What Is an IVA? UK Rules & Costs Explained 2026

Thinking about an IVA? Here's what the rules actually say

If you're searching for information on Individual Voluntary Arrangements, you're probably weighing up whether a formal debt solution is realistic for your situation. An IVA is a legally binding agreement between you and your creditors to pay back what you can afford over a fixed period — usually 5 to 6 years — after which any remaining qualifying debt is written off.

The information below sets out how IVAs work in England, Wales and Northern Ireland in 2026, what the eligibility thresholds look like, what fees apply, and where IVAs sit relative to other formal options like Debt Relief Orders and bankruptcy. IVAs are not available in Scotland — the equivalent there is a Protected Trust Deed.

How an IVA actually works

An IVA can only be set up and supervised by a licensed Insolvency Practitioner (IP). According to GOV.UK, the IP draws up a proposal based on what you can realistically afford each month after essential household costs. That proposal is then put to your creditors, who vote on whether to accept it.

For the IVA to be approved, creditors holding at least 75% by value of the debts that vote must agree to the terms. Once approved, the arrangement is legally binding on all creditors included — even those who voted against it. They cannot then chase you separately, add further interest, or take court action for those debts.

The typical structure

• A single monthly payment based on disposable income
• A fixed term, most commonly 5 years, sometimes extended to 6
• Interest and charges on included debts are frozen
• Any remaining qualifying balance is written off at the end
• The IP distributes payments to creditors on your behalf

Who can qualify for an IVA in 2026?

There's no statutory minimum debt level set in law, but in practice most Insolvency Practitioners will only propose an IVA where total unsecured debt is at least around £6,000 to £10,000 and there are typically two or more creditors involved. Below those levels, other options such as a Debt Relief Order (now available up to £50,000 of debt following the June 2024 rule change) or a Debt Management Plan may be more proportionate.

According to the Insolvency Service, an IVA may be an option if you:

• Live in England, Wales or Northern Ireland
• Have a regular, sustainable income from which to make payments
• Owe money to two or more creditors
• Have debts you cannot reasonably repay in a reasonable time

Debts that are usually included

Most unsecured debts can be included in an IVA: credit cards, personal loans, overdrafts, catalogue debt, store cards, payday loans, council tax arrears, HMRC tax debts, and some benefit overpayments. Joint debts can be included, but the co-debtor remains liable for the full amount unless they also enter their own arrangement.

Debts that cannot be included

• Secured debts such as mortgages and secured loans
• Student loans
• Court fines and magistrates' court orders
• Child maintenance arrears
• TV licence arrears
• Social fund loans

Fees and costs of an IVA

IVAs are not free. The Insolvency Practitioner charges two main fees: a Nominee's fee for setting up and proposing the arrangement, and a Supervisor's fee for administering it over its life. These fees are paid out of the monthly contributions you make — not as a separate charge on top — so the cost is absorbed into the agreed payment plan.

This is an important distinction. It does not mean the IVA is costless; it means creditors receive less of each pound you pay in, because the IP takes their fee first. Total IP fees over a 5-year IVA can run into several thousand pounds. The exact figures are disclosed in the IVA proposal documents before creditors vote.

What happens to your assets, home and car

One reason some people consider an IVA over bankruptcy is the treatment of assets. In bankruptcy, the official receiver or trustee can sell assets including, in some cases, your home. An IVA is a negotiated arrangement, so the treatment of assets is whatever creditors accept in the proposal.

Homeowners

If you own your home, the standard IVA proposal usually requires you to try to release equity in the final year of the arrangement — typically by remortgaging up to 85% loan-to-value. If a remortgage isn't possible, the IVA is often extended by 12 months in lieu. Your home is generally not sold during an IVA.

Vehicles

A reasonable car for everyday use is normally retained. High-value vehicles may need to be sold or replaced with something cheaper, with the difference going into the arrangement.

The downsides and risks

An IVA is a serious step with long-term consequences. The information below covers the main downsides that anyone considering one should understand.

