An Individual Voluntary Arrangement (IVA) is a formal and legally-binding agreement between you and your creditors to pay back your debts over a period of time. An IVA must be set up by an insolvency practitioner.
An IVA can be flexible to suit your needs but it can be expensive and there are risks to consider. Most debts can be paid off through an IVA but there are some exceptions.
Debt You Can Include:
When you get an IVA you can include:
gas and electric arrears
Council Tax arrears
national insurance arrears
tax credit or benefit over-payments
debts to family and friends
other outstanding bills, for example solicitor's costs, invoices for building work and vets bills
Mortgage, secured loan and rent
Secured loans are debts which are secured against your home. This means if you can’t pay the debt, they can take your home from you. You can include secured loans, mortgage or rent arrears in an IVA.
However, your creditor will have to give their permission for it to be included and they are unlikely to do this.
Amount of debt that can be included
Any amount of debt can be included in an IVA. There are no minimum or maximum limits set by the law.
The fees for an IVA are high so if your total debt is less than £7,000 an IVA might not be the best option.
Number of debt that can be included
Any number of debts can be included but normally an IVA will be suitable if you have more than one creditor. IVA’s can be flexible.
If you decide an IVA is right for you, your insolvency practitioner will advise you on whether your debts are suitable for an IVA.
Debt You Can Not Include In An IVA
Debts you can’t include in an IVA are:
maintenance arrears that have been ordered by a court
child support arrears
magistrates' court fines
Social Fund loans
TV licence arrears
You might have some ‘joint debts’ which are owed by you and another person, such as a partner. An IVA can only cover one person, so the other person will still be responsible for the whole of the debt. It may not be a good idea to include joint debts in the IVA.
You can't take out a joint IVA, but you and the other person might be able to take out individual IVAs that are connected - these are called ‘interlocking’ IVAs.
Your insolvency practitioner will be able to advise you about this.
If you have a lot of joint debts and the other person doesn't want an IVA, you might need to take a different option.