Apply for an IVA

An IVA is a formal and legally binding agreement between you and your creditors to pay back your debts over time, so it’s important to work with a company that is reputable and trustworthy.

Always research and compare IVA companies and check the company is registered and accredited by a relevant body. To check if a firm is authorised and has permission for the service it’s offering, you can use the Financial Services Register to find information on how you’re protected.

It’s important to note, IVA companies will not be on the register if they’re not FCA authorised. IVA companies are not required to be authorised by the FCA as the IP is personally regulated by a Recognised Professional Body (RPB) such as:
– Insolvency Practitioner’s Association (IPA)
– Institute of Chartered Accountants of Scotland (ICAS)
– Institute of Chartered Accountants in England and Wales (ICAEW)
– Chartered Accountants Ireland (CAI)

IVA companies will not be on the register if they are not FCA authorised. IVA companies are not required to be authorised by the FCA as the registered IP is personally regulated by another RPB such as Insolvency Practitioner’s Association (IPA), Institute of Chartered Accountants of Scotland (ICAS), Institute of Chartered Accountants in England and Wales (ICAEW), Chartered Accountants Ireland (CAI).

Entering an IVA is an important decision, so it’s wise to take time to consider all your options thoroughly -perhaps even discuss them with family or friends. While it’s advisable to tackle your debts as soon as possible, companies shouldn’t pressure you by pushing for a decision.
A good IVA company will keep you updated every step of the way, clarifying the process and what you should expect next. For an IVA to be legal, it must be handled by a licenced Insolvency Practitioner.

IVA services are never free. Debt charities still charge IP fees and their service costs will be passed over to your creditors, meaning that you may not get the best repayment deal as you would with a top-rated private se

An IVA typically lasts for five years. However, the duration can vary based on individual circumstances. In some cases, if there are changes to your financial situation or if certain conditions are met, the IVA could be extended. 

It typically takes between four to six weeks to set up an IVA. However, the overall duration can vary depending on how quickly you can provide your financial information, the complexity of your financial situation and how long it takes your creditors to respond.

An IVA will appear on your credit report for six years, starting from the date it was approved. This record won’t be removed if you finish your IVA earlier, but it will be marked as ‘complete’. 

At the end of the IVA term, any remaining unsecured debt covered by the agreement is typically written off. This means you wouldn’t be responsible for paying the remaining balance of these debts after successfully completing the terms of your IVA.

No, you can enter an IVA if you’re unemployed, self-employed, part-time, full-time, retired or in receipt of benefits. You’ll just need to have at least £80 in spare income each month that can be paid towards your debts. However, if you can afford more, your monthly payments may be higher.

Your IVA will be recorded on your credit report meaning your credit score will go down as a result. Here’s How to improve your credit score after an IVA.

As your IVA ages, your score should gradually improve. This is because lenders typically pay more attention to your most recent credit history. Your IVA will look better once it’s marked ‘completed’ too.

After six years, it should be removed from your credit report. Because the IVA restricts what you can borrow, you won’t have much credit information during this period, so your score may still be low. However, there are steps you can take to improve your score.

If you have any outstanding court actions including the use of a bailiff, they will be stopped once an IVA has been put in place. This means that bailiffs will no longer be able to attempt collections to repay any debts included in an IVA.

If your circumstances change or you receive a large windfall whilst completing your IVA, you may be able to settle early. You IP will make the offer by writing a proposal that they put to your creditors. This is called Variation, and for it to go ahead, a minimum of 75% of creditors that respond must agree to it.

Debt Management Plans (DMPs) and IVAs both offer the option to make manageable monthly payments to creditors. However, the key difference lies in their legal status. An IVA is a formal, legally binding agreement that prevents creditors from contacting you directly for payments, requiring them to go through your IP instead.

Whereas, a DMP doesn’t offer this legal protection, meaning creditors could pursue legal action to recover debts.

Both IVA services and Bankruptcy are forms of insolvency, and entering either requires paying certain fees.
IVAs protect assets while you make reduced payments over five to six years, whereas Bankruptcy, which typically lasts around 12 months, offers little asset protection.

With an IVA, you’ll need at least £80 in spare monthly income, while Bankruptcy only requires you to cover the Bankruptcy fee itself, plus any court fees. Read more about the differences between IVAs and Bankruptcy.