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Finance Industry Opinion

What are the consequences for an IVA?

To understand the ramifications of obtaining an individual voluntary arrangement (IVA), we need to first understand the concept

What are the consequences for an IVA?

"Should your IVA proposal be accepted, the IP will become a supervisor."
Jimmy Holyoak

IVAs were introduced as an alternative to bankruptcy, which is a more extreme procedure for an individual. An IVA is best suited to an individual with assets, offering more breathing space should your creditors begin to pressure for losses. The debts that can be dealt with through an IVA include personal debt, credit cards and unsecured loans. Business Rescue Expert, leading insolvency practitioners in the UK, are discussing the insolvency process and consequences to the procedure.

An IVA is a formal insolvency procedure, meaning you need the services of an insolvency practitioner (IP) to oversee the case. The IP will be your advisor, establishing if an IVA is in your best interests and whether you have the circumstances to meet the criteria. They will then help with your IVA proposal. Secondly, the IP will produce their own report for the benefit of the creditors. They will detail their investigations and relevant findings, as well as their recommendation on accepting or rejecting the proposal. At this stage, they are no longer the advisor, but the nominee.

Should your IVA proposal be accepted, the IP will become a supervisor. This, essentially, means they will ensure all parties meet their terms and work in the interests of both you and your creditors.

Length of an IVA

The length of an IVA can vary with each individual case, but, generally, between five to seven years. However, if you can afford a lump sum to your creditors, they can last less. The IVA outlines the monthly installaments you can make, typically no less than £80. It’s important to note that most IVA’s will require you to remortgage your property. Not doing so could extend an additional 12 months to the length of your IVA.

You will be placed on the individual voluntary arrangement register for England and Wales, as part of this process. Your name, address, D.O.B and occupation will be detailed, and it is open to the public. You will be placed on the register for the length of the IVA, along with three months after you have completed payments. The inclusion to the register may also affect employees in the financial sector, with many companies detailing the results of an IVA in employee contracts.

Obtaining an individual voluntary arrangement also costs money, as you will have to pay to set up the entire process. For example, the IP will charge a fee for their services. However, some IPS may take their fees out of your monthly installments to creditors, while others may ask for the fee up front.

Advantages and disadvantages of an IVA


  • The IVA will last only a set time

  • Further legal action is suspended when an IVA is granted

  • Creditors cannot demand interest or other payments through an IVA

  • You can work to improve your credit rating once completed

  • Creditors, generally, receive better returns from an IVA than that of bankruptcy

  • The IVA is legally-binding, meaning you know exactly what to pay and there can be no changes

  • IVA may not affect your employee status as much as bankruptcy



  • Your credit rating will be affected during the procedure

  • An IVA lasts longer than filing for bankruptcy

  • Your name and other personal information will be placed on the IVA register

  • The procedure does cost


For an IVA to be agreed, you need to meet certain criteria. As the procedure involves paying back your creditors in monthly installments, you must have the resources to do so. The IP will ensure you have sufficient surplus and are not paying back more than you can realistically afford.

IVA consequences

We have touched on the cons of an IVA, and all credit agencies will be informed if you enter the procedure. This will be filed against your name and will remain for as long as you are in an IVA. It’s likely that this will affect your ability to gain credit, although there are lenders who specialise in helping those with poor credit ratings. Similarly, you may have trouble obtaining a mortgage until you have steadily built up your credit.


Most importantly, if you are a company director, you can still be one after an individual voluntary arrangement, unlike that of bankruptcy. The only factor that may affect this is if a company does not hire on the grounds of entering an IVA.

Ultimately, if you feel you may be heading for an individual voluntary arrangement, you must seek advice at the earliest possible moment.


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