Applying for an individual voluntary arrangement (IVA)
Before applying for an individual voluntary arrangement (IVA) it’s a good idea to get debt advice. We can make sure an IVA is the best option for you based on:
- your personal situation
- the spare money you have at the end of the month
- your debts
More guides on IVA
Here are some useful guides to help you manage your money better:
Getting an IVA
Once you've decided that an individual voluntary arrangement is the best way to deal with your debts, you’ll need to:
1. Choose an insolvency practitioner
An IVA must be set up by a qualified insolvency expert – an insolvency practitioner. With your agreement, we can pass you over to our sister company Freeman Jones to help with this.
Whoever you choose, you’ll have to pay fees for your IVA. How much they are and when you pay them will depend on your provider.
Freeman Jones only start charging once your IVA has been approved. The fees you pay come out of – not on top of – your agreed IVA payments. Freeman Jones usually charge a fixed fee of £3,650 – this is standard across the industry.
Getting an IVA
Once you've decided that an individual voluntary arrangement is the best way to deal with your debts, you’ll need to:
1. Choose an insolvency practitioner
An IVA must be set up by a qualified insolvency expert – an insolvency practitioner. With your agreement, we can pass you over to our sister company Freeman Jones to help with this.
Whoever you choose, you’ll have to pay fees for your IVA. How much they are and when you pay them will depend on your provider.
Freeman Jones only start charging once your IVA has been approved. The fees you pay come out of – not on top of – your agreed IVA payments. Freeman Jones usually charge a fixed fee of £3,650 – this is standard across the industry.
2. Gather details of your income, spending and debts
Before making an application, your insolvency practitioner will need to know how much you can afford to pay towards your debts. They’ll look at your:
- income
- essential household spending
- debts
- assets
This information will be used to:
- create a budget for you to live on during your IVA
- work out how much you can afford to offer towards your debts each month
You’ll need to provide evidence of the figures you give. The kind of documents you might need include:
- bank statements
- wage slips
- benefit letters
- mortgage/rent agreement
- asset valuations e.g. something showing how much your car is worth
- paperwork relating to your debts and creditors
- household bills
3. Your IVA proposal
Once your insolvency practitioner has all the information they need, they’ll be able to write your IVA proposal for your creditors and the court.
The proposal will say how much you’ll pay your creditors and for how long (usually five or six years).
It will also include a report for the court. In this, your insolvency practitioner will say whether they think the proposal will work or not.
4. Creditors’ meeting
After your IVA proposal has been written, your insolvency practitioner will call a meeting of your creditors. This is usually held online.
Your creditors will vote on whether to accept your proposal. The individual voluntary arrangement will be accepted if creditors holding over 75% of your debts agree to it.
Example
You have £100,000 of debt and three creditors:
Creditor 1 (26,000)
Creditor 2 (£50,000)
Creditor 3 (£24,000)
Creditors 1 and 2 vote to accept the IVA. Creditor 3 votes to reject. The proposal is accepted because creditors 1 and 2 hold 76% of the debt. Creditor 3 still has to keep to the terms of the IVA.
Your creditors might ask for changes to your IVA proposal e.g. they might ask for an increase to the monthly amount you’ll pay.
IVA confirmed
If your IVA proposal is accepted, it will be confirmed by the court. Your insolvency practitioner will give you a copy. This will show your agreed payments and how long your IVA will last.
Your IVA will also be published on the Insolvency Register website.
Can you apply for an IVA online?
You can find out if an individual voluntary arrangement is right for you online by using our debt advice tool. This will let you know which debt solutions you can get. It will also tell you which one we think is the best fit for you.
If you decide to apply for an IVA, you won’t be able to set it up yourself online. You’ll need an insolvency practitioner. With your agreement, we can pass you over to our sister company Freeman Jones and one of their insolvency practitioners can help.
Do I qualify for an IVA?
There aren’t black and white rules about who qualifies for an individual voluntary arrangement. We’ll consider lots of things before deciding whether an IVA is suitable for you.
