the credit is above £500, you’ll need your insolvency practitioner’s written consent.
Can I remove an IVA from my credit report?
An IVA will usually be automatically added, marked as ‘complete’, and removed from your credit file as needed. After 6 years, it will no longer be visible on your credit file, but you can check your credit report occasionally to make sure all the details are correct.
How long does an IVA stay on your credit file?
An IVA is recorded on your credit file and will be visible for 6 years from the date it was approved. This record won’t be removed if you repay your IVA early, but once it has been repaid, it will be marked as ‘complete’. Any debts included in your IVA may be recorded separately on your credit file, too.
Will an IVA affect my partner?
If you enter into an IVA, it won’t appear on your partner’s credit report and won’t affect their credit score unless you and your partner are financially connected. You’ll only be financially connected if you’ve taken out joint credit, such as a mortgage or joint car finance agreement.
Because an IVA is designed for one person, it might not be the best way to repay joint debt. This is because, even if you are in an IVA for your debt, your partner will still be responsible for repaying the debt. In this case, you might consider an interlocking IVA, which you can read more about in StepChange’s guide.
Can you pass a credit check with an IVA?
While it isn’t impossible to pass a credit check while in an IVA, it will stay on your credit file for six years from the date it was approved, which can affect your ability to get credit. You may need to use a specialist lender who offers car finance for bad credit, and if the credit is above £500, you’ll need your insolvency practitioner’s written consent.
Can I remove an IVA from my credit report?
An IVA will usually be automatically added, marked as ‘complete’, and removed from your credit file as needed. After 6 years, it will no longer be visible on your credit file, but you can check your credit report occasionally to make sure all the details are correct.
Are you looking for car finance?
We help thousands of customers each month towards a better road ahead. If you’re looking for car finance with an IVA, we can help.
Representative 30.7% APR.
Are you looking for car finance?
We help thousands of customers each month towards a better road ahead. If you’re looking for car finance with an IVA, we can help.
Representative 30.7% APR.
Advantages and disadvantages of an IVA
Advantages and disadvantages of an IVA
During your IVA, any interest or additional charges on your debts will be frozen, so you can focus on making the agreed monthly payment.
An IVA will appear on your credit file and will make it harder to get credit. It will not be removed until 6 years after the date it was approved.
An IVA helps you avoid bankruptcy or further legal action from your creditors, such as a County Court Judgment or bailiffs.
Failing to keep up with your IVA payments may result in your IVA falling into arrears, which could lead to it being terminated.
Your debts will be combined into one affordable monthly payment with a clear timeline so you know when you will be debt-free.
An IVA includes a ‘windfall clause’. If you receive a windfall (a sum of money), you must report it and may need to make additional payments on your IVA.
Once your IVA is approved, you won’t need to talk with your creditors, and if they contact you, you can refer them to your insolvency practitioner.
An IVA isn’t guaranteed to be accepted by your creditors. If they reject the proposal, you may need to find another debt solution.
During your IVA, any interest or additional charges on your debts will be frozen, so you can focus on making the agreed monthly payment.
An IVA helps you avoid bankruptcy or further legal action from your creditors, such as a County Court Judgment or bailiffs.
Your debts will be combined into one affordable monthly payment with a clear timeline so you know when you will be debt-free.
Once your IVA is approved, you won’t need to talk with your creditors, and if they contact you, you can refer them to your insolvency practitioner.
An IVA will appear on your credit file and will make it harder to get credit. It will not be removed until 6 years after the date it was approved.
Failing to keep up with your IVA payments may result in your IVA falling into arrears, which could lead to it being terminated.
An IVA includes a ‘windfall clause’. If you receive a windfall (a sum of money), you must report it and may need to make additional payments on your IVA.
An IVA isn’t guaranteed to be accepted by your creditors. If they reject the proposal, you may need to find another debt solution.
Is an IVA worth it?
An Individual Voluntary Arrangement (IVA) can negatively affect your credit score and means you would need to cut back on any non-essential spending.
However, if managed well, it can help you get your finances back on track by clearing any debts included in the IVA.
Whether an IVA is the best debt solution depends on your circumstances, such as the amount of debt you have, the types of debt you owe, and your ability to make regular payments.
While we can’t advise on the best solution available, we’ve teamed up with PayPlan, who offer free debt help and advice.
Is an IVA worse than a CCJ?
Both a CCJ and an IVA will affect your credit score and make it more difficult to get credit for the 6 years they’re on your credit file. An IVA is a legally binding agreement, meaning your creditors can’t take further legal action, such as sending bailiffs or seeking a County Court Judgment. It also means your debts are frozen with no additional charges or interest payments.
