An individual voluntary arrangement is a formal England and Wales debt agreement proposed through a licensed insolvency practitioner and approved by creditors.
An Individual Voluntary Arrangement (IVA) is a formal agreement under the insolvency framework of England and Wales in which a person proposes to repay all or part of qualifying debts on agreed terms. A licensed insolvency practitioner prepares the proposal, creditors vote on it, and an insolvency practitioner supervises the arrangement if it is approved.
An IVA is neither a generic repayment plan nor an automatic right. It is one of several debt solutions, has fees and long-term consequences, and must be based on the person’s actual income, spending, assets, debts, and ability to comply. Scotland uses different formal debt solutions, and Northern Ireland has its own rules and guidance.
| Party | Main role |
|---|---|
| Consumer | Discloses finances, reviews alternatives, makes the proposal, and complies with approved terms |
| Nominee | Licensed insolvency practitioner who assesses the proposal and puts it to creditors |
| Creditors | Review the proposal, submit claims, vote, and receive distributions if the IVA proceeds |
| Supervisor | Insolvency practitioner who administers the approved arrangement, collects contributions, and distributes funds after applicable fees |
The nominee and supervisor may be the same practitioner, but the roles occur at different stages. The practitioner should explain the available debt solutions, their advantages and disadvantages, the consumer’s responsibilities, and what can happen if the IVA is not approved or completed.
The starting point is a complete financial review, not a sales quotation. The consumer should compare the IVA with informal creditor arrangements, a debt management plan, a debt relief order if eligible, bankruptcy, and any ability to repay directly.
The appropriate comparison depends on disposable income, asset ownership, housing, employment or business circumstances, debt types, creditor mix, and the likely result under each alternative. Free and independent debt advice can help establish that comparison before an insolvency practitioner is appointed.
The consumer provides details of income, reasonable expenditure, assets, liabilities, creditors, and relevant changes expected during the arrangement. The nominee uses that evidence to develop a proposal that identifies:
There is no sound universal payment formula. A proposal must be achievable and affordable, not merely arithmetically capable of producing a higher dividend.
The insolvency practitioner sends the proposal to creditors and arranges the statutory decision procedure. GOV.UK states that the IVA starts if creditors holding 75% of the relevant debt value agree.
Creditors can vote for or against the proposal and may seek modifications. The consumer must understand and consent to modifications before the IVA proceeds. Once approved, the arrangement binds creditors covered by it under the applicable rules, including dissenting creditors.
The consumer makes the agreed contributions and complies with information, review, and asset obligations. The supervisor receives funds, adjudicates creditor claims, deducts approved fees and expenses, and distributes the balance to creditors according to the arrangement.
Income, expenditure, and circumstances may be reviewed during the term. A payment holiday, extension, or material variation is not automatic; the authority and creditor approval required depend on the terms and the change.
After the consumer has met the arrangement’s obligations, the supervisor issues the required completion documentation and the person is released from debts covered by the arrangement under its terms.
If the consumer does not comply, the supervisor may issue breach notices, seek a variation, terminate the IVA, or take another step permitted by the proposal and law. GOV.UK warns that an insolvency practitioner can cancel an IVA for missed repayments and may make the person bankrupt.
The IVA Protocol 2025 is a standard framework for straightforward consumer IVAs. The Insolvency Service states that it must be used for new protocol IVAs proposed on or after 1 July 2025. It standardizes documents and core terms but does not override insolvency law or make an IVA suitable for every consumer.
A bespoke IVA is tailored outside the standard protocol where the consumer’s circumstances do not fit the straightforward framework. Business assets, unusual income, complex property, disputed debts, or other case-specific issues may require different drafting and analysis.
| Question | Protocol IVA | Bespoke IVA |
|---|---|---|
| Main use | Straightforward consumer cases | Cases needing tailored terms |
| Documents and terms | Standard protocol framework | Individually drafted proposal |
| Duration | Commonly regular payments over five or six years | Depends on approved proposal |
| Suitability | Must still be assessed for the individual | Must be justified against alternatives |
| Creditor approval | Required | Required |
Assume a consumer has GBP 42,000 of unsecured debt and, after a documented budget, GBP 410 of sustainable monthly disposable income. A provider quotes a six-year arrangement.
Multiplying GBP 410 by 72 months produces GBP 29,520 of gross contributions. That is not the same as the amount creditors will receive. The proposal must also show practitioner fees and expenses, claim adjustments, any asset or additional-income provisions, and the expected timing of distributions.
The consumer should test the budget rather than focus only on the headline debt reduction:
If the budget leaves no realistic allowance for predictable expenses, the proposal may fail even if creditors initially receive an attractive forecast.
An IVA commonly addresses unsecured debts that arose before approval, but the exact scope comes from the proposal and governing rules. Secured creditors generally retain rights against their collateral unless they agree to different treatment. Ongoing mortgage, rent, utility, tax, child-support, court, and other obligations can have distinct consequences and should not be assumed to disappear.
Asset treatment is also proposal-specific. GOV.UK notes that an IVA can provide more control over assets than bankruptcy, but that does not mean every asset is protected. The 2025 standard terms contain provisions for property, after-acquired assets, windfalls, and other resources. Consumers should understand exactly what is included, excluded, or subject to review.
GOV.UK identifies setup and payment-handling fees and advises consumers to understand the cost before appointing an insolvency practitioner. Fees reduce the funds available for creditor distributions and should be clearly disclosed in the proposal.
An approved IVA is entered on the Individual Insolvency Register. GOV.UK states that the register entry is removed three months after the IVA ends. Credit-reference reporting and access to future credit are separate matters governed by current reporting practices and the consumer’s circumstances, so a fixed outcome should not be promised from the insolvency-register timetable alone.
An IVA can materially affect assets, credit access, creditor rights, and financial options for years. This article is educational and does not recommend an IVA or provide personalized debt, legal, insolvency, tax, or financial advice. Use current official guidance and obtain independent debt advice before entering any formal arrangement.