Individual voluntary arrangement
A binding arrangement with creditors, supervised by a licensed insolvency practitioner.
An IVA is a formal proposal to deal with personal debts through agreed payments, assets or a combination of both. It becomes binding when the required creditor approval is obtained. An insolvency practitioner first acts as nominee and, once approved, normally supervises the arrangement.
The proposal sets the terms
The individual supplies a complete picture of income, essential expenditure, assets and liabilities. The nominee considers the proposed arrangement and alternatives. The proposal explains what creditors would receive, how fees will be paid and what happens if circumstances change.
An IVA is not one standard product. A lump-sum arrangement and a monthly contribution arrangement may work very differently. A headline percentage of debt to be written off says little about suitability without the approved terms, costs and realistic affordability.
Approval and the people bound
Creditors consider the proposal and may seek modifications. The statutory voting rules determine whether it is approved; a person should not assume that agreement from a simple majority by number is enough. The legal effect on creditors follows the legislation and the approved arrangement.
Secured rights and preferential claims have particular protection. An IVA does not automatically release a joint debtor or guarantor. Protection while a proposal is being prepared is also a separate issue: merely discussing an IVA does not stop every creditor action.
Technical detail
The legal framework is Part VIII of the Insolvency Act 1986 and the applicable insolvency rules. Interim orders, voting exclusions, challenges and the treatment of secured creditors require attention to the statutory provisions.
During the arrangement
The supervisor collects agreed funds and applies the arrangement’s distribution and reporting terms. The individual must provide information, report changes and make the required payments. Fees reduce the funds available to creditors and need to be understood at the outset.
A change in income should be raised promptly. The terms may allow a payment adjustment, a temporary break or a formal variation, but none should be assumed. If the IVA fails, creditor enforcement can resume and bankruptcy may follow; payments already made are not ordinarily returned simply because the arrangement ends.
Consumer protocol and completion
The 2025 consumer IVA protocol provides a framework for qualifying straightforward consumer cases. It includes affordability, homeowner and completion provisions. It does not replace the individual proposal, and older IVAs can have different terms.
Completion means satisfying the arrangement’s obligations, not merely reaching an advertised anniversary. The supervisor then completes the required final steps. Public-register and credit-record consequences are separate from completion.
Technical detail
Read the protocol key facts with the approved proposal and modifications. Do not import a newer protocol’s terms into an earlier arrangement without checking its actual contractual and statutory basis.
The process, at a glance
- Assess suitability. Compare bankruptcy, a DRO and other realistic alternatives against affordability and assets.Process stage — practical timing varies
- Prepare the proposal. Set out contributions, asset treatment, fees, reporting and failure provisions.Process stage — practical timing varies
- Creditors decide. The applicable statutory voting rules and any modifications determine approval.Process stage — practical timing varies
- Supervisor administers. Payments, reviews and any variations follow the approved terms.Process stage — practical timing varies
- Complete or terminate. Completion provides the agreed release; failure can restore enforcement rights.Process stage — practical timing varies
Sources & review
Read the source in its own context. Legislation may contain commencement provisions and changes not yet applied to the displayed text. Professional guidance is identified separately from law.
Initial source-based editorial review: 26 Oct 2026. Next scheduled review: 26 Jan 2027. Substantive changes are reviewed before publication.
Original editorial summary checked against the linked official guidance. Individual circumstances and the operative legal documents can change the outcome.
Read the editorial approach and change policy.