IVA Process

The IVA is a formal debt solution based on a repayment arrangement between a person who owes money called the debtor and unsecured the people they owe the money to, known as creditors.

The IVA or Individual Voluntary Arrangement is a legal debt solution introduced as part of the 1986 Insolvency Act.

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An IVA is a legally enforceable arrangement that permits the applicant to make lower payments on their unsecured debts for a certain duration, usually five years, depending on their ability to pay.

The IVA procedure is divided into six steps. From start to completion, it normally takes around six weeks. However, this is dependent on how soon you can submit to your adviser the required supporting information.

What is the process of an IVA?

If you decide that an IVA is the best option for you, the first step is to locate an Insolvency Practitioner (IP). Because an IVA is a legally binding solution, you’ll need the help of a qualified professional throughout the process. Together, you create an IVA proposal that serves as your debt management plan.

This outlines the monthly payments you can make and the lifestyle adjustments that fit you, along with the other pertinent information that matches with your current personal circumstances. Then, after completing the Individual Voluntary Arrangements that matches your current finance, this is presented to credits, the Insolvency Practitioners Association, and the local county for review. If they approve the proposal, you can start your journey towards financial freedom.

Creating a Budget

Your proposal will be based on your monthly earnings and required living expenses summarised in your budget. Your budget will be determined by the amount of money left over after deducting living expenses.

Your budget includes more than simply household bills, rent, and food; it also includes clothing, toiletries, travel, school fees, and daycare, among others. While you will have to cut back on luxuries, an IVA is meant to help you get out of debt so that you do not have to struggle financially – you can still comfortably live while repaying your obligations.

The IVA proposal requires that your income and expenditure be reviewed every year for further adjustments and ensure that you are still making the correct payments. If the review shows that you can afford to pay more, the insolvency practitioner (IP) will ask you.

IVA Proposal

The IP is the expert who will guide you through the process, and they will perform the majority of the work in preparing your IVA proposal. However, you must be truthful with your IP and contact them when they want your details.

Most of the time, the IPA will need the following details to draft your IVA proposal:

  • Bank Statements and payslips
  • All your creditor’s correspondence with you, starting from the latest communication.
  • The latest statements of any and all of your secured loans
  • Rent payment receipts
  • Vehicle financing receipts or any correspondence you had with the lender
  • Information about any of your other financial policies like health insurance, life insurance, and any pension contributions

If your IVA is approved, you will no longer need to communicate with your unsecured creditors; instead, you will make the agreed-upon payments to your IP, who will manage your IVA and disburse the cash as needed.

The IVA proposal’s goal is to lay out your financial situation and estimate how much you can afford to pay back on your debts each month. At this point, you must be entirely honest and upfront; misrepresenting or exaggerating information might jeopardise your application and your route to debt freedom.

Creditor Meeting

After your IP has made your proposal, you must wait for your creditors to settle. For your IVA to be granted, at least 75% of the creditors who vote on it must vote in favour. As a result, the creditors to whom you owe the most money will have the most influence.

For the IVA plan to become legally enforceable, creditors must vote to ‘accept’ it during the Creditors’ Meeting. There is a convoluted voting mechanism by which all IVAs are declared to have been approved or rejected. The creditors’ meeting must be given at least 17 days’ notice, during which they will vote on whether to accept or reject the proposed IVA. There is no legal obligation for the applicant to be present at the Creditors’ Meeting, but they should be contactable through a telephone during the meeting is being placed.

IVA Agreement

If the IVA is approved, it becomes legally obligatory on all creditors concerned, regardless of whether they voted in favour of it or not. Similarly, if a creditor chooses not to vote, they will be bound by the choices of the creditors who did vote. The IVA is then entered into the IVA registry, where it will stay for the length of the IVA.

Debt Escape

An IVA allows you to get out of debt by repaying a portion of what you owe over some time, usually five years. Even though the amount you pay back will be a fraction of what you owe, you must still make your monthly payments.

A ‘Completion Certificate’ will be given to you once your IVA has been completed successfully. All remaining outstanding sums from your initial loan are now lawfully written-off, and you have now successfully escaped all of your debts.

How long does it take to process?

The IVA procedure is divided into six steps. It normally takes around six weeks; however, this is dependent on how soon you can submit to your adviser the required supporting information.

