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Individual Voluntary Arrangements for dealing with Debt

If you’re struggling with debt, you may have seen adverts that offer to write off all of your debts – you may have even considered taking this path so that you can face the future debt-free.  However, don’t get taken it – it sounds too good to be true.  You know what they say about something that sounds too good to be true – that’s right, it’s not usually true!  It’s a way of persuading somebody with debts to take out a formal solution – or the solution involves spending even more money, delivering yourself even deeper into debt. 

Usually, when a company promises that your debts will be “written off”, what they’re usually offering is an individual voluntary arrangement (IVA) or assisted bankruptcy.   An IVA is a type of insolvency which, if you qualify for it, would mean entering into a legally binding arrangement with your creditors and managed by an Insolvency Practitioner.  These IVAs usually last for five to six years and, in many cases, creditors will agree to write off a percentage of your debt. 

Most debts can be included in an IVA but they are usually used for the following types of debts:

Non Priority Debts

Priority Debts

Charge cards, store cards and credit cards

Council Tax arrears

Bank and building society loans and overdrafts

Tax debts

Personal loans

Electricity and gas debts

Catalogue debts



If you want to include secured loans (such as mortgages or rent arrears) in an IVA, your creditor will have to grant permission for this, which is unlikely in most cases. 

You can include any amount of debt in an IVA as there are no maximum or minimum limits set by law, however, creditors are unlikely to agree to an IVA unless your total debt is more than £10,000.  Any number of debts can be included in an IVA so it’s a viable solution if you have more than three debts and more than two different creditors.  IVAs can be flexible and if you decide that this is the right path for you, discuss it with your insolvency practitioner to ascertain which debts are suitable for an IVA.

If some of your debts are joint owned with another person (such as a spouse or business partner), it may not be appropriate to include them in an IVA because the other person will still be responsible for any debt left at the end of the IVA.  This leftover debt won’t be written off unless this is written into the terms of the IVA - again, your insolvency practitioner can advise you on this (note that you cannot take out an IVA jointly with another person who shares your debt).

There are some types of debt that cannot be included in an IVA and these include:

  • Child support arrears
  • Maintenance arrears ordered by a court
  • Student loans
  • Magistrates’ court fines.

These will have to be dealt with separately, so when taking out an IVA, make sure that you allow enough money to pay these debts when setting the amount to be paid into the IVA.