How Does an IVA Work in 2026?

Step 1: Free assessment of your debts and finances. Step 2: Insolvency Practitioner prepares your IVA proposal. Step 3: Creditors vote (need 75% approval). Step 4: Make 60 monthly payments with frozen interest. Step 5: Remaining debt written off after completion. Throughout, you have legal protection from creditors.

The IVA process starts with a debt assessment. A licensed Insolvency Practitioner then creates a proposal based on what you can afford. This is sent to creditors who vote within 14 days. If approved, you make fixed monthly payments for 60 months. After completion, remaining debt is legally written off.

An IVA typically takes 4-6 weeks to set up from initial assessment to approval. The assessment takes about 10 minutes, the proposal is prepared within 1-2 weeks, and creditors have 14 days to vote. Once approved, your first payment usually starts the following month.

An IVA provides structure and breathing space. You make one affordable payment monthly instead of juggling multiple creditors. Interest is frozen so debt stops growing. Creditors cannot contact you. You can keep your home. Your credit rating is affected for 6 years, but you get a clear path to becoming debt free.

If creditors holding 75% or more of your debt value do not approve, your IVA is rejected. Your Insolvency Practitioner may revise the proposal with better terms and resubmit. Alternatively, you can explore other debt solutions like a Debt Management Plan, Debt Relief Order, or in some cases, bankruptcy.

No, you cannot set up an IVA yourself. By law, an IVA must be set up by a licensed Insolvency Practitioner who is regulated and authorized. They handle all the paperwork, creditor negotiations, and ongoing administration. However, you can choose which Insolvency Practitioner to work with.

Yes, most creditors accept IVAs because they receive more than they would through bankruptcy. Major creditors like banks and credit card companies regularly accept IVAs. If creditors holding 75% of your total debt agree, all creditors are legally bound by the IVA terms, even those who voted against it.

You will need proof of income (payslips, bank statements), details of all debts (creditor names, amounts owed), proof of address, and a breakdown of your monthly living expenses. Your Insolvency Practitioner will guide you on exactly what documents are needed for your specific situation.

An IVA lasts 60 months (5 years). You make fixed monthly payments during this time. If you cannot remortgage to release equity in year 5, your IVA may extend to 72 months (6 years). After completion, any remaining debt is written off. The IVA stays on your credit file for 6 years from the start date.

An Insolvency Practitioner (IP) is a licensed professional who sets up and manages your IVA. They assess your finances, prepare the proposal, present it to creditors, handle the voting, distribute your monthly payments to creditors, conduct annual reviews, and issue your completion certificate. You must use an IP by law - you cannot set up an IVA yourself.

An IVA may be refused if creditors feel the proposal does not offer them enough return, if you do not meet the criteria (minimum £6,000 debt, £100+ monthly payments), if your income is unstable, if you have provided inaccurate information, or if creditors believe they would receive more through bankruptcy. If refused, your IP may revise and resubmit the proposal with better terms.