A guide for individuals
Individual Voluntary Arrangements: how an IVA works
An IVA can provide a structured way to deal with unaffordable debt, but only where the payments proposed are sustainable and it is genuinely more suitable than the alternatives. It normally runs for five or six years. This guide sets out how one is built, how creditors decide, what it costs, how the current protocol treats the family home, and what happens when circumstances change — as over six years they usually do.
Speaking to us does not commit you to an IVA. If another solution suits you better — including one that costs you nothing — we will tell you so.
Scope, and free advice
This guide covers IVAs for individuals in England and Wales. Scotland and Northern Ireland have separate personal insolvency procedures; obtain advice under the applicable jurisdiction. It is general information, not personalised insolvency, legal, tax or financial advice. No guarantee is given as to creditor approval, any particular write-off or monthly payment, protection of any asset, successful completion, acceptance of a variation, or any particular outcome for a family home.
Free, regulated debt advice is available to you regardless of whether you instruct anyone. MoneyHelper and the free debt advice charities will give you an independent view at no cost, and the government’s Breathing Space scheme may give you time to take it. We would genuinely rather you used them first than entered an arrangement that was never going to work.
What an IVA is
An IVA is a formal agreement between an individual and their creditors to repay all or an agreed proportion of their debts. It is proposed through a licensed insolvency practitioner and built on your assets, debts, income and reasonable expenditure. Creditors consider it and vote. If the required majority approves it, and you accept any modifications, the arrangement binds the relevant creditors; you then make regular contributions, or provide another agreed source of funds, and an insolvency practitioner supervises compliance.
On successful completion, the debts included are dealt with according to its terms. An IVA is recorded publicly and affects your credit record. Failure leaves you exposed to creditor action and potentially to bankruptcy.
One point worth being clear about at the outset: an IVA does not become effective because someone signs an application form. It requires a proposal prepared with a nominee, a creditors’ decision, and your acceptance of any modifications creditors put forward.
Protocol IVAs and bespoke IVAs
Protocol IVA
Follows the standard framework agreed between insolvency practitioners and participating creditors — currently the IVA Protocol 2025, which applies to qualifying consumer IVAs proposed under that framework.
It sets standard provisions on suitability, duration, affordable contributions, the family home, annual reviews, additional income, payment difficulties, fees, completion and failure. Under the protocol, practitioners and creditors agree not to propose modifications to the standard terms unless exceptional circumstances exist.
Bespoke IVA
May be required where your circumstances do not fit the protocol: self-employment, irregular income, complex assets, a proposal depending on property, investments or third-party funds, an unusual creditor position, a lump-sum or asset-based proposal, or where the standard terms simply would not produce a workable outcome.
Bespoke does not mean unregulated. The legislation, professional standards and creditor approval requirements apply either way.
Could a protocol IVA be suitable?
Guiding characteristics under the protocol
- Regular, sustainable income other than state benefits or a state pension.
- Multiple debts totalling £7,000 or more.
- Uncomplicated assets.
- Unable to repay the debts in full within the proposed period.
- Not eligible for a Debt Relief Order.
- Sufficient disposable income for sustainable contributions.
- Willing to give full financial disclosure.
- Able to maintain household, tax and secured-debt payments throughout.
These are guiding characteristics, not an eligibility checklist. Meeting them does not make an IVA suitable for you.
Signals it is the wrong instrument
- You qualify for a Debt Relief Order.
- Debts below the usual £7,000 level.
- No reliable surplus income, or income likely to fall.
- Reliance mainly on benefits, with no sustainable contribution.
- Bankruptcy would be shorter, cheaper or otherwise more appropriate.
- The debts could be repaid in full through an affordable plan.
- Most of the debts cannot legally be included.
- Disputed debts; investments; an expected lump sum.
- Sole trader with trade debts.
- Very high property equity, or an interest in more than one property or a buy-to-let.
- You would need to borrow to keep up the payments.
