Individual Voluntary Agreements Explained (2026)

When unsecured debts have reached a level where full repayment is no longer realistic, one formal route available in England, Wales, and Northern Ireland is an Individual Voluntary Arrangement — commonly referred to as an IVA or, interchangeably, an individual voluntary agreement. Under this arrangement, a person repays an agreed proportion of what they owe over a fixed term, with any remaining balance legally written off at the end. The arrangement is governed by the Insolvency Act 1986 and supervised by a licensed Insolvency Practitioner (IP).

What an Individual Voluntary Agreement Is

An individual voluntary agreement is a legally binding contract between a person and their unsecured creditors. The official legal term, as used in the Insolvency Act 1986, is "Individual Voluntary Arrangement" (IVA) — both phrases describe the same formal insolvency procedure. Once creditors representing at least 75% by value of those voting approve the proposal, the arrangement becomes binding on all unsecured creditors included in it, even those who voted against or did not vote. Interest and charges on included debts are frozen from the point of approval.

The arrangement is supervised throughout by the licensed IP, who collects monthly payments from the individual and distributes funds to creditors according to the agreed terms. It is distinct from informal debt management in that it carries statutory legal force.

The term "individual voluntary agreement" is widely used in search queries and in everyday conversation. For clarity, the statutory instrument underpinning the procedure uses "Voluntary Arrangement" — both terms refer to the same thing.

How an Individual Voluntary Agreement Works

The proposal stage

A licensed Insolvency Practitioner reviews the individual's income, assets, and debts, then drafts a formal proposal setting out what creditors will receive. This document details the proposed monthly payment, the term of the arrangement, which debts are included, and the IP's fees. The IP acts as nominee at this stage and submits the proposal to creditors.

The creditors' vote

Creditors are given the proposal and invited to vote. For the IVA to be approved, creditors representing at least 75% by value of those voting must agree to the terms. According to GOV.UK, if that threshold is met, the arrangement becomes binding on all unsecured creditors named in it — including any who voted against or did not participate in the vote.

The arrangement period

Once approved, the individual makes a single monthly payment to the IP, who distributes funds to creditors in line with the agreed terms. The standard IVA term is 60 months. For homeowners, most IVA proposals include a clause requiring an attempt to release equity from the property in the final year; if a remortgage proves impossible, the arrangement typically extends by a further 12 months, making the total term 72 months. During the arrangement period, creditors cannot take further legal action in respect of the debts covered by the IVA.

Completion

At the end of the term, provided all agreed payments have been made and any other conditions fulfilled, the IP issues a completion certificate. Any remaining balance on the debts included in the IVA is legally written off at that point. According to the Insolvency Service, the IVA entry on the Individual Insolvency Register — a public register searchable at GOV.UK — is removed three months after the arrangement ends.

Who May Be Eligible for an IVA

There are no statutory minimum or maximum debt thresholds written into law for an IVA, but in practice most Insolvency Practitioners require total unsecured debt of around £10,000 or more across at least two creditors before the arrangement is commercially viable. The individual must also have a regular, provable income sufficient to sustain the proposed monthly contributions throughout the term.

IVAs are available to individuals — including sole traders — but not to limited companies, which have separate insolvency procedures. A person already subject to a bankruptcy order or an active Debt Relief Order cannot simultaneously enter an IVA.

Debts that can typically be included

• Credit cards and store cards
• Personal loans and overdrafts
• Catalogue debts and payday loans
• HMRC tax debts (subject to HMRC agreeing to the proposal)
• Utility bill arrears

Debts that cannot be included

• Secured debts such as mortgages or secured loans
• Student loans
• Child maintenance arrears
• Court fines
• Debts arising from fraud

The Effect on Credit and the Insolvency Register

An IVA is recorded on the Individual Insolvency Register, maintained by the Insolvency Service and publicly searchable at GOV.UK. The entry remains visible throughout the arrangement and for three months after the completion certificate is issued — meaning, for a standard 60-month IVA, approximately five years and three months from the start date.

The IVA is also recorded on the individual's credit file for six years from the date it began, in line with standard credit reference agency retention periods. This typically affects the ability to obtain new credit during that period. A regulated debt adviser would normally discuss the credit implications in detail before a person commits to this route.

An IVA is not the same as bankruptcy, though both are formal insolvency procedures. Bankruptcy in England and Wales currently costs £680 to apply for and generally results in discharge after 12 months, whereas an IVA involves a longer repayment commitment but does not carry all the same restrictions — for example, there is generally no automatic restriction on holding a bank account or continuing in certain professions.

Costs and Fees Within an IVA

Insolvency Practitioners charge fees for setting up and supervising an IVA. According to GOV.UK guidance, these fees are typically taken from the monthly payments made under the arrangement rather than charged separately upfront in most cases — meaning creditors receive less than the gross contributions made. There is no standard fixed fee set by law; costs vary between providers.

