Find An Alternative To Bankruptcy – Start Your Analysis
Updated for 2026
Individual Voluntary Arrangement (IVA)
An IVA is a legally binding agreement between you and your creditors. You offer to pay as much as you can reasonably afford towards your debts, typically over 60 months, in exchange for the remaining debt being written off at the end.
Creditors are the people, companies or organisations you owe money to. In most cases these are lenders, but they can also include your local council, HMRC or a service provider.
An IVA may be suitable if…
- You owe at least £6,000 in unsecured debts (this threshold has increased over time, and most IVA providers now require a minimum of £6,000).
- You have debts with at least two different creditors.
- You are unable to repay your debts as they fall due.
- You have little realistic prospect of clearing your debts in full within a reasonable timeframe.
- Your financial situation is stable enough to commit to regular monthly payments for 60 months, usually at least around £100 per month. The exact figure depends on what you can afford after essential living costs.
- It is in your best interests to avoid bankruptcy, or bankruptcy is not appropriate for your circumstances.
- You are able to provide evidence of your income, outgoings and overall financial position.
IVA Advantages
- You are unlikely to face employment restrictions or lose your job.
Some employment contracts contain a clause relating to IVAs, so it is worth checking yours. However, for the vast majority of jobs an IVA has no impact. - Your home is protected.
You may need to remortgage to release equity in the final year of the IVA. In bankruptcy, your home could be sold if the equity in it is needed to repay creditors. - You may continue running your own business or act as a company director.
In bankruptcy, you are not permitted to be a director of a limited company. - No risk of a restriction order.
Reckless or dishonest behaviour could reduce the chances of your IVA being approved, but there is no equivalent of a Bankruptcy Restriction Order in an IVA. - No formal investigation into your finances.
In bankruptcy, the Official Receiver investigates your financial affairs and may report irregularities to the courts, which could lead to criminal proceedings. - An IVA can sometimes lead to an existing bankruptcy being annulled. See our guide on bankruptcy annulment for more details.
IVA Disadvantages
- You repay more of your debt overall.
IVAs were designed, in part, so creditors recover more than they would through bankruptcy. In bankruptcy, you might make payments from income for up to three years if you can afford to. With an IVA, you commit to repaying what you can afford for five years. - You can still be made bankrupt if the IVA fails.
If you stop making your agreed payments, your IVA supervisor may terminate the arrangement. Your creditors could then pursue bankruptcy proceedings against you. This may leave you worse off than if you had chosen bankruptcy from the start, because debt is only written off on successful completion of the IVA. - Fees are included.
Your Insolvency Practitioner’s fees are paid from your monthly contributions. This means a portion of what you pay goes towards their costs rather than directly reducing your debts. - It affects your credit rating.
An IVA is recorded on your credit file for six years from the approval date, which can make it harder to obtain credit during and after the arrangement.
How an IVA Works
An IVA is a formal insolvency process and can only be set up under the supervision of a licensed Insolvency Practitioner (IP).
An Insolvency Practitioner is a licensed professional who specialises in formal insolvency procedures. They are regulated by one of several recognised professional bodies in the UK.
You will need to speak with an IVA provider to explain your financial situation in detail.
If an IVA is appropriate, and you decide to go ahead, your IP will help you prepare an IVA proposal. This is your formal offer to creditors. It sets out your financial circumstances, your income and expenditure, and how much you can realistically pay each month.
The proposal is then sent to all of your creditors, who vote on whether to accept it. If creditors holding 75% or more (by value of the total debt) of those who vote are in favour, the IVA is approved. Once approved, all creditors are bound by the terms, including those who voted against or did not vote at all. This means you are legally protected from further action on those debts.
We Provide IVAs. A free, informal chat (around 20 minutes) with one of our advisors will help determine whether an IVA is the right solution for your situation.
IVA Benefits
Some debt is written off
Once you successfully complete your IVA, any remaining debt included in the arrangement is written off. On average, people in IVAs have between 50% and 70% of their total debt written off, though this varies depending on individual circumstances.
Affordable payments
You only pay what you can genuinely afford after meeting your essential living costs. Your payment amount is reviewed annually and can be adjusted if your circumstances change.
Interest and charges frozen
While your IVA is active, creditors cannot add further interest or charges to the debts included in the arrangement. This alone can save you thousands of pounds over the five-year term.
Legal protection from creditors
Once your IVA is in place, creditors cannot take legal action against you to recover debts that are included in the IVA. Bailiff visits, court action and threatening letters should stop.
Important: Debt write-off depends on the circumstances of the individual applicant and applies only upon the successful completion of the IVA. Other benefits only apply while agreed payments are maintained. An IVA is a formal insolvency solution and may not be suitable for everyone.
IVA Considerations
Unsecured debts only
Secured debts (such as your mortgage), some court fines, child maintenance, student loans and certain other debts cannot be included in an IVA. You remain responsible for keeping up with those payments alongside your IVA contributions.
Credit rating impact
During your IVA you cannot obtain further credit without your IP’s permission (some limited exceptions apply). Your IVA will appear on your credit file for six years from the date it is approved.
Long-term commitment
You can withdraw from an IVA application up to the point it is formally approved by your creditors. After that, you are bound by its terms for the full duration. Leaving an IVA early without completing it means your debts are not written off.
Recorded on the Individual Insolvency Register
Your IVA will be recorded on the Individual Insolvency Register, which is a public record. It is also noted on your credit file with the main credit reference agencies.
IVAs and Home Ownership
If you are a homeowner, your home is protected under an IVA. This is one of the key differences from bankruptcy, where your property could be forcibly sold to repay creditors.
However, if you have significant equity in your property, you are likely to be asked to release some of that equity towards the end of the IVA, usually by remortgaging. This is sometimes referred to as the “equity release” clause.
Any remortgage is subject to affordability. You will never be required to pay more than you can realistically manage. If you are unable to obtain a remortgage (which is common given the impact an IVA has on your credit rating), the IVA may be extended by up to 12 months instead. Your IP will explain exactly how this works when setting up your proposal. For more on how insolvency affects property, see our guide on bankruptcy and your property.
IVA vs Other Debt Solutions
An IVA is not the only option available to you. Depending on your circumstances, one of the following alternatives to bankruptcy might be more appropriate:
- A Debt Management Plan (DMP) is an informal arrangement where you make reduced monthly payments to your creditors. Unlike an IVA, a DMP is not legally binding and does not offer the same level of protection.
- A Debt Relief Order (DRO) may be suitable if you have debts of £50,000 or less, limited assets and a low disposable income. It is a lower-cost option than an IVA or bankruptcy.
- A County Court Administration Order is available if you have a county court judgment against you and your total debts are under £5,000.
- Bankruptcy may be more appropriate if you have no realistic way of repaying your debts at all and do not need to protect assets such as a home or business directorship.
Speaking to a qualified advisor is the best way to work out which solution fits your situation. We offer free, no-obligation assessments to help you understand your options.
Not sure which option is right for you? Use our free bankruptcy eligibility checker to get a personalised assessment based on your circumstances.
We’ll answer your questions to help you decide if going bankrupt is the right option for you.