An IVA should only be proposed after every suitable alternative has been explained and compared.
The process, step by step
1
Confidential initial assessment
Debts, assets, income, expenditure, home ownership, employment — and every alternative solution. Free, and it commits you to nothing.
2
Complete financial information gathered
Creditor statements, bank records, income evidence, household expenditure and asset details. A credit history search is carried out, and proportionate enquiries made into income, expenditure, assets and liabilities.
3
Affordability assessed
A sustainable contribution calculated from realistic income and reasonable expenditure, using the Standard Financial Statement and reflecting the whole household where appropriate. The payment must be sustainable for the full term and must not cause hardship.
4
Alternatives compared
The expected IVA outcome set against bankruptcy, a DRO, a Debt Management Plan and the other options open to you — and your reasons for choosing an IVA documented.
5
The practitioner acts as nominee
The nominee helps formulate the proposal and assesses whether it has a reasonable prospect of approval and implementation. You should receive the key facts document, and a copy of the protocol, before you sign anything.
6
Proposal signed and circulated
Creditors receive the proposal, the financial information, the comparison with the alternative, and the details of fees and how your payments will be split between fees and dividends.
7
Creditors vote
Creditors may approve, reject or propose modifications. Under the protocol, creditors should avoid modifications except in exceptional circumstances.
8
The IVA takes effect
If the required majority approves and you accept any agreed modifications, the arrangement begins.
9
The supervisor administers it
Receiving contributions, reviewing circumstances, adjudicating creditor claims and distributing available funds as dividends after deduction of fees.
10
Annual reviews and changes
Income and expenditure reviewed around each anniversary, and contributions adjusted in accordance with the terms.
11
Completion, or failure
Successful compliance leads to a completion certificate. Unresolved breach may result in termination.
How long does approval take? Case-specific, and we will not quote a fixed period. It depends on how quickly complete information is provided, whether creditor balances are known, the complexity of assets and debts, self-employment, property valuations, the reliability of income, tax returns and accounts, whether urgent creditor action is underway, whether Breathing Space or an interim order should be considered, and any creditor modifications. Creditors must have sufficient notice to consider and vote. Where legal action is already underway, take advice immediately — starting an IVA enquiry does not stop enforcement.
How an IVA is approved, and who is bound
An IVA is approved where at least 75% by value of the creditors participating in the decision and voting approve the proposal. The threshold is based on the value of debt among those who vote — not the number of creditors, and not necessarily 75% of everything you owe. Creditors may vote for, against, or abstain, and may propose modifications, which you must understand and accept before proceeding. Additional voting rules prevent associated or connected creditors from improperly controlling the outcome. A court does not normally decide whether an IVA is approved.
An approved IVA normally binds the unsecured creditors who were entitled to vote — including those who approved it, those who voted against, those who did not vote, and, subject to the legislation and the terms of the proposal, those entitled to vote who were not initially identified.
It is not true that "all creditors are bound"
- Secured creditors are not normally bound in relation to their security without consent.
- Ongoing mortgage, rent and hire-purchase payments normally continue.
- Some debts cannot be included or released.
- Post-IVA debts are not automatically included.
- Joint creditors may continue pursuing a co-debtor.
- Guarantors are not automatically protected.
Which debts can and cannot be included
Normally can be included
- Credit cards, personal loans and overdrafts
- Catalogue and buy-now-pay-later balances
- Council tax and utility arrears
- Personal tax liabilities
- Benefit overpayments
- Trade debts and sole-trader liabilities
- Personal guarantees that have crystallised
- Debts to friends or family
Excluded or treated separately
- Secured lending, to the extent of the security
- Ongoing mortgage payments and current rent
- Student loans
- Court fines
- Child maintenance and certain family-proceedings debts
- Certain Social Fund loans
- Debts arising from fraud
- Certain personal injury liabilities
- Post-approval debts, and others excluded by legislation
The legal nature, timing and terms of each liability have to be checked — nothing in the left-hand column is certain to be included in every case, and treatment may depend on the proposal, creditor consent and the law.
