If you’re weighing up whether to enter an IVA, you’re probably feeling overwhelmed by conflicting advice. Some sources make it sound like a miracle cure, others act like it’ll ruin your life. The truth sits somewhere in between, and it depends entirely on your circumstances.
This page gives you the honest picture. We’ll cover what an IVA can genuinely do for you and where it falls short, so you can make the right call.
Quick Summary#
Advantages:
- Write off 60-70% of your debt after 5-6 years
- Creditors and bailiffs must stop contacting you
- Interest and charges freeze immediately
- One affordable monthly payment based on your budget
- Keep your home and car in most cases
- Payment breaks available if circumstances change
- Protection from bankruptcy proceedings
- Most jobs aren’t affected
Disadvantages:
- Damages your credit file for 6 years
- Need regular income to qualify
- Can’t borrow more than £500 without permission
- Windfalls must go towards your debt
- Around 1 in 3 IVAs fail
- Public record on the Insolvency Register
- May need to release property equity in year 5
- 5-6 year commitment with restricted spending
Advantages of an IVA#
Write Off the Majority of Your Debt#
After making affordable payments for typically 5 years, any remaining debt gets legally written off. Most people who complete an IVA write off 60-70% of what they originally owed. If you owe £20,000 and pay £120 per month for 5 years, you’ll pay £7,200 total. The remaining £12,800 is gone for good. That’s real debt relief, not just kicking the can down the road.
Stop All Creditor Contact Immediately#
Once your IVA is approved, every creditor included must stop chasing you. No more phone calls at work, no more threatening letters, no more debt collectors turning up at your door. This protection is legally binding. If a creditor breaks the rules, your insolvency practitioner deals with them, not you. For many people, this immediate relief is as valuable as the debt write-off itself.
Interest and Charges Freeze on Day One#
The day your IVA gets approved, all interest stops. Every penny you pay goes towards clearing your actual debt, not feeding interest charges that were piling up faster than you could pay them. If you had credit cards charging 39% APR or payday loans with eye-watering rates, this alone can make the difference between drowning and staying afloat.
One Affordable Monthly Payment#
Instead of juggling payments to a dozen different creditors, you make one payment to your insolvency practitioner each month. They sort out who gets what. You don’t have to negotiate with creditors or decide who to pay first. Your payment is based on what you can genuinely afford after essential living costs, starting from around £90-£100 per month.
Keep Your Home in Almost All Cases#
You won’t be forced to sell your home. That’s the key difference between an IVA and bankruptcy. If you’re a homeowner with equity, you may be asked to try remortgaging in year 5 to release some of it. But if that’s not possible (and often it isn’t), your IVA simply extends by 12 months instead. Under the 2025 Protocol changes, forced home sales are off the table entirely.
Keep Your Car if You Need It#
If you need your car for work or essential use (getting kids to school, medical appointments), you keep it regardless of value. If it’s not essential, you can usually keep vehicles worth under £2,000. Anything more valuable may need to be sold and replaced with something cheaper, but you won’t be left without transport you genuinely need.
Payment Breaks Are Built In#
Life doesn’t stop for 5 years. If you lose your job, have unexpected medical expenses, or hit genuine hardship, you can request a payment break. The missed months get added to the end of your term. This flexibility means temporary setbacks don’t automatically torpedo your entire arrangement. It’s not a free pass to skip payments whenever you fancy, but there’s breathing room when you truly need it.
Protection From Bankruptcy and Legal Action#
Once approved, creditors can’t take you to court or make you bankrupt for the debts in your IVA. If you were facing county court judgments or bailiff action, an IVA stops that process. It gives you legal protection while you get back on your feet. This is especially valuable if you have council tax arrears or other priority debts that can escalate quickly.
Most Employers Won’t Know or Care#
For the vast majority of jobs, an IVA won’t affect your employment. Most employers don’t ask, and you’re not required to tell them. There are exceptions in certain regulated sectors like finance, law, and some public sector roles where you handle money. Check your employment contract if you’re unsure, but for most people, work continues as normal.
Your Pension Stays Protected#
Private pension savings are completely protected in an IVA. You can keep contributing throughout, and creditors can’t touch your pension pot. If you’re worried about losing everything you’ve saved for retirement, that’s one thing you can cross off the list.
Reasonable Living Allowances#
Your budget isn’t designed to make you miserable. You’ll have reasonable allowances for food, clothing, utilities, transport, mobile phone, haircuts, and even some entertainment. A typical budget might include £450 per month for groceries for a family, £50-£80 for clothing and personal care, and £30-£50 for leisure. You’re expected to live modestly, but not on the breadline.