You’ll usually need:
- a steady source of income
- non-priority debts (credit cards, buy now pay later, personal loans, overdrafts etc.) of at least £5,000
- to live in England, Wales or Northern Ireland
- to have more than one creditor
Can my IVA application be declined?
It’s possible that your individual voluntary arrangement application could be declined. But don’t worry - the insolvency practitioners we work with will only submit a proposal to your creditors if they believe it’s likely to be accepted.
Some of the main reasons IVA applications get rejected are:
- incorrect/incomplete information
- creditors don’t believe you’ll be able to stick to the proposed budget or payment plan
- creditors have had a bad experience with you in the past and aren’t convinced you’ll manage your finances responsibly
- the payments you’ve offered are too low. Creditors will be looking to recover as much of what they’re owed as possible
IVAs are most likely to be accepted when creditors can see you’re paying as much as possible without causing yourself financial hardship. The detailed information about your income and spending contained in your proposal will show this. Your IVA is also more likely to be accepted if everyone is treated fairly. That means all creditors should be included.
Many creditors have signed up to something called the IVA protocol. The protocol contains guidelines on drawing up an IVA proposal. Creditors are expected to accept a proposal that follows these guidelines.
FAQs
There are two types of bills: priority and non-priority. Priority bills are the ones that could have the most serious consequences if you don’t pay them.
They include:
- gas and electricity bills
- rent and mortgage
- secured loans
- council tax
- court fines
- child support and maintenance
- benefit overpayments
- some essential hire purchase items e.g. kitchen appliances
If you don’t keep up with priority debt payments you could lose your home, be visited by bailiffs, have your energy supply cut off or be forced onto a prepayment meter or lose essential hire purchase items.
Non-priority debts include things like:
- credit cards
- buy now pay later
- personal loans
- store cards
- catalogue payments
- overdrafts
- money owed to family/friends
The consequences of not paying non-priority debts are usually less serious than for priority debts. But creditors may still take action to try and get their money. They may pass your debt to a debt collection agency or try and get a county court judgment against you, among other things.
Our debt advice is free but that doesn’t affect how good it is. And don’t just take our word for it, see what our customers say.
How you access our advice is down to you – our friendly advisers can chat to you over the phone or you can go through the entire process online. Whichever you prefer, we’ll only make a recommendation once we’re happy it’s what’s best for your individual situation.
If you prefer to speak to us, you can be sure you’ll be dealing with someone who is patient and non-judgemental. When choosing new recruits to the Money Wellness team, we look for warmth and a drive to help others.
Our advisers understand that everyone faces their own challenges and anyone can experience financial difficulties. We get to know the person behind the money worries. We consider your long-term financial wellbeing, as well as your immediate concerns.
Whether you need budgeting help or a formal debt solution, we’ll be by your side for as long as you want.
After getting to grips with your situation, we may recommend a debt solution. Some solutions are free. Others have a fee. We’ll make sure you’re aware of any costs up front.
Being a homeowner and having a mortgage doesn’t stop you from getting an IVA. If there is more than £5,000 of equity in your home, you’ll usually have to remortgage to release money to be paid into your IVA. Equity is how much money you’d make from selling your home once any mortgages were paid off. If you’re unable to remortgage, you’ll carry on making your IVA payments for up to another 12 months. This means your individual voluntary arrangement will last up to six years instead of five.
An individual voluntary arrangement (IVA) is a legally binding agreement between you and your creditors to pay back your debts at a rate you can afford.  
It usually lasts for five or six years. After that time, any remaining debt included in your IVA is written off meaning you don’t have to pay it back. 
During your IVA, providing you make the agreed payments, creditors aren’t allowed to charge interest or fees on your debts. They also have to stop chasing you to pay.  
An individual voluntary arrangement must be set up by a qualified insolvency expert. 
Is an IVA right for me? 
This depends on your situation. It might be a good idea if you: 
 
-
can’t pay your debts at the rate you originally agreed to, but you can afford to pay something each month 
-
owe money to more than one creditor  
-
want to write off some of your debt.  
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