Five years, or six
Under the IVA Protocol 2025, a protocol IVA is normally proposed for 60 months — or 72 months where you hold a beneficial interest in a family home worth £10,000 or more, in place of releasing that equity. That is a long commitment, and it is the thing most worth being realistic about before you begin.
| IVA stage | General timing |
|---|---|
| Assessment and preparation | Case-specific |
| Creditor decision | After the proposal and the required notice |
| Protocol IVA, lower or no home equity | Normally 60 months |
| Protocol IVA, beneficial interest £10,000+ | Normally 72 months, in lieu of equity release |
| Payment holidays or arrears | May extend the term — normally by up to 12 further months to recover the shortfall |
| Completion certificate | Issued as soon as possible after all final actions are concluded |
60 and 72 months are the protocol’s standard terms, not universal statutory periods. A bespoke IVA may use a different term, and a lump-sum arrangement operates differently from a monthly-contribution one. A formal variation approved by creditors may create a longer extension.
The family home under the 2025 protocol
This is the change most worth understanding, because it differs from how older IVAs commonly dealt with property. A protocol IVA will not include any proposal requiring you to realise your interest in a family home to fund the arrangement. The home is excluded, and there is no requirement to review the equity value again once the IVA is in force.
- A valuation is obtained at or before the start. It is based on a reasonable assessment by you — an online source is acceptable — and verified by the practitioner; where the valuation is a range, the mid-point is used.
- Available equity is calculated using 85% of the property’s value, less any secured borrowing such as a mortgage.
- If your individual beneficial interest is under £10,000, the proposal records the figures and confirms the home is excluded. The standard term is 60 months.
- If it is £10,000 or more, the term extends to 72 months in lieu of your equity interest, and the proposal must explain why excluding the home is reasonable in your circumstances — which may take account of your ability to access secured lending, your age, and whether your household would remain financially sustainable if you had to sell or move.
- For a jointly owned property under interlocking IVAs, each person’s share is considered separately and the £10,000 threshold is assessed separately for each. Joint ownership does not necessarily mean equal beneficial interests.
- Where a home has very high equity, or you hold an interest in more than one property or a buy-to-let, a protocol IVA is unlikely to be appropriate and a bespoke IVA should be considered alongside other solutions.
Three caveats that matter
First, these provisions apply to a qualifying protocol IVA under the 2025 framework. Older IVAs may contain different remortgage or equity-release clauses — if you already have an IVA, read its terms rather than this guide. A bespoke IVA may also treat property differently.
Second, the mortgage and any secured borrowing must continue to be paid. An IVA does not protect a home from a lender enforcing its security if those payments stop.
Third, if you voluntarily sell the property while the IVA is in force and the arrangement later fails, creditors may investigate how the proceeds were used and may take action to recover funds. Discuss any sale with the supervisor first.
Payments, and other assets
Payments are based on sustainable disposable income, drawn from a household budget prepared using the Standard Financial Statement. The assessment takes in net wages, self-employed drawings or profits, benefits and pensions, and a partner’s fair contribution to joint household costs on one side; and rent or mortgage, utilities, food and household costs, clothing, travel and vehicle costs, childcare, medical and disability needs, insurance, tax and reasonable contingencies on the other. All state benefits count as income — and where disability or caring-related benefits are included, the associated costs must be included as expenditure too.
Reasonable living costs must be included: the payment is not set at whatever creditors would prefer. It must be sustainable for the whole term and must not cause hardship, and you should never need to borrow in order to make a contribution. There is no universal minimum monthly payment in legislation, and any online calculator that produces one should be treated with caution. Reasonable pension contributions can normally continue, though additional voluntary contributions are a different matter.