IVA vs DMP
An Individual Voluntary Arrangement (IVA) is a formal, legally binding agreement where interest is frozen and some debt may be written off. In contrast, a Debt Management Plan (DMP) is informal and not legally binding, and under a DMP all debt is repaid.
Another key difference is the types of debt you can include. Only non-priority debts can be included in a DMP, like loans and credit card debts. With an IVA, you can include essential things like Council Tax arrears and gas, water, and electricity bills.
IVA vs DRO
While an IVA might last for 5 to 6 years, a DRO usually ends after 12 months. Debt Relief Orders are for people with low incomes who cannot afford to repay their debts, while IVAs are for people who can make repayments to clear their debts.
Find out more in our guide about whether you can get car finance with a DRO.
IVA vs bankruptcy
An IVA and bankruptcy are both forms of insolvency (financial difficulty in which you can’t repay your debts). The key difference is that in bankruptcy, you must hand over all your assets (such as your home) which can be sold to recover your debts. An IVA offers a path to being debt-free by making agreed monthly payments to your creditors.
Also, there are jobs that a bankrupt person would not be legally allowed to hold, such as working for the government, in a financial services role, or being a company director. Being in an IVA might not affect your job unless you work in financial or legal services.
How can I improve my credit score after an IVA?
Getting approved for credit can be harder after an IVA. While you can still be approved for things like car finance after an IVA, you might be offered a higher interest rate.
Thankfully, there are some things you can do that may help improve your credit score, which can make it easier to get approved:
- Regularly check your credit report to ensure all information is up-to-date and accurate.
- Register for the electoral roll, if you haven’t already, to make it easier for lenders to verify your identity.
- Make sure to pay your bills in full and on time. Paying bills on time like car finance can help improve your credit score.
- Keep your credit utilisation low, proving to future lenders that you can manage credit responsibly.
You could use a money management app such as Snoop. Snoop is one of our sister companies that helps users track their spending, control their finances, and view their credit score.
Are you looking for car finance? We can help!
Is an IVA worth it?
An Individual Voluntary Arrangement (IVA) can negatively affect your credit score and means you would need to cut back on any non-essential spending.
However, if managed well, it can help you get your finances back on track by clearing any debts included in the IVA.
Whether an IVA is the best debt solution depends on your circumstances, such as the amount of debt you have, the types of debt you owe, and your ability to make regular payments.
While we can’t advise on the best solution available, we’ve teamed up with PayPlan, who offer free debt help and advice.
Is an IVA worse than a CCJ?
Both a CCJ and an IVA will affect your credit score and make it more difficult to get credit for the 6 years they’re on your credit file. An IVA is a legally binding agreement, meaning your creditors can’t take further legal action, such as sending bailiffs or seeking a County Court Judgment. It also means your debts are frozen with no additional charges or interest payments.
IVA vs DMP
An Individual Voluntary Arrangement (IVA) is a formal, legally binding agreement where interest is frozen and some debt may be written off. In contrast, a Debt Management Plan (DMP) is informal and not legally binding, and under a DMP all debt is repaid.
Another key difference is the types of debt you can include. Only non-priority debts can be included in a DMP, like loans and credit card debts. With an IVA, you can include essential things like Council Tax arrears and gas, water, and electricity bills.
IVA vs DRO
While an IVA might last for 5 to 6 years, a DRO usually ends after 12 months. Debt Relief Orders are for people with low incomes who cannot afford to repay their debts, while IVAs are for people who can make repayments to clear their debts.
Find out more in our guide about whether you can get car finance with a DRO.
IVA vs bankruptcy
An IVA and bankruptcy are both forms of insolvency (financial difficulty in which you can’t repay your debts). The key difference is that in bankruptcy, you must hand over all your assets (such as your home) which can be sold to recover your debts. An IVA offers a path to being debt-free by making agreed monthly payments to your creditors.
Also, there are jobs that a bankrupt person would not be legally allowed to hold, such as working for the government, in a financial services role, or being a company director. Being in an IVA might not affect your job unless you work in financial or legal services.
How can I improve my credit score after an IVA?
Getting approved for credit can be harder after an IVA. While you can still be approved for things like car finance after an IVA, you might be offered a higher interest rate.
Thankfully, there are some things you can do that may help improve your credit score, which can make it easier to get approved:
- Regularly check your credit report to ensure all information is up-to-date and accurate.
- Register for the electoral roll, if you haven’t already, to make it easier for lenders to verify your identity.
- Make sure to pay your bills in full and on time. Paying bills on time like car finance can help improve your credit score.