  • First, the counsellor should thoroughly examine your income, expenses, assets, and debts to decide how much you can afford to provide your creditors each month (see how much would I have to pay into my IVA) and if your creditors are likely to approve your IVA (see who can enter into an IVA). At this stage, the counsellor should also go through all of your other alternatives with you, including bankruptcy.
  • If an IVA is the best option for you, creating a Statement of Affairs using the information you have previously submitted in the next stage. The Statement of Affairs summarises your present financial situation and the foundation for your IVA petition. A summary of your income and spending and any supporting information that you may be required to supply will be included in the proposal. Your Nominee may also file an Interim Order at this time, which is a court injunction that prevents your creditors from taking any action against you until your IVA plan is approved.
  • During the third stage, if you are settled with the IVA option, your IVA proposal is then submitted to all your creditors, the local county court, and the Insolvency Service for their review. The proposed IVA contains the suggested meeting date, until which all the involved parties have the time to review the document. If the creditors need to review your proposal longer or need more information from you, the meeting can be adjourned
  • The fourth stage is where the Meeting of Creditors happen. During this stage, your creditors will vote on whether or not to accept your offer. For the plan to be passed, 75% of the votes by your debt value must be in favour of it. If this happens, all of your unsecured creditors are legally obligated to follow the provisions of the IVA agreement, whether they voted yes, no, or did not vote at all. You do not have to attend this meeting, but you are required to at least be reachable via phone calls.
  • Once accepted, all relevant parties are notified. A Supervisor is appointed (typically the same Insolvency Practitioner who functioned as Nominee) to oversee monthly payments and ensure compliance with the IVA’s requirements.
  • When your IVA is completed, you will be free of your legal obligations if you continue to make payments for the agreed-upon period.

How do I get an IVA approved?

If more than 75% (by value) of the creditors who vote or are represented at the meeting vote in favour, the plan is adopted. This is known as the ‘necessary majority.’ It is dependent on the amount outstanding in debt. For instance, if one creditor owes 20% of the entire debt, their vote counts for 20% of the overall vote.

What happens after my IVA finishes?

Your Insolvency Practitioner will provide you with a certificate of completion once you have paid your final payment and successfully concluded your Individual Voluntary Arrangement, and will also notify your creditors.

The Insolvency Service receives a copy of the completion certificate so that the Insolvency Register may be amended and your information erased.

You must keep credit reference agencies up to date. To improve your credit rating, you must notify them that your IVA has been completed successfully.

How likely is an IVA to be accepted?

An IVA proposal is more likely to be accepted if all of the requirements and necessary information are provided and well prepared by the IP and the creditor.

Many creditors have agreed to participate in an IVA. The protocol includes instructions on how to write an IVA proposal. Creditors are required to accept a proposal prepared in accordance with the procedure without requesting superfluous revisions.

Advantages of the IVA process

The IVA process has many advantages for anyone qualified to use it.

First, the monthly repayments will end at a certain period, and you will most likely pay less than the whole amount owed. You can also still keep working in industries where declaring bankruptcy can end a career or close up a business.

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Aside from this, you may also have the chance to enter into a formal agreement where your creditors accept a lump sum and forgive whatever remaining amount is left of your debts. You may also still keep your home and your assets.

Disadvantages of the IVA process

Though undertaking an IVA sounds like debt advice, this still comes with several disadvantages.

First, if the creditors do not accept your proposal, this means you have to explore other options or try again. Next, your insolvency practitioner can ask you to remortgage your home, or your landlord can also choose to end your tenancy once you enter into an IVA.

You also need to set up a different bank account for the IVA that is separate from your debts. A basic account does not have credit features such as an overdraft. While you are in an IVA, certain banks may not enable you to maintain a basic bank account.

There is also a big chance that your personal financial circumstances might change within the six-year period, which means you may lose the ability to settle your monthly payments for your IVA. If this happens and you are not able to keep the terms of your IVA, your creditors can take further actions against you.

However, out of all the disadvantages, the greatest would be that the IVA will remain in your credit file for six years. This IVA on your credit report may affect your chances of credit approval in the future.


Although you may believe that an IVA is the best debt option for you, you should still obtain free debt advice from a specialist. Debt solutions each have their own set of requirements, and while you may check to see whether you meet them, some may be better suited to your situation than others. Consult an insolvency practitioner first about your income and expenses to see what advice they may provide; they can assist you in the debt solution process. An IVA is a legally binding debt solution that serves as a tool that can help you free yourself from debt when used correctly.

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IVA Debt Help Information

If you want to know more about the debt help plan of an IVA we have all articles related to individual voluntary arrangements here:

Other Debt Solutions

An IVA is not the only debt solution you have and this is where speaking to a qualified debt advisor is very important.

After speaking to a debt consultant you might realise the best solutions are one of the following:

Make sure you take time to understand all the debt solutions available before making a decision because DMPs (aka debt management plans) are also a popular choice in the United Kingdom.