Apply for an IVA: What Happens and How to Start

Applying for an IVA is simpler than most people expect. You’ll work with a licensed Insolvency Practitioner who handles the legal side. The whole process takes 4-8 weeks from your first call to your debts being frozen. Here’s exactly what happens at each stage.

If you’re ready to see if you qualify, our free IVA calculator takes 2 minutes and gives you an instant assessment based on your circumstances.

Check if you qualify for an IVA →

Can You Apply for an IVA?

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You can’t apply for an IVA directly to the court or your creditors. By law, you must work with a licensed Insolvency Practitioner (IP) — this is a legal requirement under the Insolvency Act 1986. The IP manages the entire process, from assessing your finances to negotiating with creditors to supervising your payments.

General Eligibility Requirements

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To qualify for an IVA, you typically need:

• £7,000 to £10,000+ in total unsecured debt (some IPs accept lower amounts in specific circumstances)
• At least 2 different creditors (lenders, credit cards, overdrafts, etc.)
• £50 to £100+ per month in disposable income (what’s left after essential bills)
• Residency in England, Wales, or Northern Ireland (Scotland has Protected Trust Deeds instead)
• Reliable income from employment, self-employment, or a pension

If you live in Scotland, you’ll need a Protected Trust Deed instead of an IVA. The concept is similar, but the legal framework is different.

Which Debts Can Be Included?

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An IVA covers most unsecured debts:

Included:

• Credit cards
• Personal loans
• Bank overdrafts
• Store cards and catalogue debts
• Payday loans
• Council tax arrears
• Utility arrears (gas, electric, water)
• HMRC debts (income tax, VAT, National Insurance)

Not included:

• Mortgages and secured loans (these monthly payments are prioritised in your budget, but the debt stays separate)
• Student loans
• Child maintenance arrears
• Court-ordered fines
• Debts arising from fraud

Can You Apply If You’re Self-Employed?

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Yes. Self-employed individuals can apply for an IVA. You’ll need to provide:

• A 12-month forward-looking cashflow forecast showing your business is viable
• All tax returns up to date (HMRC won’t support a proposal if you’re behind on filings)
• Evidence of business income and expenses

You can include trade debts and HMRC arrears in your IVA. You may also be able to maintain access to limited credit for business operations (like purchasing stock or equipment), but this must be disclosed to and approved by your IP.

HMRC will only support your proposal if you commit to meeting all future tax obligations as they fall due.

Use our IVA calculator to check your eligibility →

The IVA Application Process — Step by Step

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Here’s what happens from your first phone call to your debts being written off.

Step 1 — Free Initial Assessment (Day 1-3)

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The first step is a comprehensive financial review with a debt adviser or your IP’s assessment team. This usually takes 30-60 minutes and can be done over the phone.

During this call, the adviser will:

• Review all your debts (amounts, creditors, types)
• Ask about your income (employment, benefits, pensions, self-employment)
• Go through your monthly spending (rent, bills, food, transport, childcare)
• Calculate your disposable income — the surplus you have each month after essential expenses
• Confirm whether an IVA is the right solution for you

This is critical: A good adviser will tell you if an IVA isn’t suitable. Sometimes a Debt Management Plan, Debt Relief Order, or even bankruptcy is a better option. The assessment isn’t just about getting you into an IVA — it’s about finding the right solution for your circumstances.

What to Have Ready

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To make the assessment smooth, gather:

• A list of all creditors with account numbers and current balances
• Recent payslips (last 3 months), P60, or benefit award letters
• If self-employed: tax returns or prepared accounts
• Bank statements for all accounts (last 3 months)
• Details of any property you own (mortgage statement, recent valuation)
• Vehicle details (registration, value, any outstanding finance)
• Monthly expenditure breakdown (rent, council tax, utilities, food, transport, insurance, childcare)
• Details of any County Court Judgments, attachment of earnings, or previous insolvency

Step 2 — Your IP Prepares the Proposal (Week 1-3)

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If an IVA is the right option, you’ll move forward with a licensed Insolvency Practitioner. At this stage, the IP acts as your Nominee — they’re responsible for reviewing your affairs and declaring to the court and creditors whether your proposed arrangement has a reasonable prospect of success.

The IP drafts a formal IVA Proposal document. This is the legal foundation of the entire arrangement.

