An IVA may not be suitable in all circumstances.

Fees apply to the service, click here for more details. Your credit rating may be affected. Read more about IVAs here.

IVA Pros and Cons

Outlined below are some pros and cons of an Individual Voluntary Arrangement (“IVA”). These IVA pros and cons will be instrumental in deciding whether it’s the right solution for you.

A woman with IVA pros and a man with IVA cons

Debt may impact a person’s life positively or negatively, depending on how it is managed. For example, some types of debt, if managed correctly, may build your credit score and help you achieve your dreams, such as getting on the property ladder. However, if debts get out of hand, they can take a toll not only on your finances but also on your physical wellbeing.

In this situation, an IVA might be just what you need to regain financial control.

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What is an IVA?

An IVA stands for an Individual Voluntary Arrangement. It is a formal, legally binding arrangement which freezes interest and charges on your unsecured debts, allowing you to pay your creditors an affordable amount over an agreed period. Upon successful completion, any outstanding unsecured debt will be written off. An IVA can protect you from creditors commencing legal action, such as petitioning for your Bankruptcy or making an application to Court for defaulting on payments.

Do I qualify?

An overview of the IVA Pros and Cons

The IVA pros and cons depend on your personal circumstances, however here’s an overview of the pros and cons we’ll cover in this article.


  • An affordable payment
  • Protects your assets
  • Creditors shouldn’t harass you for payment
  • The payment is fixed and reliable
  • Interest rates and charges are usually frozen
  • It’s legally binding
  • Protection from bailiffs and other legal action


  • Effect on employment
  • Affects your credit rating
  • It isn’t private
  • It means following a strict budget
  • If you’re a homeowner, you may need to release equity from your home

If you’d like more information on the IVA pros and cons for you personally, you can click below to submit some information about your circumstances.

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IVA Pros and Cons

Pros of an IVA

There are multiple benefits to an IVA. Here we’ve outlined the details of these advantages so you can see whether an IVA could help you:

A wallet to illustrate paying what you can afford

1. You only pay what you can afford

Your day to day living costs will be taken into account before the payment to your IVA.

A house with a shield in front

2. It protects your assets

Assets such as your home or vehicle are usually protected during an IVA, meaning that you are able to retain these, provided they are of a reasonable value.

A phone ringing to show creditor harassment

3. Creditors cannot harass you for payment

Once creditors have agreed to your IVA proposal, they are legally bound by the arrangement and can no longer contact you directly to request payment. However, you will have to deal with your Insolvency Practitioner and their staff who will administer the IVA and will deal with creditors on your behalf.

A calendar with a pound sign

4. A fixed, reliable payment

You will make an affordable repayment to your debts in the knowledge that your debt amount is fixed. Creditors cannot make additional charges or add more interest to your debts once the IVA is approved.

A pen and money bag to show debt write-off

5. It writes off debt

Most IVAs last five to six years. After successful completion, any remaining unsecured debt will be written off.

A frozen sign to show you can freeze interest

6. Interest rates and charges are frozen

Once the IVA is approved by creditors interest and charges are frozen and cannot be added to the debts by your creditors. This helps prevent the debt from increasing further.

A document with a signature

7. A legally binding solution

An IVA is legally binding, which means once approved, both you and your creditors must follow the agreed terms.

A gavel and sound block to show legal protection from bailiffs

8. Protection from bailiffs and other legal action

As long as you stick to the terms of your IVA, creditors are not allowed to take legal action against you. This includes sending bailiffs to reclaim debt.

Three people to show IVAs usually have less reduced social stigma

9. Reduced social stigma

Although the topic of debt should not be a taboo generally, it may be an IVA is generally viewed better than some of the alternatives, such as bankruptcy.

A briefcase to show better employment options

10. Better employment options

Although some occupations won’t allow employees to join them if those individuals have been made bankrupt, the same typically cannot be said of an IVA. We would advise to check your employment contract if you were concerned that there may be any effect on your job.

Do I qualify for an IVA?

Cons of an IVA

However, as with any financial product, there are negatives to IVAs:

A credit rating dial

1. Your credit rating will be affected

An IVA will negatively impact your credit rating. An IVA will be registered on your credit file and will usually remain there for six years from the date of approval. As an IVA usually lasts for five years, it means that is it likely to remain on your credit file for a further year after successfully completing the IVA. As a result, you will probably find it hard to obtain future loans or other financial products.

A file with an open lock to indicate public records

2. An IVA is not private

Once an IVA is approved by creditors, it is listed on a public database called the Insolvency Register. This is searchable by anyone. Although, in practice, few people are actually going to use this system.

A calculator and a pound sign to illustrate a budget

3. You will need to follow a strict budget

Payments to the IVA must be made. Although the agreement is somewhat flexible, you will need to budget for the next few years to ensure that you continue making repayments.

A home with a stack of coins

4. If you’re a homeowner, you may need to release equity from your home

You may be required to release equity from your home as part of the agreement. If this isn’t possible, the length of your IVA might increase from five years to six. However, an IVA may still be suitable for you if you owe money to more than one creditor or have accumulated at least two debts.

If your debts total more than £6,000 or you do not wish to deal directly with your creditors, an IVA could be ideal. Contact us today with any queries or concerns you have, and we will be happy to answer them for you.

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