Other assets. An IVA may allow more control over assets than bankruptcy, but the proposal has to disclose and deal with them transparently — savings, investments, additional properties, valuable vehicles, business assets, shares, trust interests, endowment policies, claims and compensation, money owed to you, and overseas assets. Depending on the proposal an asset may be excluded, may need to be sold, may have its value introduced by a third party, or may affect the contribution or the duration; the supervisor’s consent may be required before any disposal. Nobody can promise you that every asset can be retained.
Fees, and where your payments go
There are normally nominee fees for assessing, preparing and obtaining approval of the proposal, supervisor fees for administering the arrangement, and expenses and disbursements. Under a protocol IVA these are paid from your contributions, not as a separate upfront payment.
The point most people are not told clearly
Because fees come out of the contributions, your early payments may go substantially towards fees rather than to your creditors. That is not hidden or improper — it is how the procedure is funded — but it matters, because it means an IVA that fails early can leave you having paid a good deal without much having reached your creditors.
Your proposal must set out how payments will be split between fees and dividends, with a schedule of when those payments are expected. Creditors approve or modify the fee basis. Ask for that schedule, and read it, before you sign. If any adviser cannot explain it to you plainly, that itself is information.
How much debt is written off? There is no standard or guaranteed percentage, and we will not quote one. The outcome depends on your total debt, your contributions, the duration, any asset or additional-income contributions, windfalls, fees, creditor modifications and whether the IVA completes. What the proposal must show is the estimated total paid in, the fees, the other costs, the estimated amount available to creditors, the estimated dividend, and the comparison with bankruptcy or the relevant alternative.
Annual reviews, pay rises and additional income
The supervisor normally reviews income and expenditure around each anniversary. You may need to provide payslips, a P60, bank statements, benefit information, self-employed accounts, evidence of household expenditure, and details of any change in employment or family circumstances. Contributions may increase where disposable income has risen, and may potentially reduce where circumstances have deteriorated. Failing to co-operate with a review may constitute a breach and could lead to termination.
A pay rise does not mean the whole increase is taken. The supervisor has to consider the increase in net income, changes in tax and pension deductions, increased household expenses, and inflation and other reasonable changes in expenditure — and then apply the standard terms. Under the standard terms an increase in disposable income is normally shared rather than taken in full.
Additional income — overtime, bonuses, commission — must be disclosed. The standard terms normally allow you to keep additional income up to a stated percentage of your usual take-home pay, with a proportion of qualifying additional income above that allowance paid into the arrangement, subject to disclosure and payment deadlines. Failing to disclose additional income may be a breach. The intention is not that you lose every pound you earn above your normal wage.
We have deliberately not printed the specific percentages and deadlines here. They sit in the standard terms and conditions annexed to the protocol, and they are exactly the sort of figure that should be read from your own proposal rather than from a guide. Ask us, or your supervisor, for the precise provisions that apply to your arrangement — and expect a straight answer.
When circumstances change
If income falls, or costs rise
Contact the supervisor immediately. Depending on the terms the options may include a temporary payment holiday, a reduction in contributions, extending the arrangement, a formal variation, a third-party contribution, early settlement, or termination where the IVA is no longer viable.
The supervisor has discretion to allow payment holidays of no more than the equivalent of nine months’ payments in total over the whole arrangement without going back to creditors, with the term then extended by up to twelve further months to recover the shortfall. The supervisor may also reduce your regular contribution by up to 20%, cumulatively, without a creditor decision. Beyond that, a variation needs creditor approval.
Windfalls, inheritances, redundancy
You must tell the supervisor about material changes in your assets or financial circumstances — an inheritance, a lottery or gambling win, a tax refund, a legal settlement, compensation, a valuable gift or an unexpected lump sum. Depending on the terms, some or all of the value may need to be paid in; payments are normally capped at what would pay the debts, fees and any applicable interest in full. Receiving a lump sum does not usually end the IVA by itself, and the timing of the entitlement may matter.