The proposal includes:

• Your detailed budget (based on industry-standard expenditure guidelines)
• A full list of your assets (property, vehicles, savings, pensions)
• The monthly payment you’ll make
• How long the IVA will last (typically 60 months, or 72 months if you have property equity over £10,000)
• How creditors will be paid (pro-rata based on the size of their debts)
• What happens if your circumstances change (income increase, windfall, job loss)

You’ll review the proposal, ask questions, and sign it. The IP then sends it to all your creditors.

This stage typically takes 5-10 days from the initial assessment to signing the proposal.

Step 3 — Creditors Vote (Week 3-5)

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Once the proposal is issued, your creditors have 14-17 days (a statutory requirement) to review it and vote.

For your IVA to be approved, 75% of creditors “by value” must vote yes. This means:

• If you owe £20,000 total, creditors holding at least £15,000 of that debt must approve.
• The vote is weighted by debt size, not by number of creditors.
• If you have one large creditor holding more than 25% of your total debt, they could theoretically block the proposal. In practice, this is rare — most creditors approve well-structured proposals.

If 75% approve, the IVA is legally binding on ALL unsecured creditors — including those who voted no or didn’t vote at all.

Creditors may request modifications (slightly higher monthly payment, longer term, or capped fees). Your IP negotiates on your behalf. Minor modifications are common and usually don’t change the affordability of your arrangement.

This voting process is now typically conducted as a virtual decision procedure rather than a physical creditors’ meeting.

Step 4 — Your IVA Begins (Week 5-8)

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The moment your IVA is approved, everything changes:

• Interest and charges on all included debts are legally frozen. No more compound interest eating away at your balance.
• Creditors must stop all contact. No more phone calls, threatening letters, or doorstep visits.
• Any pending enforcement action must stop. If bailiffs were scheduled, CCJ applications were underway, or attachment of earnings was being considered — it all stops.
• You make your first agreed monthly payment to your IP, who distributes it to your creditors.

The Day 1 Reality

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This is the point where you’ll feel immediate relief. The phone stops ringing. The letters stop coming. You have one manageable payment to make each month to your IP, and they handle all creditor communication.

Your IP’s role now shifts from Nominee to Supervisor — they manage your IVA for its entire duration.

From this day forward, you’re on a clear path to being debt-free in 5-6 years.

Step 5 — During Your IVA and Completion

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Your IVA typically lasts 5 years (60 months). If you’re a homeowner with property equity exceeding £10,000, it may be extended to 6 years (72 months) under the 2025 Protocol. This extension replaces the old practice of forcing homeowners to remortgage or sell their property.

Annual Reviews

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Each year, your IP conducts a financial review to ensure your payments remain affordable. They’ll ask for updated income and expenditure information.

If your income increases significantly (promotion, pay rise, new job), you’ll typically be required to contribute 50% of the increase to your IVA. This doesn’t mean your living standards drop — you keep the other 50%.

If your income decreases (job loss, illness, reduced hours), your payments can be reduced or paused. Under the 2025 IVA Protocol, your IP can now approve payment reductions of up to 20% (increased from 15%) without needing to call a formal creditor meeting. This makes the arrangement more sustainable if you hit financial difficulties.

Windfalls and Lump Sums

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If you receive a windfall during your IVA (inheritance, redundancy payout, bonus, PPI refund), you’re typically required to contribute it to the arrangement. Your IP will assess each case individually.

Completion

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After you make your final payment, your IP issues a Completion Certificate. At this point:

• The remaining balance of all included unsecured debts is legally written off.
• You’re debt-free.
• The IVA record stays on the Individual Insolvency Register for 3 months after completion.
• The IVA stays on your credit file for 6 years from the start date (same as a CCJ or default).

What Does an IVA Cost?

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One of the most common concerns is the cost. Here’s the key point: you do not pay anything upfront. All fees are deducted from your monthly payments over the life of the IVA.

IVA fees are regulated and must be approved by your creditors as part of the proposal. They fall into three categories:

1. Nominee’s Fee

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This covers the work performed before your IVA is approved:

• Initial financial assessment
• Drafting the proposal
• Liaising with creditors
• Arranging the decision procedure

Typical range: £1,000 to £2,500

2. Supervisor’s Fee

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This is the ongoing management fee for the life of your IVA:

• Annual financial reviews
• Processing your monthly payments
• Distributing funds to creditors
• Handling creditor queries
• Supporting you if your circumstances change

Typical structure: £35 to £50 per month, or a percentage of the total amount realised

3. Disbursements

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These are third-party costs:

• Fee for listing on the Individual Insolvency Register
• Statutory bond required to protect the funds held in your arrangement

Typical Total Fees Over the Life of an IVA:

Your monthly payment stays the same. The fees come out of what you pay, reducing the amount that goes to creditors — they don’t increase what you personally pay each month.