• Credit file impact: The IVA is recorded on your credit file for 6 years from the start date, and is also entered on the public Individual Insolvency Register while active.
• Failure rates: If you miss payments or your circumstances change and the IP cannot agree a variation, the IVA can fail. Failure may lead to creditors pursuing the original debts in full, or to a bankruptcy petition.
• Strict budget: You'll live on an agreed budget for 5-6 years. Pay rises typically mean increased contributions (the standard term requires you to pay 50% of any net income increase above 10%).
• Some professions restricted: Certain regulated roles — for example in finance or law — may have rules about being subject to an IVA.
• Joint debts: A co-debtor remains fully liable.

How an IVA compares to other formal options

An IVA is one of three main formal insolvency routes in England and Wales. The right route depends on debt level, assets, income and homeownership.

Debt Relief Order (DRO)

Since the June 2024 reforms, a DRO covers debts up to £50,000, requires assets under £2,000 (plus a vehicle up to £4,000), and disposable income of £75 per month or less. The £90 application fee was scrapped in April 2024. A DRO lasts 12 months and is typically cheaper and faster than an IVA for those who qualify.

Bankruptcy

Bankruptcy involves a £680 application fee and usually lasts 12 months before discharge. Assets including, potentially, a home with equity may be sold. There's no minimum debt threshold to apply.

Debt Management Plan (DMP)

A DMP is an informal arrangement — not legally binding on creditors. Interest and charges may continue, but the plan is flexible and can be cancelled at any time. There is no write-off at the end; you pay the full balance.

What the process looks like step by step

1. Initial review: An assessment of income, expenditure, debts and assets to see whether an IVA is realistic.
2. Proposal drafted: The Insolvency Practitioner prepares a formal proposal document setting out the monthly payment, term and treatment of assets.
3. Interim order (optional): Some cases involve applying to court for an interim order to pause creditor action.
4. Creditors' meeting: Creditors vote. 75% by value of those voting must agree.
5. IVA in force: Monthly payments begin. The IP distributes funds. Annual reviews check income and expenditure.
6. Completion: After the final payment (and any equity release attempt), the IVA completes and remaining qualifying debt is written off.

Where to get impartial information

Because an IVA is a long, legally binding commitment, looking at the full range of options before signing anything is important. Free debt advice charities can provide an impartial overview of all available routes — including options that may be cheaper or shorter than an IVA. Useful starting points include GOV.UK's Options for paying off your debts page and the Insolvency Service's published guidance on IVAs and other formal procedures.

IVA UK: How the Individual Insolvency Register Works

One area that often generates questions from people researching IVAs in the UK is the Individual Insolvency Register — a public database maintained by the Insolvency Service that records all active IVAs, bankruptcies and Debt Relief Orders in England and Wales. Understanding how the register works is a practical part of assessing what an IVA means in day-to-day life.

What information appears on the register?

According to GOV.UK, the Individual Insolvency Register shows the individual's full name, date of birth, address at the time the IVA was approved, the name and address of the supervising Insolvency Practitioner, and the current status of the arrangement. The entry is publicly searchable — anyone can look up a name without charge via the Insolvency Service's online portal.

How long does an IVA stay on the register?

An IVA entry remains on the Individual Insolvency Register for the duration of the arrangement and is removed three months after the IVA completes or terminates. This is a separate timeline from the credit file recording, which lasts six years from the start date regardless of when the IVA ends. In practice, for a standard five-year IVA that completes on time, the register entry would be removed roughly three months after the final payment, while the credit file entry would remain for approximately one further year.

What if an IVA fails or is revoked?

If an IVA fails — for example because contributions are missed and the arrangement cannot be varied — the Insolvency Practitioner can apply to court for it to be revoked. According to the Insolvency Act 1986, the IP also has the power to petition for a debtor's bankruptcy if the IVA fails. In that scenario, a separate bankruptcy entry would be added to the register alongside, or replacing, the IVA entry, and the six-year credit file clock for the bankruptcy would start from that later date.

The register distinction matters because it affects more than credit applications. Some professional regulators, landlords carrying out background checks, and certain licensing bodies search the Individual Insolvency Register as a standard step. Anyone subject to an IVA in the UK should be aware that this public record exists independently of credit reference agency data and operates on a different removal timetable.

• Register entry removed: approximately three months after IVA completion or termination
• Credit file entry removed: six years from the IVA start date
• The register is publicly searchable at no cost via the Insolvency Service
• A failed IVA that results in bankruptcy creates a separate register entry with its own timeline