On redundancy, tell the supervisor promptly, provide details of the payment, and keep them updated on your employment. The standard terms normally let you retain an amount equivalent to several months’ net take-home pay, with any qualifying excess paid in; payment breaks may be available while you look for work. Ask for the precise provisions in your own arrangement.
Variations. A variation changes the terms of an existing IVA — usually because income has reduced, essential expenditure has risen, illness or disability has affected affordability, employment has been lost, a third party has offered a lump sum, more time is needed, an asset or liability has changed, or early completion is proposed. Some limited changes fall within the supervisor’s discretion; material changes normally require creditor approval. No variation is guaranteed. A payment holiday is also not a free month — the term is normally extended to make it good.
Missed payments, failure, early completion
A missed payment is dealt with according to the terms and the extent of the breach. The supervisor should review the circumstances and establish the reasons, which are documented and may be shared with creditors. They may contact you, agree a remedy period, permit a payment holiday, extend the arrangement, reduce payments within the permitted discretion, seek a variation, issue a breach notice, terminate the IVA, or petition for bankruptcy where authorised. One temporary problem does not necessarily cause immediate failure — early communication is what makes the difference.
There is a specific safeguard worth knowing: where a breach occurs before the first payment to creditors, the supervisor must record whether the IVA was the right solution at all, having reviewed the case in full. If it was not the most suitable solution, or there was evidence that such a breach was likely, payments made should be refunded and the arrangement terminated. Where termination happens, the supervisor should also point you towards free, regulated debt advice.
If the IVA fails, creditors regain the right to pursue outstanding balances, interest and charges may become payable under the terms, and renewed court action or a bankruptcy petition becomes possible. Payments already made are not normally returned, and because early contributions may have gone substantially towards fees, you could still owe a significant amount. Joint debtors and guarantors may already have been pursued. Failure does not automatically make bankruptcy inevitable, but it does make urgent advice necessary.
Early completion may be possible where a third party offers an acceptable lump sum, where sufficient funds become available to satisfy all obligations, or where creditors approve an appropriate variation. Paying the remaining monthly contributions early is not always enough on its own: creditors may take account of changes in circumstances and asset entitlements, the source of third-party funds must be disclosed, an offer may be rejected, and where sufficient funds exist creditors may expect the debts, fees and applicable interest to be paid in full.
Completion, and what it releases
Completion happens when all agreed payments have been made and all other obligations complied with in full. The supervisor completes the final review, ensures the required payments and asset contributions have been received, makes or arranges final distributions, issues a completion certificate, informs creditors, and completes the statutory reporting. Under the protocol the certificate is issued as soon as possible after all final actions have been concluded. Where a full and final settlement variation has been accepted, the IVA completes once the payments under that variation have been made and the other obligations met.
On completion you are released from the debts included in the IVA, according to its terms. But joint borrowers remain liable for joint debts, excluded debts remain payable, your credit record does not clear immediately, and the Individual Insolvency Register is updated after completion rather than on the day.
Joint debts, work, and your records
Joint debts and guarantors. An IVA protects only the person whose proposal is approved. On a joint and several debt the creditor may continue pursuing the other borrower for the full outstanding balance; the debt is not divided in half, though payments through the IVA reduce the overall balance. A guarantor is not automatically protected either, and the guarantee terms need reviewing. Where two people have closely connected finances, interlocking IVAs are sometimes considered — but each remains a separate legal proposal. Whoever else is liable should take their own advice.
Does it stop creditor action? Once approved, creditors bound by the IVA cannot normally pursue the included debts outside its terms. But an initial enquiry stops nothing, and preparing a proposal does not create protection by itself. Secured creditors retain rights over their security, excluded creditors may continue enforcement, joint borrowers and guarantors remain exposed, and post-IVA debts are not protected. Existing court or bankruptcy action may require additional steps, and an IVA does not automatically cancel a bankruptcy petition. Breathing Space or an interim order may be worth considering while advice is taken or a proposal prepared, subject to eligibility.