Before entering an IVA, the individual has the right to receive a clear breakdown of all fees the IP intends to charge. These should be set out in the proposal document. The fee structure directly affects how much of each payment reaches creditors and how much is retained by the IP as remuneration and expenses.

There is no government application fee for an IVA, unlike bankruptcy (£680) or — prior to April 2024 — a Debt Relief Order. The costs are entirely the IP's fees, drawn from within the arrangement itself.

What Happens If an IVA Fails

If the agreed payments are not maintained, or the terms of the arrangement are breached, the IP can fail the IVA. When this happens, creditors are free to pursue the debts again, and interest that was frozen during the arrangement may be reinstated. Both the IVA and its failure will appear on the individual's credit file.

In some cases, a failed IVA is followed by bankruptcy — either applied for by the individual or petitioned for by a creditor. According to GOV.UK, creditors can petition for bankruptcy if the IVA has been terminated and sufficient debt remains outstanding. Many IVAs contain a variation procedure that allows the monthly contribution to be reviewed if financial circumstances change materially; any significant variation requires approval from creditors representing the same 75% threshold as the original proposal. Changes in financial circumstances during the arrangement are therefore worth communicating promptly to the supervising IP.

IVA vs Other Formal Debt Solutions

An individual voluntary agreement is one of several formal routes available in England and Wales. The main alternatives are a Debt Relief Order (DRO), bankruptcy, and a Debt Management Plan (DMP) — though a DMP is an informal arrangement rather than a formal insolvency procedure.

A DRO is available where total qualifying debt is under £50,000 (the limit was raised from £30,000 on 28 June 2024), there are minimal assets, and disposable income is low. The £90 application fee was abolished on 6 April 2024, meaning there is now no fee for a DRO. It lasts 12 months, after which qualifying debts are written off. Eligibility criteria are strict and a DRO is not suitable for someone with significant assets or income.

Bankruptcy offers a faster route to debt write-off — generally 12 months to discharge — but brings restrictions on financial activity and, in some cases, professional practice. The £680 application fee is payable upfront. An IVA sits between these options for someone with regular income who cannot repay debts in full: it allows continued trading and avoids some bankruptcy restrictions, but requires five years (or more) of commitment to a structured payment plan.

Which route may be appropriate in any individual case depends on that person's specific financial circumstances, assets, income, and the nature and total value of their debts. This is the kind of assessment that a regulated debt adviser carries out.

Common Questions About Individual Voluntary Agreements

Does an IVA write off all debt?

An IVA does not write off debt immediately. A person pays an agreed amount each month for the term of the arrangement — typically 60 months. Any balance remaining on the unsecured debts included in the IVA at the end of the term is then legally written off. Secured debts, such as mortgages, are not included and must be maintained separately throughout.

Can creditors still contact someone during an IVA?

Once an IVA is approved and legally binding, creditors included in the arrangement cannot take further legal action in respect of those debts. All contact regarding included debts is ordinarily directed to the supervising Insolvency Practitioner. Creditors with debts not included in the IVA — such as secured lenders — retain their usual rights.

Is an IVA public record?

Yes. An IVA is recorded on the Individual Insolvency Register, a publicly searchable register maintained by the Insolvency Service and accessible at GOV.UK. The entry is visible throughout the arrangement and for three months after it ends. The IVA also appears on the individual's credit file for six years from the start date.

What is the difference between an IVA and a DMP?

A Debt Management Plan (DMP) is an informal arrangement — usually administered by a debt management company or a free-sector charity — under which someone repays debts in full over an extended period at a reduced monthly rate. A DMP has no legal binding effect on creditors, who may continue to add interest or take legal action. An IVA is a formal insolvency procedure under the Insolvency Act 1986: it is legally binding on creditors, freezes interest, and can result in a portion of the debt being written off at the end of the term.

Free Debt Advice

Free debt advice is available from several regulated, non-commercial organisations. Anyone considering a formal insolvency solution may find it helpful to speak with one of these services before proceeding:

• MoneyHelper — moneyhelper.org.uk
• StepChange Debt Charity — stepchange.org
• Citizens Advice — citizensadvice.org.uk
• National Debtline — nationaldebtline.org

These organisations provide free, impartial debt advice and can explain all available options — including IVAs, DROs, bankruptcy, and informal arrangements — based on an individual's full financial picture.

Speaking to a Regulated Specialist

UK Debt Team is a debt advice lead generation and referral business. The information on this page is provided for general informational purposes only and does not constitute debt advice. UK Debt Team does not assess individual circumstances or recommend specific debt solutions. Where someone would like to explore formal debt solutions such as an IVA, UK Debt Team can connect them with FCA-regulated firms whose advisers are qualified to assess their full financial situation and explain the options available to them.