What are the downsides of an IVA?

The insolvency practitioner charges fees, which are taken out of your monthly payments. An IVA stays on your credit file for 6 years and is recorded on the public Individual Insolvency Register. If you own your home you may be asked to release some equity towards the end. And if your circumstances change and you can no longer keep up the payments, the IVA can fail — which can lead to bankruptcy. That is why free advice first matters: a Debt Relief Order or a simple debt management plan may suit you better and cost nothing.

Should I pay a company that offers to write off my debt?

No — get free debt advice first. IVAs are heavily marketed by lead-generation firms through ads and cold calls promising to 'write off' debt, and they earn money by funnelling people into IVAs that may not be the best option. Free, impartial debt charities — StepChange, National Debtline and Citizens Advice — can advise you and set up an IVA if it really is right for you, without upfront fees and without a sales pitch. Never pay a fee to start, and be very wary of anyone who contacts you out of the blue.

IVA explained: how it works and the catch

Q: What is an IVA?

An IVA — Individual Voluntary Arrangement — is a formal, legally binding agreement with the people you owe to pay what you can afford over a set period, usually 5 or 6 years. You make one regular payment to a licensed insolvency practitioner, who divides it between your creditors. At the end, any remaining unsecured debt covered by the IVA is written off. It can only be set up through a licensed insolvency practitioner, and it is one of several debt solutions — it is not automatically the best one for everyone.

Q: How is an IVA approved?

An insolvency practitioner draws up a proposal and your creditors vote on it. If creditors holding more than 75% of your debt (by value, of those who vote) agree, the IVA is approved and becomes binding on all the creditors included — even those who voted against it. Once it is in place, they cannot add interest or charges, take further action or contact you for payment, as long as you keep to the agreement.

Q: Is an IVA right for me?

An IVA can suit someone with a regular income who can afford to pay something each month but not clear their debts in a reasonable time, and who has a meaningful amount of unsecured debt. If your debts and assets are low and your spare income is very small, a Debt Relief Order may be cheaper and better. If you can clear your debts with a bit of help, an informal debt management plan may be enough. Only free, impartial advice based on your full situation can tell you which is right — that is always the first step.

What an IVA actually is

An IVA is a legally binding agreement between you and the people you owe. Instead of trying to pay everything, you agree to pay what you can genuinely afford:

You make one regular payment each month to a licensed insolvency practitioner.
They divide it between your creditors over 5 or 6 years.
While you keep to the agreement, creditors freeze interest and charges, stop action and stop contacting you.
At the end, any remaining unsecured debt in the IVA is written off.

Why people choose itAn IVA can wipe out debt you could never realistically clear, in fixed affordable payments, while protecting you from further action — without the full effects of bankruptcy. For the right person, it’s a genuine fresh start.

How it’s approved — the 75% rule

The insolvency practitioner writes a proposal setting out what you’ll pay, and your creditors vote on it. If creditors holding more than 75% of your debt by value (of those who vote) accept it, the IVA is approved and becomes binding on all the creditors included — even ones that voted against. After that, they can’t chase you or add charges as long as you stick to the plan.

The catches — what they don’t put in the advert

The catch	What it means
Fees	The insolvency practitioner charges fees, taken out of your monthly payments. They must tell you the fees before you agree.
Your credit file	An IVA stays on your credit record for 6 years and is listed on the public Individual Insolvency Register.
Your home	If you’re a homeowner, you may be asked to release equity (or pay longer) towards the end.
It can fail	If your circumstances change and you can’t keep paying, the IVA can fail — which can lead to bankruptcy, with the fees already paid.

This is why free advice mattersAn IVA is a serious, long commitment. A Debt Relief Order (free, for people with low debt, few assets and little spare income) or a simple debt management plan might leave you better off and cost nothing. Only impartial advice on your full situation can tell you which is right.

The mis-selling warning — read this first

IVAs are aggressively marketed. You’ll see ads and get cold calls and texts promising to “write off up to 85% of your debt” or “one easy payment”. Many come from lead-generation firms that get paid for funnelling people into IVAs — whether or not it’s the best option for them.

