If you’re struggling with debt and considering an Individual Voluntary Arrangement (IVA), one of the first questions you’ll have is: which debts can be included in an IVA? Understanding which debts qualify, and which don’t, is essential before you commit to this legally binding agreement.

In this guide, we break down exactly which debts are included in an IVA in 2026, which debts are excluded, and what you need to know before applying.

What Is an IVA?

An IVA is a formal debt solution available in England, Wales, and Northern Ireland. It’s a legally binding agreement between you and your creditors, arranged through a licensed Insolvency Practitioner (IP). You make affordable monthly payments over a fixed period, typically five to six years, and at the end, any remaining qualifying debt is written off.

IVAs are regulated by the Insolvency Act 1986 and supervised by the Insolvency Service, making them one of the most structured and protected debt solutions available in the UK. If you’re unsure whether an IVA is right for your situation, our guide on whether you can get an IVA covers the eligibility criteria in detail.

Debts Included in an IVA

The good news is that most common unsecured debts can be included in an IVA. Here’s a comprehensive list of qualifying debts:

Credit Cards and Store Cards

All credit card and store card debts can be included in your IVA. This covers balances from major providers like Barclaycard, MBNA, Capital One, and high-street store cards. Once your IVA is approved, interest and charges on these accounts are frozen.

Personal Loans

Unsecured personal loans from banks, building societies, and online lenders can all be included. This applies whether the loan is from a high-street bank or a specialist lender. For more on how different loan types work, see our guide to types of loans explained.

Overdrafts

Both arranged and unarranged overdrafts qualify for inclusion in an IVA. Your bank will be notified as a creditor, and the overdraft balance will be treated as an unsecured debt.

Catalogue Debts and Buy Now Pay Later

Debts owed to catalogue companies such as Very, Littlewoods, and JD Williams can be included. Buy Now Pay Later (BNPL) debts from providers like Klarna and Clearpay can also be added to your IVA. This is increasingly relevant in 2026, as the FCA’s BNPL regulatory framework continues to develop, bringing these products under tighter oversight.

Payday Loans

High-interest payday loans and short-term lending debts are fully eligible for inclusion. Given the high interest rates these carry, including them in an IVA can provide significant relief. If you’re currently struggling with a payday loan, read our advice on what to do if you can’t afford your payday loan.

Council Tax Arrears

Outstanding council tax debt can be included in an IVA. However, only arrears up to the date of your IVA proposal qualify. You’ll still need to keep up with current council tax payments going forward.

HMRC Debts (Tax, VAT, National Insurance)

Debts owed to HMRC, including income tax, National Insurance contributions, and VAT, can be included in an IVA. HMRC is treated as any other unsecured creditor and will be bound by the arrangement if it’s approved.

Utility Bill Arrears

Unpaid gas, electricity, and water bills can be included. As with council tax, only arrears up to the IVA proposal date are covered. You must continue paying current utility bills.

Benefit Overpayments

Overpayments of benefits such as Universal Credit, Tax Credits, or Housing Benefit can be included in your IVA, though the DWP may still make deductions from ongoing benefits in some cases.

Debts to Friends and Family

Personal debts owed to individuals can technically be included in an IVA. However, they’ll be treated the same as all other creditors, receiving only a proportion of what’s owed. Many people choose to exclude these for personal reasons.

Debts That Cannot Be Included in an IVA

Certain types of debt are excluded from IVAs by law or by their nature:

• Mortgage and secured loan arrears: these are secured against your property and fall outside the IVA
• Student loans: Student Loans Company debt cannot be included
• Court fines and criminal penalties: magistrates’ court fines and criminal compensation orders are excluded
• Child maintenance (CMS/CSA): ongoing and arrears of child maintenance cannot be included
• Social fund loans: budgeting loans from the DWP are excluded
• Debts arising from fraud: if a debt was obtained through fraudulent activity, it cannot be written off

What About Hire Purchase and Car Finance?

Car finance and hire purchase agreements are secured against the vehicle, so they can’t be included in an IVA in the same way as unsecured debts. However, if you’ve already returned the vehicle and there’s a shortfall balance, that shortfall can be included as an unsecured debt.

If you’re currently making car finance payments, your Insolvency Practitioner will factor these into your budget as an essential expense.

How Much Debt Do You Need for an IVA?

While there’s no strict legal minimum, most Insolvency Practitioners require at least £6,000 in qualifying unsecured debt and a minimum of two creditors before they’ll propose an IVA. The average IVA in the UK covers debts of around £25,000 to £30,000 according to Insolvency Service statistics, but arrangements for both smaller and much larger amounts are common.