Less Public Than Bankruptcy#
Your IVA does go on the Individual Insolvency Register, which is technically public. But it’s not advertised in newspapers or announced to the world. Unless someone specifically searches for your name on the register (which most people don’t even know exists), it stays private. You decide who you tell and who you don’t.
Disadvantages of an IVA#
Serious Damage to Your Credit Rating#
An IVA stays on your credit file for 6 years from the day it starts. During that time, getting approved for credit cards, loans, or mortgages is extremely difficult. Your credit score will be low, and most mainstream lenders won’t touch you. After 6 years it comes off and you can rebuild, but those are 6 years where your borrowing options are severely limited. If you need a car on finance or want to get a mortgage, this is a real obstacle.
You Need Regular Income to Qualify#
An IVA only works if you have consistent income to make monthly payments. That can be from employment, self-employment, or benefits. If your income is irregular, stops completely, or drops significantly, your IVA could fail. Around 1 in 3 IVAs fail, and lost income is one of the main reasons. When an IVA fails, you’re back to square one with creditors able to chase you for the full original debt.
Can’t Borrow More Than £500 Without Permission#
For the entire duration of your IVA, you can’t take out any new credit over £500 without your insolvency practitioner’s permission. That includes credit cards, loans, car finance, store cards, even mobile phone contracts with an upfront handset cost. If your washing machine breaks or your car needs emergency repairs, you can’t just put it on credit. You need to plan for these situations or ask your IP first.
Windfalls Go Straight to Your Creditors#
If you receive any unexpected money during your IVA, it generally has to go towards your debts. This includes inheritances, lottery wins, redundancy payments, PPI refunds, or work bonuses. Anything over £500 typically gets claimed. If your elderly parent passes away and leaves you £10,000, that money goes to your creditors, not to you. This can be emotionally difficult on top of the financial reality.
Around 1 in 3 IVAs Fail#
Let’s be honest about the failure rate. Roughly 30-35% of IVAs don’t make it to completion. The main reasons are lost income, changed circumstances, or people simply finding the restrictions too difficult to maintain for 5 years. If your IVA fails, you’ll have paid money into it for however long it lasted, but you’ll still owe the original debt. Creditors can then pursue you, potentially through bankruptcy. This isn’t a scare tactic, it’s the reality of a long-term commitment.
Property Equity May Need to Be Released#
If you’re a homeowner with equity in your property, you’ll likely be asked to try remortgaging in year 5 to release some of it. Under current rules, if you can’t remortgage, your IVA extends by 12 months instead. But attempting to remortgage with an IVA on your credit file is tough, and the process itself is stressful. If you do successfully remortgage, that money goes to your creditors, not into your pocket.
Your Bank May Close Your Account#
Some banks automatically close accounts when you enter an IVA. You’ll need to open a basic bank account with another provider. These accounts work fine for everyday banking but have no overdraft facility. It’s not a disaster, but it’s disruptive at a time when you’re already dealing with enough stress. Make sure you’ve got a backup account ready.
It’s a 5-6 Year Commitment With Real Restrictions#
Five years is a long time to live on a restricted budget. You can’t take expensive holidays, can’t upgrade your car without permission, and every penny is accounted for. Annual reviews mean your finances get scrutinized every year. Some people find this disciplined approach helpful; others find it suffocating. Be realistic about whether you can maintain this for that long, especially if your mental health is already fragile.
Your Details Go on a Public Register#
The Individual Insolvency Register is publicly searchable online. Your name, address, date of birth, and IVA details are listed for the duration plus 3 months. It’s not advertised, but it’s there. Employers, landlords, or anyone else can search for you if they think to look. Most people never experience problems with this, but it does mean your financial situation isn’t completely private.
The Mental Health Rollercoaster#
Here’s something most sites won’t tell you. The relief of having a plan and stopping creditor harassment is real, and for many people it’s life-changing. But the ongoing stress of restricted spending, annual reviews, and fear of the IVA failing can take a toll. You might feel judged when you have to explain why you can’t chip in for a friend’s birthday dinner or go on a weekend away. That’s not nothing, and it’s worth thinking about before you commit.