Creditors may negotiate to cap these fees during the voting process to ensure a higher dividend for themselves, but this negotiation doesn’t increase your monthly contribution.

The fees are disclosed in full in your proposal, and you’ll see exactly where every pound goes.

What If Your IVA Application Is Rejected?

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It’s not common with a well-prepared proposal, but it does happen. If fewer than 75% of creditors approve, your IVA is rejected.

Common Reasons for Rejection

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• Payment offer too low: Creditors believe they’d recover more through other means (bankruptcy, continued collection)
• Undisclosed assets or income: If a creditor knows about something you didn’t declare, they’ll likely vote no and report it to the IP
• Unsustainable budget: Proposed expenses are unrealistically high (lavish lifestyle) or dangerously low (can’t be maintained)
• HMRC non-compliance: A history of failing to file tax returns or prioritise tax payments

What Happens If You’re Rejected?

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Your IP will review the situation and recommend next steps. You have several options:

1. Revised Proposal

Your IP may suggest modifying the terms — perhaps a slightly higher monthly payment, a longer term, or adjustments to asset treatment — and resubmitting to creditors.

2. Debt Management Plan (DMP)

An informal arrangement where you make reduced payments to creditors. There’s no legal protection — creditors can still pursue you — but it can work if you can afford to repay in full over a longer period. Interest and charges usually continue. Learn more about Debt Management Plans.

3. Debt Relief Order (DRO)

If you have:

• Debts under £50,000
• Very low income (under £75/month disposable income)
• Minimal assets (under £2,000 in total)

A DRO provides a 12-month freeze, after which qualifying debts are written off. You make no monthly payments. Learn more about Debt Relief Orders.

4. Bankruptcy

For debts over £5,000 where you have limited assets to protect. Bankruptcy is faster (typically 1 year) but has significant impact on your credit, career (especially in financial services), and any property or assets you own. Learn more about Bankruptcy vs IVA.

What You Need to Apply (Checklist)

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To make the application process as smooth as possible, gather these documents before your initial assessment:

Creditor Information:

• Full list of everyone you owe money to
• Account numbers and reference numbers
• Current balances
• Recent correspondence (default notices, CCJ paperwork, threatening letters)

Income Evidence:

• Last 3 months of payslips
• P60 (annual tax summary)
• Benefit award letters (if you receive Universal Credit, ESA, PIP, etc.)
• For self-employed: last 2 years of tax returns or prepared accounts

Banking Records:

• Complete bank statements for all accounts (personal and business) for the last 3 months

Property and Assets:

• Mortgage statement with current balance
• Recent property valuation or Rightmove estimate
• Vehicle registration documents
• Current vehicle value (use WeBuyAnyCar or similar for a quick estimate)
• Details of any outstanding vehicle finance (HP, PCP)
• Savings account balances
• Pension valuations
• Details of any other high-value assets

Monthly Expenditure:

• Rent or mortgage payment
• Council tax
• Gas, electric, water
• Food and groceries
• Mobile phone, internet, TV licence
• Transport costs (fuel, public transport, car insurance, tax, MOT)
• Childcare costs
• Insurance (home, life, health)
• Clothing, toiletries, household items

Legal Information:

• Details of any County Court Judgments (CCJ)
• Attachment of earnings orders
• Charging orders
• Previous insolvency (bankruptcy, IVA, DRO)

Having this information ready speeds up the process and increases the chances of a strong, approvable proposal.

The 2025 IVA Protocol — What’s Changed

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The 2025 IVA Protocol came into effect on 1 July 2025. It introduces several consumer protections designed to make IVAs more sustainable and reduce early failure rates.

Key Changes:

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Home Equity Protection

The old practice of requiring homeowners to remortgage or release equity in year 5 has been largely eliminated. Under the new Protocol:

• If you have property equity exceeding £10,000, your IVA is simply extended from 60 months to 72 months.
• No forced sale. No remortgage applications. Just a slightly longer arrangement.