Get free debt advice first — from StepChange (0800 138 1111), National Debtline (0808 808 4000) or Citizens Advice. They compare every option, not just IVAs.
Free charities can set up an IVA too if it really is right for you — without a sales pitch and without an upfront fee.
Never pay a fee to start, and be very wary of anyone who contacts you out of the blue. If in doubt, check it.

Do this now

Before signing anything, make one free call — StepChange 0800 138 1111 or National Debtline 0808 808 4000. Ask them to compare an IVA with a Debt Relief Order and a debt plan for your exact situation.

If creditors are piling on the pressure right now, you can also press pause with Breathing Space while you get advice, and know your rights if bailiffs are involved.

Where IVAs applyIVAs are for England, Wales and Northern Ireland. In Scotland the equivalent is a Protected Trust Deed — speak to a free adviser or Citizens Advice Scotland.

Is an IVA right for you?

An IVA can suit someone who:

has a regular income and can afford to pay something each month, but not clear the debts in a reasonable time;
has a meaningful amount of unsecured debt (credit cards, loans, overdrafts);
wants to protect assets (like a home) better than bankruptcy might.

It may not be right if your debts and assets are low and your spare income is tiny — a Debt Relief Order could be cheaper and quicker — or if you could clear your debts with a bit of breathing room and a debt plan. The honest answer always comes from free, impartial advice based on your whole picture.

Related guides — free debt routes

Free debt help Debt Management Plan Debt Relief Order Breathing Space Which debt to pay first

Source verification Primary source: GOV.UK — Options for dealing with your debts: Individual Voluntary Arrangements; Citizens Advice and StepChange IVA guides. Specific URL: gov.uk/options-for-dealing-with-your-debts/individual-voluntary-arrangements. Last verified 14 June 2026 (the 5–6 year term, the 75% creditor vote, IP-only set-up and fees-from-payments web-checked against GOV.UK). Confidence: High on the framework — IVAs run under the Insolvency Act 1986: regular payments to a licensed insolvency practitioner over usually 5–6 years, binding if creditors holding 75%+ by value agree, remaining unsecured debt written off, 6 years on the credit file and the Individual Insolvency Register. The mis-selling caution reflects long-standing Insolvency Service and FCA warnings. Key facts: 5–6 year term · 75% creditor approval by value · set up only via a licensed insolvency practitioner · IP fees taken from payments (not upfront) · stays on credit file 6 years + public register · homeowner equity release possible · can fail → bankruptcy · free advice first; free charities can set one up · England/Wales/NI (Scotland = Protected Trust Deed). Scope: England, Wales & Northern Ireland. Not financial advice — get free, impartial debt advice (StepChange, National Debtline, Citizens Advice) before entering any agreement.

IVAs — common questions

What is an IVA?

A formal, legally binding agreement to pay what you can afford over usually 5–6 years, after which remaining unsecured debt is written off. You pay a licensed insolvency practitioner, who divides it between your creditors. It’s one of several debt solutions — not automatically the best.

How is it approved?

An insolvency practitioner proposes it and creditors vote. If creditors holding more than 75% of your debt by value agree, it’s binding on all the creditors included — even those who voted against.

What are the downsides?

The IP charges fees (from your payments), it stays on your credit file for 6 years and the public register, homeowners may need to release equity, and if you can’t keep paying it can fail and lead to bankruptcy. That’s why free advice first matters.

Should I pay a firm to write off my debt?

No — get free advice first. IVAs are heavily marketed by lead-generation firms. Free charities (StepChange, National Debtline, Citizens Advice) compare every option and can set up an IVA without upfront fees or a sales pitch. Never pay to start, and beware cold calls.

Is an IVA right for me?

It can suit someone with a regular income and meaningful debt who can pay something monthly but not clear it in a reasonable time. If debts/assets are low, a Debt Relief Order may be cheaper. Only free, impartial advice on your full situation can say for sure.

Sources: How an IVA works — term, the 75% vote, the role of the insolvency practitioner and fees · GOV.UK — Individual Voluntary Arrangements. Free debt advice and choosing the right solution · StepChange, National Debtline and Citizens Advice. SortedUK is not a regulated adviser and this is general information — get free, impartial debt advice before acting. Last reviewed: 14 June 2026.

An IVA can clear your debt — but get free advice first.