Take control of your finances again and lower debt repayments
The aim of IVA Advice is to properly inform and educate you on the advantages and disadvantages of IVA’s (Individual Voluntary Agreements), they are not right for everyone so it is important to understand what it is, how it works and most importantly what happens after you have finished paying it off. In addition to offering free information and advice, we can start the process of getting your own IVA in place – use our free guide to see if you are eligible.
An IVA is suitable if you live in England, Wales or Northern Ireland (if you live in Scotland you will need a Trust Deed) and owe money to multiple creditors. It is important that are able to pay at least £80 per month in repayments and are struggling to meet the current payments. The major benefit of an IVA is that it doesn’t affect you permanently in the same way that declaring bankruptcy does and you could also have up to 90% of your debts written off with your monthly repayments being far lower once they are consolidated. An IVA will stay on your credit file for 6 years, presuming you have completed your repayment schedule thoroughly you will then be debt free. The average time it takes to pay off an IVA is around 5 years, therefore in these circumstances, once you have completed your repayments it would stay on your credit file for an additional year. After this you would be eligible again to apply for mortgages and credit.
An IVA is an official agreement recognised by the court which creditors, loan providers, bailiffs and collections agencies MUST abide to. One of the biggest selling points of an IVA for many people is the peace of mind it gives you, you know that if you make your agreed repayments you can’t and won’t receive any visits from bailiffs or collections agencies as it is illegal.
When you go through the process of applying, the court will take in to account your living costs and monthly outgoings when determining your repayment amount, you can rest assured that you won’t be left with no money. The aim of an IVA is to make it so that it is something you can viably pay back. You may be short of expendable income in the short term but sorting out your finances is essential, once your debts escalate it can be hard to get back on track with the interest levels on many common financial products.
Want to know if you qualify for an IVA?
Here’s the key criteria you'll need to meet:
A resident in England, Wales or Northern Ireland.
You must be over 18 years old
Owe more than £5,000
Be able to repay at least £80 per month
Owe money to two or more creditors
Be struggling financially to meet your existing obligations
"IVA-Advice.org.uk really helped me out when I was going through a tough time in my life. Thankfully, those days are now behind me and i've learnt to be far more responsible with my money. Their customer service team are absolutely top notch."
- Simon A, Portsmouth
Frequently Asked Questions
Find out the answers to the most common questions we receive on IVA's.
We know IVA's can be confusing and the technical terms used are often there to make it seem more complicated than it actually is. We're here to help simplify the process and enable you to clearly understand every aspect of obtaining and paying off an IVA as well as what you can expect afterwards. Read our FAQ's below and if you still have any questions please don't hesitate to contact us and we'll be happy to explain things further.
An IVA is an agreement made between yourself and your creditors that you will pay off the money owed over a set period of time. An IVA is a formal, legal process approved by the court meaning that creditors have to honour it. You will have a set payment schedule based on what you can afford meaning that your monthly repayments will be consolidated in to a lower amount than you are currently paying individually to different creditors. An IVA is a form of insolvency but is different to bankruptcy meaning that you can get a mortgage in the future. The easiest way to sum up an IVA is that as a person you have recognised your debts have got out of control, you want to repay them but you can't at the current repayment rates, which are far too high. It is in the creditors interest as they will be repaid (slower than they would hope to be) rather than losing all of their money through an individual declaring bankruptcy. It is in both parties interests to repay and means that it is possible to get your finances back on track.
An IVA will affect your credit rating whilst it is place and typically for around a year after it ends (depending on the length of your repayment period). An IVA stays on your credit file for 6 years so if it is 5 years of repayments then you will have one additional year at the end to wait. Once this 6 year period has passed you should be eligible for credit again and can obtain a mortgage. It is important to understand that you shouldn't be looking to obtain further credit whilst you have an IVA in place, the IVA is only there as your debts are so severe that borrowing more would only compound the problem further. When you take out an IVA, all of your living costs are taken in to account to come up with your monthly repayment amount therefore it shouldn't be necessary to need further credit. In all likelihood it will be tough and you may not have much disposable income during this period, but if you look at it in the long run, you are far better off by sorting your problems out than letting them get progressively worse until bankruptcy is the only solution.
There is a variety of criteria you must meet to be eligible for an IVA, you can find out in more detail by visiting our 'About IVAs' page. The main eligibility criteria are that you must owe more than £5,000, be able to afford repayments of at least £80 per month, owe money to two or more creditors and be struggling to repay them. Please note that an IVA is also only available to people in England, Wales and Northern Ireland. The equivalent of this in Scotland is a Trust Deed.
An IVA (Individual Voluntary Arrangement) and Trust Deed are effectively the same thing. The difference is that an IVA is only available in England, Wales and Northern Ireland. For Scottish resident they must obtain a Trust Deed. To find out more information on Trust Deeds, please visit our Trust Deed page.
At the end of your IVA you will receive an 'IVA Completion Certificate' showing that your IVA has finished. Your Insolvency Practitioner (IP) will confirm that all payments have been made and send you the certificate, they will also contact creditors to let them know you have now completed it and are eligible for credit again. It is worth checking the public insolvency register to ensure that you have been removed (note that this can take up to 3 months and won't be instantaneous). You will find that your credit score is low once you complete your IVA due to your previous financial difficulties but you can now get to work on building it back up again. Obtain credit responsibly and in the right ways i.e. mobile phone contract or Sky TV and make your monthly payments on time and in full. You will soon find that your credit score starts to increase again.
We have covered the pros of IVA's in some detail elsewhere on the site, the main pros being lowering your monthly repayment amounts, writing off large chunks of your debt, enabling you to get credit still again in the future and also getting bailiffs and debt collectors off your back. Time for the negatives, a high proportion of IVA's are accepted although not always, so whilst you may want one, you might not be able to get it. Whilst the monthly repayments are calculated based on what you can afford and taking living costs in to account, you will need to be capable of living on a tight budget for a few years for it to work. An IVA will stay on your credit file for 6 years, even if you complete it in 5 years, you will have another year with it on your file so your credit score will be affected. Your IVA will be listed on the Individual Insolvency Service register (although this will be removed within 3 months of completing your IVA). Finally, you will need to pay fee's to your Insolvency Practitioner (IP) but these are often included within your monthly repayments so they don't have too much of an effect, there will be no lump sum to pay.
An IVA (Individual Voluntary Agreement) lasts for 6 years on your credit file. Even if you pay it off in 5 years, you will still have it for another year after. Once this is completed you will be removed from the Individual Insolvency register within 3 months and then you can look at re-building your credit score.
If you are struggling to pay the monthly repayment amounts, speak to your IP as a matter of urgency, they may be able to reduce the repayment amount for you. If you can't afford to pay it at all, you IVA will fail and that means that all of your previous debts are back in place again, your IP or the creditors to whom you owe money may take action to make you bankrupt. You will still also have to pay your IP fees for the work they have done so far. If you have low income and don't own a home, bankruptcy may be the best option for you and creditors will often seek this, though they will often first send a statutory demand before filing for bankruptcy. As your IVA has failed they will be able to file for bankruptcy straight away.
Yes. Once your IVA has finished and you have received your completion certificate you will be eligible for credit again. You will find that following the IVA your credit score will be low (due to the problems you had before it) but you can now work on re-building it. Don't try and run before you can walk, if you are looking to do things differently this way round, work on improving your credit score before applying for a mortgage or in all likelihood your only option will be with a lender that specialises in poor credit customers meaning that your repayments will be higher and you are more likely to end up foreclosing.
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