Employment, business and directorships. An IVA does not ordinarily prevent you from remaining employed, working as a sole trader, or acting as a company director. But employment contracts may contain disclosure requirements, regulated professions have their own rules, and financial services, legal, accountancy, public office and trustee roles may be affected — as may company articles or finance agreements. Check with your employer or regulator rather than assuming. For a sole trader, an IVA can work, often as a bespoke proposal, but it needs reliable trading forecasts and must account for tax liabilities, seasonal income, business assets, employees, leases and finance agreements, supplier credit, HMRC compliance and the drawings you actually need to live on. It must not be built on unrealistic future income, and you remain responsible for ongoing tax and new liabilities.
Credit and privacy. An IVA is entered on the public Individual Insolvency Register, normally removed three months after it ends, and appears on your credit file, normally for six years from the start date. If the arrangement runs longer than six years it may remain visible until completion and records are updated. New credit will be difficult, and under the standard terms you normally need the supervisor’s consent before obtaining credit above a stated threshold, subject to exceptions. An IVA may affect mortgages, tenancy applications and insurance instalments. Nobody can offer you confidentiality or anonymity.
An IVA compared with the alternatives
| Option | Typical suitability | Duration | Creditor approval | Public record |
|---|---|---|---|---|
| IVA | Reliable sustainable income, multiple debts, assets worth dealing with flexibly | Normally 60 or 72 months | Yes — 75% by value of those voting | Yes |
| Debt Relief Order | Eligible person with qualifying debt, few assets, little surplus income | Normally 12 months | No | Yes |
| Bankruptcy | Where repayment is unrealistic and other routes are unavailable or worse | Normally 12 months to discharge; assets and income payments may continue longer | No | Yes |
| Debt Management Plan | Where debts can be repaid in full over a longer period | Until repaid | Informal — binds nobody automatically | No |
| Informal settlement | Access to a lump sum, few creditors | As agreed | Depends entirely on agreement | No |
| Breathing Space | Anyone needing time to take advice and decide | A defined short period | No — accessed through a debt adviser | Registered, not public in the same way |
Debt Relief Order eligibility — figures reviewed 21 August 2026
At the review date, the official criteria include total qualifying debts below £50,000, assets below £2,000, a vehicle worth below £4,000, and usually less than £75 monthly surplus income. There is currently no application fee, and applications are made through an approved intermediary — usually a free debt advice service.
These figures change and must be checked on GOV.UK. The protocol is explicit that someone who meets the DRO criteria is unlikely to be suitable for a protocol IVA. A DRO is normally far shorter and costs nothing — if you may qualify, that is where the conversation should start, and we will tell you so.
What we will need
Incomplete records should not stop you having a first conversation. Full and accurate disclosure does become essential before a proposal can be made — and failing to provide accurate information about assets, debts, income and expenditure can result in termination of the arrangement, and potentially in criminal proceedings.
- Complete creditor list and recent statements
- Bank statements
- Payslips and P60
- Benefits and pension income
- Household expenditure
- Mortgage and secured-loan statements
- Property valuation
- Tenancy agreement
- Vehicle and finance information
- Savings and investments
- Pension information
- Business accounts and forecasts
- Tax liabilities and returns
- Personal guarantees
- Joint debts
- Court claims, statutory demands or petitions
- Previous debt arrangements
- Expected redundancy, inheritance or compensation
- Assets sold or transferred
- Payments to relatives or selected creditors
- Employment and professional-regulatory information
- Dependants, disability and caring requirements
Frequently asked questions
What is the difference between a protocol and a bespoke IVA?
A protocol IVA follows the standard framework agreed between practitioners and creditors — currently the IVA Protocol 2025 — with standard terms on duration, the family home, reviews, additional income and fees. A bespoke IVA is used where those standard terms would not work: self-employment, irregular income, complex assets, or a proposal built on property or third-party funds. Both are subject to the same legislation, professional standards and creditor approval requirements.