- Keep your credit utilisation low, proving to future lenders that you can manage credit responsibly.
You could use a money management app such as Snoop. Snoop is one of our sister companies that helps users track their spending, control their finances, and view their credit score.
Are you looking for car finance? We can help!
We have over 30 years of experience helping people across the UK, including those looking to get car finance with an IVA. Our Conditional Sale agreement means you’ll legally own the car once you make the final payment.
How our car finance works
Use our car finance calculator to see what your agreement might look like, depending on how much you want to borrow.
When you’re ready, get a quote in less than 5 minutes.
We only use a soft check when you do this, and if you’re approved, we’ll show you what your agreement might look like. We only use a hard check when contracts are drawn up for you to sign.
Representative 30.7% APR.
We have over 30 years of experience helping people across the UK, including those looking to get car finance with an IVA. Our Conditional Sale agreement means you’ll legally own the car once you make the final payment.
Use our car finance calculator to see what your agreement might look like, depending on how much you want to borrow.
When you’re ready, get a quote in less than 5 minutes.
We only use a soft check when you do this, and if you’re approved, we’ll show you what your agreement might look like. We only use a hard check when contracts are drawn up for you to sign.
Representative 30.7% APR.
How our car finance works
FAQs about an Individual Voluntary Arranagement
Does an IVA take my assets?
When your IVA proposal is drafted, your insolvency practitioner will consider the value of your assets, such as your house and any vehicles you have. Creditors usually only ask for the sale of these assets if they are deemed non-essential and if selling them is needed to repay your debts. Your insolvency practitioner will be able to advise you about this.
Will I lose my car if I get an IVA?
You may be able to keep your car if you enter an IVA. However, this depends on the value of your car and the terms of the IVA. Your insolvency practitioner will advise you on whether including assets like your car in the IVA is appropriate.
Can I go on holiday while paying off an IVA?
There are no specific rules stating that you can’t go on holiday while on an IVA. However, when you’re in an IVA, you must prioritise making the agreed monthly payment and any essential costs before spending on luxuries like a holiday.
Will an IVA affect my current mortage?
If you already have a mortgage when you enter an IVA, it likely won’t affect it, and you shouldn’t have to sell your home. While there is no requirement to sell your home as part of an IVA, you might be required to remortgage it if it has positive equity, so you can use the money to repay your debts.
Can you get an IVA while on Universal Credit?
If you receive benefits, such as Universal Credit, you might find it difficult to qualify for an IVA. This is because benefits cover essential costs like housing, food, and clothes, so there might not be enough spare money to make the regular IVA payments. While it might be possible, if your income is solely from benefits, it could be challenging.
Can you pay an IVA off early?
Yes, you can pay off an Individual Voluntary Arrangement (IVA) early if you receive a lump sum of money or if your financial situation changes. Your insolvency practitioner will arrange a variation meeting with your creditors to propose a change to your IVA. Like the original proposal, it will need approval from creditors who hold at least 75% of your total debt to go ahead.
What happens if your IVA fails
There are several reasons why an IVA might fail: missed payments, taking out credit during the IVA, or something that wasn’t disclosed in the initial IVA proposal.
When an IVA fails, the insolvency practitioner sends a letter of termination and a failure report. These documents outline how much the creditors have been repaid so far. The insolvency practitioner will also advise you on your options, which might include another debt solution.
They will also inform the Insolvency Service about the IVA’s failure, and it should be removed from the Insolvency Register 3 months after the failure. It will be marked as failed on your credit report.
Can I change from an IVA to a Debt Management Plan?
It may be possible to exit an IVA and switch to another debt solution, but this might not be suitable for everyone. As a DMP is an informal solution that doesn’t prevent creditors from taking further legal action, you might want to speak with a free debt advice service before deciding which solution is right for you.
Do I have to declare an IVA after 6 years?
Whether you need to declare an IVA after 6 years depends on the type of credit you’re applying for. For a mortgage, you must declare if you’ve had significant financial difficulty in the past, such as an IVA. For car finance, you usually don’t have to declare it, because the lender will do a credit check to see if you have an IVA on your credit file.
How long do you stay on the Insolvency Register for?
During the IVA, it will be recorded on the Insolvency Register. This includes the name, address, gender, and date of birth of the person involved. Details of an IVA will remain on the Insolvency Register for 3 months after it has been completed (paid off) or terminated (if the IVA fails), after which point it will be removed.
If you are worried that having your address published on the Insolvency Register might put you at risk of violence, you may be able to apply to keep your address private.
What happens if I receive a windfall after my IVA is completed?
