Should I do an IVA?

We find out more about the IVA debt solution and ask whether it is suitable for you.

An IVA (individual voluntary arrangement) is a formal legally binding debt solution which can be used to write off debt which you cannot afford to repay.

IVAs are popular with over 4000 people using this solution every month to solve their personal debt problems.

However before getting IVA help and starting an IVA there are a number of important things that you need to consider.

How much debt do you have?

You can only include unsecured debts in an IVA. This means that you can include most of your normal consumer debts. However you cannot include secured debts such as a mortgage or secured loan or a car HP.

The amount of unsecured debt that you owe is also important. An IVA debt solution is generally only suitable if you have £12,000 - £15,000 or more of unsecured debt.

However there is no upper limit to the amount of debt you can include.

A significant advantage of an IVA is that it only lasts for five years. Any IVA debt that you have been unable to repay after five years will be written off allowing you to get on with your life.

This may mean that by using an IVA you are able to write off thousands of pounds of your debt.

Are you a homeowner?

If you own your property, you cannot include your mortgage or other secured loans as part of your IVA debts. You have to continue to pay these as normal.

In addition you must agree to release equity from your property if possible to increase the amount that you pay back to your creditors.

If at the end of your IVA there is some equity in your property but you are unable to release it because you cannot get a new mortgage, then it is likely that your IVA payments could be extended by a further 12 months to compensate.

If you are renting your property, you have no need to worry. You can get IVA help and use an IVA debt solution without this affecting your home at all. Your landlord will not be told that you are in an IVA.

Company directors

If you are a company director, getting IVA help may be an ideal way of dealing with your personal debts.

If you use the IVA debt solution, this will have no affect on your ability to continue in your role as a director running your business.

This is a significant advantage of the IVA over personal bankruptcy which would require you to resign from your position for at least twelve months.

In addition, if you personally owe any tax to HM Revenue and customs this can also be included as part of your IVA debts.

Credit rating affected

Individual voluntary arrangements significantly affect your credit rating. The fact that you have started an IVA will be recorded on your credit file and the record will remain there for six years.

Your ability to borrow more money during this time will be severely restricted and even things like taking new car finance or a new mobile phone contract will be much more difficult.

In addition to the affect on your credit rating, once you have taken IVA help and started an IVA, your name will be added to an IVA register called the insolvency register. This is a public record which is available to anyone via the internet.

Anyone can find out that you are using the IVA debt solution by searching the insolvency register.

Do IVA benefits outweigh drawbacks?

An IVA debt solution can be a very good way of solving a difficult debt problem.

One of the significant benefits of the IVA is that it can allow you to write off thousands of pounds of your IVA debts.

However before you start it is vital that you get IVA help from a personal debt expert and understand exactly how the IVA will affect you.

Once you know exactly what an IVA will mean for you only then can you decide whether the benefits you will get from doing one will outweigh the drawbacks.


James Falla is a debt management solutions expert and author. He has fourteen years of experience of implementing individual voluntary arrangements for people who are struggling with personal debt.

In 2004 James co founded Thomas Charles a specialist debt management solutions company where he personally helped over 1000 clients implement individual voluntary arrangements. James is now the managing director of and senior debt advisor for Wilmott Turner Financial Services which operates debt solution websites such as http://www.beatmydebt.com/.

However before you start it is vital that you get IVA help from a personal debt expert and understand exactly how the IVA will affect you.