An individual voluntary agreement (IVA) is an agreement between you and your creditors to pay your debts back over a certain amount of time. It can help you consolidate your debts into a more manageable package, but will also have a significant impact on your credit score.
An IVA will remain on your credit report for up to six years. During the period of your IVA (usually 60 or 72 months), you’ll only be able to obtain up to £500 worth of credit, and you’ll have to get approval from your insolvency practitioner to do this.
What is an IVA?
An IVA is an agreement between you and your creditors for you to consolidate your debts into more manageable payments. This agreement usually occurs in a meeting. At least 75% of your creditors have to agree to the terms in order for an IVA to be granted.
Your payments will be made to an insolvency practitioner, who will pay creditors on your behalf. Your creditors shouldn’t contact you after an IVA has been agreed. If you default on an IVA, it’s likely you will be made bankrupt.
Will an IVA be visible on my credit file?
Your credit file is a document which displays all information relating to your borrowing history. An IVA is one of the biggest indicators that you’re bad at borrowing money, so it demolishes your credit score and remains on your credit report for up to six years.
You could write off up to 80% of your debts with an IVA
Debt Free Direct can help with debts over £5,000. Use its free online check to see if you are eligible.
Write off unaffordable debt
Lower your monthly payments
Take back control of your finances
Become debt free
IVAs are subject to eligibility and acceptance. Fees may be payable. Click through to find out more.
Yes, you’ll only be able to borrow up to £500 during the course of your IVA. You’ll usually have to get permission from your insolvency practitioner to do that. Even in these cases, your credit score is likely to have taken such a hit that you’ll only be able to access credit from products with really high rates, such as payday loans.
After your IVA has been paid off, you may still struggle to get a loan while it’s still logged on your credit report (six years from the date it started).
The good news is that an IVA is designed to help you pay off your debts. Although your credit score will be affected, it isn’t impossible to get a loan.
Seek advice from a debt adviser to learn if an IVA is suitable for you
Learn how to live within your means during the IVA period (and beyond). The chances are you needed an IVA because you struggled to do this
Borrow money unnecessarily during an IVA
Default on your IVA. This will result in bankruptcy
Megan's loan application and her credit score
Megan had fallen so far behind on her debts that she found she now owed more than she actually owned in cash and assets.
It was suggested she applied for an IVA, and her creditors agreed on the best terms she could actually afford to pay.
It was a struggle, and Megan was unable to borrow any money for six years. However, since then, she was able to rebuild her financial life.
The bottom line
An IVA is often marketed as a positive solution for serious debt problems and an alternative to bankruptcy. It can be the best way out of debt for some people, but in most cases, it will massively impact your credit score for up to six years.
Frequently asked questions
Your eligibility for an IVA depends mostly on how much money you owe, how many creditors you owe and how much spare income you have to contribute to IVA payments. Speak with the Money Advice Service or directly to an insolvency practitioner to learn if you’re likely to be eligible.
The size of your IVA payments will be based on an insolvency practitioner’s assessment of how much you can reasonably be expected to pay back over the 60-month period. You will be expected to try and remortgage your home and hand over any lump sums you have received in order to contribute more to your IVA. However, if the practitioner suggests that some debts should be written off and the creditors agree, this will occur.
An IVA is likely to be a better option than bankruptcy if you own a home, a business or other assets you don’t want to lose. However, it could be argued that bankruptcy is a better option if you don’t own any assets or have a job that will be affected by it.
Read about how different factors can affect your score
Chris Lilly is a publisher at finder.com. He's a specialist in credit-based products including business and personal loans, mortgages and credit cards, and is passionate about helping UK consumers make informed decisions about their borrowing. In his spare time Chris likes forcing his kids to exercise more.
If your credit score is less than ideal, you might be worried about being refused for a business account application. But there are business accounts with no credit checks, sometimes referred to as “guaranteed”, that can offer a solution.
How likely would you be to recommend finder to a friend or colleague?
Very UnlikelyExtremely Likely
Thank you for your feedback.
Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.
finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. finder.com compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.