Is an IVA Right for You?#
An IVA makes sense if you:
- Owe £6,000 or more in unsecured debts to at least 2 creditors
- Have regular income (from work or benefits) that covers essential living costs plus at least £90-£100 per month
- Want to avoid bankruptcy and the associated stigma
- Own a home you want to protect from being sold
- Can commit to 5 years of disciplined budgeting and restricted spending
- Face constant harassment from debt collectors or threats of legal action
It’s probably not right if:
- Your income is irregular or very low (under £1,000 per month total)
- You can pay off your debts within a reasonable timeframe without an IVA
- You work in finance, law, or another profession where insolvency could cost you your job
- You can’t mentally handle 5 years of strict budgeting and limited financial freedom
- You need to borrow money regularly for work or family commitments
Alternatives to consider:
- Debt Management Plan: If you can afford to pay your debts in full but need reduced payments, a DMP might suit you better. No debt write-off, but also less severe credit impact.
- Debt Relief Order: If you owe under £30,000, have minimal assets, and very low income, a DRO writes off your debts for just £90. Much faster than an IVA.
- Bankruptcy: If you have no assets and can’t afford IVA payments, bankruptcy might be quicker and more suitable. It’s off your credit file after 6 years too.
Use our IVA calculator to see if you qualify and get an estimate of how much debt you could write off. It takes 2 minutes and won’t affect your credit score.
If you’re struggling with debt and want to find out what options are available, use our free IVA calculator to see how much you could write off.
Frequently Asked Questions#
Is an IVA worth it?#
An IVA is worth it if you’re in a position where you can’t realistically pay off your debts in full, have regular income, and want to avoid bankruptcy. If you complete your IVA successfully, you’ll have written off the majority of your debt and have a clear path forward. But remember the 1 in 3 failure rate. It’s only worth it if you’re genuinely committed for the full term. If you’re on the fence, speak to a debt advisor who can look at your full situation.
Will an IVA affect my partner?#
Your IVA only affects you unless you have joint debts or joint assets. If you have a joint bank account, your partner should open their own account to avoid complications. If you have joint debt (like a joint loan or credit card), your partner remains liable for the full amount. The IVA can include your share, but creditors can still chase your partner for theirs. Your partner’s credit file won’t show your IVA, but lenders may ask about household finances when assessing applications.
What happens if I lose my job during an IVA?#
If you lose your job, contact your insolvency practitioner immediately. They can arrange a payment break while you find new work or adjust your payments if your new income is lower. Payment breaks get added to the end of your term. If you’re unemployed long-term and can’t resume payments, your IVA may fail. In that case, you’d be back to dealing with creditors directly, possibly facing bankruptcy. The key is early communication with your IP.
Can I still get a car on finance during an IVA?#
Getting car finance during an IVA is extremely difficult. You’d need permission from your IP, and most mainstream lenders won’t approve you with an IVA on your credit file. Some specialist lenders deal with people in IVAs, but interest rates are high. If you need a car, it’s better to save up and buy something cheap outright. If your existing car breaks down and you need transport for work, discuss options with your IP first.
Should I just go bankrupt instead?#
Bankruptcy might be better if you have no assets, very low income, and debts you absolutely can’t pay. It’s faster (usually 12 months) and you won’t face 5 years of restricted budgeting. But if you own a home, have valuable possessions, or work in a profession where bankruptcy is a problem, an IVA protects you better. Bankruptcy also has more severe employment restrictions. There’s no universal “better” option. Get advice from companies who specialize in both before deciding.
How long until my credit score recovers after an IVA?#
Your IVA stays on your credit file for 6 years from the start date. After those 6 years, it’s completely removed. Your credit score will then start improving, assuming you’re managing any new credit responsibly. Many people can get a mortgage 1-2 years after their IVA comes off their file, though you’ll need a decent deposit. The first year after completing your IVA is about rebuilding. Get a credit-builder card, make small purchases, pay them off in full, and gradually prove you’re creditworthy again.
Will bailiffs come to my house if I have an IVA?#
Once your IVA is approved, bailiffs can’t visit for debts included in your IVA. That’s one of the legal protections you get. However, if you have debts that can’t go into an IVA (like magistrates court fines or parking penalties), bailiffs can still visit for those. And if your IVA fails, bailiffs could potentially resume action for the original debts. As long as your IVA is active and you’re keeping up payments, bailiffs for included debts are off the table.
Ready to find out if you qualify?
Check if an IVA could help you write off debt with our IVA calculator. Takes 2 minutes, and you’ll get an instant estimate based on your situation. If you qualify, we’ll connect you with a licensed insolvency practitioner for free advice.