What is an IVA?

Updated:May 13, 2026

7 min read

An Individual Voluntary Arrangement (IVA) is a formal, legally binding agreement between you and the people you owe money to. You make regular monthly payments to a licensed insolvency practitioner over a set period and any remaining debt is written off when the arrangement ends. An IVA stays on your credit file for 6 years from the date it is approved, which can affect your ability to get credit during that time.

What does IVA stand for?

IVA stands for Individual Voluntary Arrangement. It is a formal insolvency process governed by Part VIII of the Insolvency Act 1986, available to people in England, Wales, and Northern Ireland. In Scotland, a similar debt solution is called a Protected Trust Deed.

IVAs are one of the most common forms of individual insolvency in the UK. In 2024, 67,089 IVAs were registered in England and Wales according to the Insolvency Service, accounting for 57% of all individual insolvencies that year.

How does an IVA work?

A licensed insolvency practitioner assesses your income, outgoings, and debts, then draws up a proposal to put to your creditors. For the IVA to go ahead, creditors holding at least 75% of the total debt by value must vote in favour. Once approved, you make agreed monthly payments to the practitioner, who distributes them to your creditors. At the end of the arrangement, any remaining unsecured debt covered by the IVA is written off.

You cannot arrange an IVA yourself – you need a licensed insolvency practitioner to set it up and manage it. You can find more detail on your options for dealing with debts on GOV.UK.

What debts can be included in an IVA?

IVAs cover unsecured debts only. Secured debts (where your home or another asset is used as collateral) cannot be included.

Typically included:

Credit cards
Personal loans
Overdrafts
Store cards
Payday loans
Utility bill arrears

Cannot be included:

Mortgage or secured loan
Student loans
Child maintenance (court-ordered or under the Child Support Act 1991)
Magistrates' court fines
Social Fund loans
TV licence arrears

HMRC debts can often be included in an IVA. HMRC considers IVA proposals on a case-by-case basis. It is more likely to support a proposal if your tax affairs are up to date, you have submitted all returns, and the proposal makes clear you will pay all future tax debts in full and on time. A debt adviser can help you assess whether an IVA is the right option.

How long does an IVA last?

Most IVAs run for 5 years. If you own a home and your equity is £10,000 or more, your IVA will typically run for 6 years rather than 5 from the outset.

Things to consider before getting an IVA

An IVA can freeze interest and charges, stop creditor action, and result in some of your debt being written off at the end. But there are significant consequences to weigh up:

Your credit file will show the IVA for 6 years from the start date
Your details will be added to the public Individual Insolvency Register
Most IVA terms restrict you from taking on more than £500 of new credit without your insolvency practitioner's written permission
If you own a home, your equity position may be reviewed
Insolvency practitioner fees are taken out of your monthly contributions
If you miss payments, the IVA can fail and you may face bankruptcy

An IVA is not right for everyone. Before making any decisions, it is worth getting free debt advice from impartial charities like StepChange.

How does an IVA affect your credit score?

This is one of the most significant consequences of an IVA, and one of the most important things to understand before entering one.

Your credit file

The IVA is recorded on your credit file as soon as it is approved. It remains there for 6 years from the start date, not the date you finish paying.

This means if your IVA runs for 5 years, it stays on your file for 1 year after your final payment, though it may be marked as ‘completed’ or ‘satisfied’.

During this period, mainstream lenders are unlikely to accept your application.

Default notices

Most debts included in your IVA will be marked as ‘defaulted’ on your credit file, either before the IVA starts or as part of the process. Each default stays on your file for 6 years from the date the account defaulted. This is a separate mark from the IVA entry itself, and the two timelines may not align.

The Individual Insolvency Register

Your IVA will also be listed on the Individual Insolvency Register, a public record managed by the Insolvency Service. Credit reference agencies Experian, Equifax, and TransUnion use this to update your file. The entry is removed from the register 3 months after your IVA ends, though the record on your credit file remains until the 6-year mark.