What is the minimum debt for an IVA?
There is no statutory minimum, but the protocol treats multiple debts totalling £7,000 or more as a guiding characteristic and says protocol IVAs are not suitable for people with very low levels of debt. Where debts total less than £7,000 and an IVA is still pursued, the proposal must clearly explain why it is the most appropriate solution.
Can I have an IVA if I qualify for a DRO?
The protocol says someone meeting the DRO criteria is unlikely to be suitable for a protocol IVA, and that if one is pursued anyway the reasons must be clearly explained in the proposal. A DRO is normally much shorter and has no application fee. If you may qualify, that is where we will start.
Can creditors change my proposal?
They may propose modifications, and you must understand and accept them before proceeding. Under the protocol, practitioners and creditors agree to avoid modifications to the standard terms unless exceptional circumstances exist — one of the aims of the framework is to reduce them. Where a creditor votes against a protocol-compliant proposal, its reasons should be disclosed and documented.
Is there a minimum monthly payment?
Not in legislation. The payment is whatever is genuinely sustainable from your disposable income after reasonable living costs, and it must remain sustainable for the whole term without causing hardship. The protocol also warns that protocol IVAs are not suitable for people with very low levels of disposable income.
Why might a homeowner’s IVA last six years?
Because under the 2025 protocol the extra twelve months stands in lieu of releasing equity from the family home. Where your individual beneficial interest is £10,000 or more — using 85% of the property’s value less secured borrowing — the term extends to 72 months instead of you being asked to remortgage or sell.
What if I have an older IVA with an equity-release clause?
Then your own terms govern, not the current protocol. Older IVAs commonly required an attempt to remortgage towards the end of the term, with an extension if that was not possible. Read your proposal, or ask your supervisor to explain the specific clause. Do not assume the 2025 provisions apply to an arrangement approved earlier.
Is the equity reassessed during the IVA?
Under the 2025 protocol there is no requirement to review the equity value again once the protocol IVA is in force. A rising property market during the arrangement does not, of itself, change what you are asked to pay.
Can I keep my car?
Usually, where it is reasonable and needed, and its cost is reflected in the budget. A high-value vehicle, or one with significant equity, may need to be dealt with in the proposal. Vehicles on finance are subject to the agreement’s terms, and the payments have to be affordable alongside the contribution.
What happens to savings and investments?
They must be disclosed and dealt with transparently in the proposal. The protocol treats investments — shares, bonds, invested savings — as an indicator that a protocol IVA may not be suitable, so a bespoke proposal may be more appropriate. Depending on the terms an asset may be excluded, sold, or have its value introduced by a third party.
What happens if I get a pay rise?
Not the whole increase is taken. The supervisor considers the rise in net income, changes in tax and pension deductions, increased household costs and inflation, and then applies the standard terms — under which an increase in disposable income is normally shared rather than taken in full. Ask for the precise provision in your own arrangement.
How are overtime and bonuses treated?
They must be disclosed. The standard terms normally allow you to keep additional income up to a stated percentage of your usual take-home pay, with a proportion of qualifying income above that allowance paid in, subject to disclosure and payment deadlines. Failing to disclose it may be a breach. The intention is not that you lose everything you earn above your normal wage — read the exact figures in your own proposal.
What happens if I receive an inheritance?
Tell the supervisor. Depending on the terms, some or all of the value may need to be paid into the arrangement, normally capped at what would pay the debts, fees and any applicable interest in full. Receiving a lump sum does not usually end the IVA by itself, and the timing of the entitlement may matter.
What happens if I am made redundant?
Tell the supervisor promptly, provide details of the payment, and keep them updated on your employment. The standard terms normally let you retain an amount equivalent to several months’ net take-home pay, with any qualifying excess paid in, and payment breaks may be available while you look for work. If sustainable employment cannot be found, the IVA may need to be varied or terminated.
Can I take a payment holiday, or have my payments reduced?