IVAs generally include a windfall clause. This could affect any lump sums of money you receive, even after an IVA is completed. If this applies to you, you might need to give some or all of that windfall to your insolvency practitioner, who will pass it on to your creditors. Your insolvency practitioner can advise if this applies to you.
FAQs about an Individual Voluntary Arranagement
Does an IVA take my assets?
When your IVA proposal is drafted, your insolvency practitioner will consider the value of your assets, such as your house and any vehicles you have. Creditors usually only ask for the sale of these assets if they are deemed non-essential and if selling them is needed to repay your debts. Your insolvency practitioner will be able to advise you about this.
Will I lose my car if I get an IVA?
You may be able to keep your car if you enter an IVA. However, this depends on the value of your car and the terms of the IVA. Your insolvency practitioner will advise you on whether including assets like your car in the IVA is appropriate.
Can I go on holiday while paying off an IVA?
There are no specific rules stating that you can’t go on holiday while on an IVA. However, when you’re in an IVA, you must prioritise making the agreed monthly payment and any essential costs before spending on luxuries like a holiday.
Will an IVA affect my current mortage?
If you already have a mortgage when you enter an IVA, it likely won’t affect it, and you shouldn’t have to sell your home. While there is no requirement to sell your home as part of an IVA, you might be required to remortgage it if it has positive equity, so you can use the money to repay your debts.
Can you get an IVA while on Universal Credit?
If you receive benefits, such as Universal Credit, you might find it difficult to qualify for an IVA. This is because benefits cover essential costs like housing, food, and clothes, so there might not be enough spare money to make the regular IVA payments. While it might be possible, if your income is solely from benefits, it could be challenging.
Can you pay an IVA off early?
Yes, you can pay off an Individual Voluntary Arrangement (IVA) early if you receive a lump sum of money or if your financial situation changes. Your insolvency practitioner will arrange a variation meeting with your creditors to propose a change to your IVA. Like the original proposal, it will need approval from creditors who hold at least 75% of your total debt to go ahead.
What happens if your IVA fails
There are several reasons why an IVA might fail: missed payments, taking out credit during the IVA, or something that wasn’t disclosed in the initial IVA proposal.
When an IVA fails, the insolvency practitioner sends a letter of termination and a failure report. These documents outline how much the creditors have been repaid so far. The insolvency practitioner will also advise you on your options, which might include another debt solution.
They will also inform the Insolvency Service about the IVA’s failure, and it should be removed from the Insolvency Register 3 months after the failure. It will be marked as failed on your credit report.
Can I change from an IVA to a Debt Management Plan?
It may be possible to exit an IVA and switch to another debt solution, but this might not be suitable for everyone. As a DMP is an informal solution that doesn’t prevent creditors from taking further legal action, you might want to speak with a free debt advice service before deciding which solution is right for you.
Do I have to declare an IVA after 6 years?
Whether you need to declare an IVA after 6 years depends on the type of credit you’re applying for. For a mortgage, you must declare if you’ve had significant financial difficulty in the past, such as an IVA. For car finance, you usually don’t have to declare it, because the lender will do a credit check to see if you have an IVA on your credit file.
How long do you stay on the Insolvency Register for?
During the IVA, it will be recorded on the Insolvency Register. This includes the name, address, gender, and date of birth of the person involved. Details of an IVA will remain on the Insolvency Register for 3 months after it has been completed (paid off) or terminated (if the IVA fails), after which point it will be removed.
If you are worried that having your address published on the Insolvency Register might put you at risk of violence, you may be able to apply to keep your address private.
What happens if I receive a windfall after my IVA is completed?
IVAs generally include a windfall clause. This could affect any lump sums of money you receive, even after an IVA is completed. If this applies to you, you might need to give some or all of that windfall to your insolvency practitioner, who will pass it on to your creditors. Your insolvency practitioner can advise if this applies to you.
For a better road ahead
Moneybarn is a member of the Finance and Leasing Association, the official trade organisation of the motor finance industry. The FLA promotes best practice in the motor finance industry for lending and leasing to consumers and businesses.
Moneybarn is the trading style of Moneybarn No. 1 Limited, a company registered in England and Wales with company number 04496573, and Moneybarn Limited, a company registered in England and Wales with company number 02766324. The registered address for these companies is: Athena House, Bedford Road, Petersfield, Hampshire, GU32 3LJ.
Moneybarn’s VAT registration number is 180 5559 52.
Moneybarn Limited is authorised and regulated by the Financial Conduct Authority (Financial Services reference No. 702781)
Moneybarn No. 1 Limited is authorised and regulated by the Financial Conduct Authority (Financial Services reference No. 702780)