Borrowing during an IVA

Most IVA arrangements include a condition restricting you from taking on more than £500 of new credit without written permission from your insolvency practitioner. In practice, borrowing at all during an active IVA will be difficult as many standard lenders will not accept applications from someone with an active IVA on their file.

After your IVA completes

Once you have made your final payment, your insolvency practitioner will issue a Completion Certificate confirming the arrangement is finished. It is worth contacting the main credit reference agencies (Experian, Equifax, and TransUnion) directly with a copy of your certificate to confirm your IVA status has been updated from ‘active’ to ‘satisfied’. The ‘satisfied’ status looks more positive to lenders than an active IVA.

How can I improve my credit score after an IVA?

Once the 6-year period has passed and the IVA drops off your credit file entirely, rebuilding your score is very achievable. There are also steps you can take before that point, though progress may be limited while the entry is still visible.

1. Register on the electoral roll

This is the simplest step and one of the fastest ways to add a positive signal to your profile. Lenders use the electoral roll to confirm your identity and address. If you are not currently registered, do so at your current address as soon as possible.

2. Use a credit builder card responsibly

A credit card designed for people with bad credit can be an effective tool for rebuilding your score over time, as long as it’s used responsibly. If you use it for small, everyday purchases and pay the full balance each month, you can demonstrate to lenders that you can manage credit without accumulating debt.

3. Avoid multiple applications in quick succession

Each credit application leaves a hard search on your file. Several hard searches in a short period signals financial stress to lenders. Space out any applications and use eligibility checkers where available – these only leave a soft search that does not affect your score.

4. Understand what affects your score

If you want to know more about what counts as a bad credit score and how lenders assess your profile, our guide walks through the key factors. You can also read about how long missed payments stay on your credit report. Understanding these timelines helps you plan your rebuilding steps.

5. Be patient

Credit rebuilding after an IVA takes time. The most important milestone is the 6-year mark, when the IVA and associated defaults drop off your file. Consistent, responsible behaviour in the years leading up to that point (registered on the electoral roll, using credit carefully, paying on time) means you will be in a much stronger position once your file clears.

Read more about how to increase your credit score and what lenders look for.

FAQs

Can I get a mortgage with an IVA?

Getting a mortgage while an IVA is active is difficult. Many high-street lenders will decline outright, and specialist lenders who do consider it may require a larger deposit and charge higher rates. Your chances should improve significantly once your IVA completes and is marked as satisfied, and improve further once the 6-year entry drops off your file entirely.

Can I get a credit card with an IVA?

Standard credit cards from mainstream lenders may be out of reach while an IVA is active. Some credit cards designed for people rebuilding their credit history may be available, though interest rates can be higher than average, and credit limits can be smaller.

Can I pass a credit check with an IVA?

Some specialist lenders and products designed for adverse credit profiles may accept applications. For most mainstream products, like standard credit cards and high-street mortgages, you are less likely to be accepted.

How much does an IVA cost?

Insolvency practitioners charge fees for setting up and managing your IVA. These are not paid separately – they are taken from your monthly contributions before the money reaches your creditors. The total varies depending on the provider and the size of your debt, so ask your insolvency practitioner to break down their fees clearly before proceeding.

What is the difference between an IVA and a DMP?

A debt management plan (DMP) is an informal arrangement, usually managed by a debt charity, where you make reduced monthly payments to your creditors. Unlike an IVA, a DMP is not legally binding, meaning creditors can still add interest or take further action. A DMP also does not write off any remaining debt at the end.

An IVA is a formal insolvency process that legally freezes interest, stops creditor action, and writes off remaining debt, but it carries a more significant and longer-lasting impact on your credit file. You can read more about how to get out of debt and the different options available.

There are a range of financial products available that may suit your needs. We encourage you to research your options carefully and consider seeking independent financial advice before making any decisions. This blog is for informational purposes only and does not constitute financial advice.

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