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Check if you can afford an individual voluntary arrangement

Mae’r cyngor hwn yn berthnasol i Cymru

An Individual Voluntary Arrangement (IVA) is a formal and legally-binding agreement between you and your creditors to pay back your debts over a period of time. An IVA has to be set up by a professional, known as an insolvency practitioner.

An IVA can be flexible to suit your needs but it can be expensive and there are risks to consider.

Not everyone can get an IVA - there are certain criteria that you need to meet. This page tells you about what assets and spare income you need to get an IVA.

Top tips

Increasing your income and reducing your spending

There may be ways you can increase your income or reduce your spending to give you more spare income each month. Find out how:

Increasing your income

Reducing your spending

Spare income

To get an IVA, you should have some spare income each month to pay your creditors, usually at least £100. Your creditors are unlikely to accept an IVA if your payments are less than that.

However, an IVA can be flexible depending on your needs and circumstances. For example, if you don’t have much spare money from your monthly income but do have something that you can sell to raise a lump sum, you may be able to pay your creditors with the lump sum.

If you decide an IVA is right for you, your insolvency practitioner will advise you on what payments to make and how you might be able to increase your spare monthly income.

Regular income

An IVA will normally only be right for you if you have a regular and predictable income. This is because an IVA depends on you making monthly payments to your creditors over a period of a few years. If your income changes from month to month, an IVA may not be right for you.

Complete a budget

Before you decide on an IVA, complete a budget to see what spare income you have each month.

If you decide that an IVA is right for you, your insolvency practitioner will need a copy of your budget.

Lump sums

You may have a lump sum of money, for example money left to you in a will. This is likely to be included in the IVA. This means you will need to use this money to make your monthly payments to your creditors. You may use a combination of a lump sum and spare monthly income.

If you’re over 55 and have a 'defined contribution pension', you could cash in some of your pension to raise a lump sum for an IVA. However, this would leave you with less money to live on in retirement. You should get financial advice from an independent financial adviser before using your pension to pay off debt. A ‘defined contribution pension’ is based on how much has been paid into your pot, not your salary near retirement.


Assets are things you own that have significant value, such as a home, land or a car. You don’t need to have any particular assets to get an IVA but they may help you to pay your debts. Assets can be included in the IVA, which means you will sell them and use the money to pay the creditors.

If you decide that an IVA is right for you, your insolvency practitioner will discuss your assets with you and whether you need to include them in the IVA. You must tell the insolvency practitioner about all your assets. If you don’t, you will be breaking the law.

If you own a home

If you own a home, most IVA agreements include a requirement for you to get a valuation of your home in the final year. If there is equity in the property, you'll usually need to raise a lump sum to put into the IVA by re-mortgaging your home. Equity is the money you'd make from the sale of a property, after any mortgage or secured loans are paid off. You shouldn't have to sell your home to raise the lump sum. If you think you are being asked to sell your home, get specialist advice straight away.

If you can't re-mortgage, you'll continue to pay the usual monthly contributions under the IVA for twelve months instead.

Next steps

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UAT (Release)