Payment Flexibility

Your IP now has greater discretion to help you through financial shocks:

• They can approve payment reductions of up to 20% (increased from 15%) without calling a formal creditor variation meeting.
• Payment holidays can be granted more easily for short-term crises (illness, job loss, family emergency).

Low Debt Signposting

IPs are now required to actively direct individuals with low debt levels or minimal assets toward Debt Relief Orders or Debt Management Plans rather than pushing them into IVAs. This ensures IVAs are used only where they’re genuinely the best solution.

Vehicle Protection

Essential vehicles are generally protected under the Protocol. If you need a car for work:

• Hire Purchase (HP) or PCP payments are included in your budget.
• When the finance agreement ends, the surplus is redirected into the IVA rather than forcing you to sell the vehicle.

These changes make the 2025 Protocol IVA more sustainable, fairer, and less likely to fail due to unrealistic demands.

Frequently Asked Questions

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How long does it take to get an IVA?

From your initial phone call to IVA approval typically takes 4-8 weeks. The process involves: initial assessment (1-3 days), proposal drafting and signing (5-10 days), and creditor voting period (14-17 days). Once approved, your IVA begins immediately.

Can I apply for an IVA myself?

No. By law, you must work with a licensed Insolvency Practitioner. This is a legal requirement under the Insolvency Act 1986. The IP manages the entire process, from drafting the proposal to supervising your payments for 5-6 years.

Does an IVA clear all my debt?

An IVA covers most unsecured debts (credit cards, loans, overdrafts, council tax, HMRC debts). It does not cover student loans, child maintenance arrears, court-ordered fines, or secured debts (mortgage, car finance). After 5-6 years, the remaining balance of included debts is legally written off.

Will I lose my house if I apply for an IVA?

Under the 2025 IVA Protocol, your home is generally protected. If you have property equity exceeding £10,000, your IVA is extended to 72 months instead of 60. There’s no forced sale or remortgage requirement. Your monthly mortgage payments are prioritised in your budget.

How much does an IVA cost?

Fees are deducted from your monthly payments — you pay nothing upfront. Total fees over the life of an IVA typically range from £3,500 to £5,000, covering the IP’s work in setting up and managing your arrangement. Your monthly payment amount stays the same; fees reduce what goes to creditors, not what you pay.

What is the minimum debt for an IVA?

Generally £7,000 to £10,000+ in total unsecured debt. Some IPs accept lower amounts in specific circumstances, but below this threshold, a Debt Management Plan or Debt Relief Order is usually more appropriate.

Can I get an IVA if I’m self-employed?

Yes. You’ll need to provide a 12-month cashflow forecast showing your business is viable, and all tax returns must be up to date. You can include trade debts and HMRC arrears. You may be able to access limited business credit with IP approval.

What happens on Day 1 of an IVA?

The moment your IVA is approved:

• Interest and charges are legally frozen
• All creditor contact must stop (no more calls, letters, or threats)
• Any pending legal action (bailiffs, CCJs, attachment of earnings) must stop
• You make your first monthly payment to your IP

You’ll feel immediate relief. One payment, clear path to debt freedom.

Can creditors refuse my IVA?

Yes, if fewer than 75% by value vote to approve. However, most well-prepared proposals are approved. Creditors generally prefer IVAs to bankruptcy because they receive higher recoveries. If your proposal is realistic and properly structured, approval is likely.

What’s the difference between an IVA and bankruptcy?

Both are formal insolvency solutions. An IVA is a payment plan (5-6 years) that protects your assets and gives you control. Bankruptcy is a 12-month process that typically involves losing assets (property, savings) and has stricter restrictions on employment and financial activity. Learn more: Bankruptcy vs IVA.

Ready to Take the Next Step?

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If you’ve read this far, you’re serious about sorting out your debts. An IVA could give you a clear path to being debt-free in 5-6 years, with legal protection from creditors and a manageable monthly payment.

Our free IVA calculator takes 2 minutes. You’ll get an instant assessment of whether you qualify, how much you could write off, and what your monthly payment might be.

Use our free IVA calculator now →

You can also read more about:

• What is an IVA? — The full explanation of how IVAs work
• IVA Pros and Cons — The benefits and risks explained
• Best IVA Companies — Choosing the right provider
• Trust Deeds in Scotland — The Scottish equivalent
• Council Tax Arrears — Can an IVA include council tax?
• HMRC Debt — Dealing with tax arrears in an IVA