The supervisor has discretion to allow payment holidays of no more than the equivalent of nine months’ payments in total across the arrangement without going back to creditors, with the term extended by up to twelve further months to recover the shortfall. They may also reduce your regular contribution by up to 20%, cumulatively, without a creditor decision. Anything larger needs creditor approval through a variation.
Can an IVA be varied, or finish early?
Both are possible but neither is guaranteed. A variation changes the terms and, if material, needs creditor approval. Early completion may be possible where a third party offers an acceptable lump sum or sufficient funds become available — but simply paying the remaining monthly contributions early is not always enough, the source of third-party funds must be disclosed, and creditors may reject an offer.
Will I get my payments back if it fails?
Not normally. There is one important exception: where a breach occurs before the first payment to creditors, the supervisor must review whether the IVA was the right solution at all — and if it was not, or there was evidence the breach was likely, payments made should be refunded and the arrangement terminated. Otherwise, contributions already made stay in the arrangement.
Is my spouse or partner protected?
Not by your IVA. Their own debts are unaffected, and on any joint and several debt the creditor may pursue them for the full outstanding balance. Their contribution to household costs will feature in the budget, but the arrangement is yours alone. If you have significant joint debts, they should take their own advice — and interlocking IVAs may be worth considering.
Can an IVA stop a bankruptcy petition?
Not automatically. An IVA does not cancel an existing petition by itself, and beginning an enquiry stops nothing. Where a petition has been presented, additional steps may be needed and the position is urgent — take advice immediately rather than assuming a proposal will resolve it.
Is an IVA better than bankruptcy?
Neither is better in the abstract, and we would be wary of anyone who says otherwise. Bankruptcy normally lasts twelve months to discharge, requires no creditor approval, and is often cheaper — but assets vest in a trustee and income payments can run for three years. An IVA lasts five or six years and needs creditor approval, but may allow more control over assets, including the family home. The right answer depends on your assets, income, employment and family circumstances.
What is Breathing Space?
A government scheme giving temporary protection from most creditor action, interest and charges while you take debt advice and decide what to do. It is not a repayment arrangement and it writes off nothing — but it can be a sensible first step, and it is accessed through a debt adviser rather than applied for directly.
Next step
An IVA is a long-term commitment, and it should feel like a considered decision.
We will help you understand whether it is affordable, how it compares with the alternatives, and what it would mean for your home, income and family. If something else suits you better — including free advice that costs you nothing — we will say so. Your initial consultation is free and confidential.
01472 250001 · enquiries@crginsolvency.co.uk
Free, independent debt advice is also available from MoneyHelper and the free debt advice charities, and the government’s Breathing Space scheme may give you time to take it.
CRG Financial Recovery. Company number 04948177. Licensed insolvency practitioners, regulated by the Insolvency Practitioners Association. Members of R3. This guide covers IVAs for individuals in England and Wales; Scotland and Northern Ireland have separate personal insolvency procedures and advice should be obtained under the applicable jurisdiction. It is general information, not personalised insolvency, legal, tax or financial advice, and no guarantee is given as to creditor approval, any particular percentage of debt being written off, any particular monthly payment, protection of any asset, successful completion, acceptance of a variation, any particular outcome for a family home, that every creditor will stop contact immediately, or that an IVA will always be better than bankruptcy. Legal, procedural and monetary content reviewed 21 August 2026 against the IVA Protocol 2025 and its standard terms, GOV.UK guidance on IVAs, Debt Relief Orders, Debt Management Plans, Breathing Space and bankruptcy, the Insolvency Act 1986 and the Insolvency (England and Wales) Rules 2016. Voting thresholds, associated-creditor rules, protocol suitability criteria, home-equity calculations, DRO limits, additional-income provisions, variation powers, completion periods and financial thresholds should be re-verified before reliance.
Related
The Individual Voluntary Arrangement page
This guide sits alongside our main page on the subject, which covers the same ground more briefly and links to the rest of the site.
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