What Happens to Interest and Charges?

Once your IVA is approved by creditors, all interest and charges on included debts are frozen. This is one of the biggest advantages: your debt stops growing, and every payment you make goes directly towards reducing what you owe. For a fuller picture of the benefits, have a look at our article on 10 reasons an IVA is worth it.

Can Creditors Refuse to Be Included?

You don’t choose which creditors to include. All unsecured creditors must be listed in your IVA proposal. However, creditors can vote on whether to accept the arrangement. For the IVA to be approved, creditors holding at least 75% of your total debt (by value) must vote in favour.

Once approved, the IVA is binding on all listed creditors, even those who voted against it.

How Much Debt Can Be Written Off Through an IVA?

The amount written off depends on your circumstances, but on average, people in IVAs have 50 to 70% of their qualifying debt written off. Some arrangements result in even higher write-offs. Your Insolvency Practitioner will calculate what you can realistically afford, and the remaining balance is cleared when your IVA completes.

If you want to understand how long the process takes from start to finish, our guide on how long an IVA lasts covers the typical timeline.

Free Debt Advice and Support

Before committing to any debt solution, it’s worth getting free, independent advice. The following organisations offer confidential support at no cost:

• StepChange Debt Charity: free online and telephone debt advice
• MoneyHelper: government-backed guidance on debt options
• Citizens Advice: free local and online debt support

Next Steps: Is an IVA Right for You?

If most of your debts fall into the qualifying categories above and you can afford regular monthly payments, an IVA could be the right solution. The best way to find out is to speak to a qualified debt adviser who can assess your full financial situation.

Our team at Swift Debt Help can review your debts, check your eligibility, and guide you through the process with no obligation. Read our step-by-step guide to applying for an IVA, or get in touch directly.

This article is for general information purposes only and does not constitute financial advice. If you are struggling with debt, we recommend seeking advice from a qualified professional or one of the free debt advice services listed above. Swift Debt Help is not authorised to provide regulated financial advice.

If you’re struggling with debt and your credit score has taken a hit, you might be wondering whether an Individual Voluntary Arrangement is still an option. The good news? Having bad credit doesn’t stop you from getting an IVA. In fact, most people who apply for one already have a poor credit rating.

Here’s everything you need to know about applying for an IVA with bad credit in 2026.

Does Your Credit Score Affect IVA Eligibility?

Your credit score is not part of the IVA eligibility criteria. Unlike a loan or credit card application, an IVA doesn’t require a credit check in the traditional sense. Your Insolvency Practitioner (IP) won’t run a credit score before accepting your case.

What matters instead is:

• You owe at least £6,000 in unsecured debt (though some IPs accept lower amounts)
• You owe money to two or more creditors
• You can afford regular monthly payments towards your debt
• You have a stable source of income, whether employed or self-employed

If you meet those criteria, bad credit won’t stand in your way.

Why Bad Credit Is Common Among IVA Applicants

Most people applying for an IVA have already missed payments, defaulted on accounts, or received County Court Judgments (CCJs). That’s completely normal. The whole point of an IVA is to help people who are already in financial difficulty.

Common signs that lead to both bad credit and IVA applications include:

• Missed credit card or loan payments
• Defaults registered on your credit file
• CCJs issued against you
• Using overdrafts as everyday spending money
• Borrowing from one lender to pay another

If any of those sound familiar, you’re exactly the type of person an IVA is designed to help.

How an IVA Works When You Have Bad Credit

The process is the same regardless of your credit history:

1. Free assessment: You speak with a debt adviser who reviews your income, expenses, and total debts
2. Proposal: Your IP prepares a formal proposal offering your creditors reduced monthly payments over a set period (usually five or six years)
3. Creditor vote: Creditors holding 75% or more of your debt (by value) must agree to the arrangement
4. Approval: Once approved, the IVA becomes legally binding on all included creditors
5. Monthly payments: You make one affordable payment each month, and at the end of the term, remaining debt is written off

Your credit history plays no role in whether creditors accept or reject the proposal. They’re looking at whether your offer is better than the alternatives, like bankruptcy, where they might get nothing at all.

Will an IVA Make Your Credit Score Worse?

An IVA is recorded on the Individual Insolvency Register and stays on your credit file for six years from the approval date. During the IVA, you won’t be able to take on new credit of £500 or more without your IP’s permission.

However, if your credit is already damaged by defaults and missed payments, an IVA gives you a structured path to becoming debt-free. Once the IVA completes and drops off your file, you can start rebuilding your credit from a clean slate.

Many people find their credit score actually improves within 12 to 18 months of completing an IVA, especially if they take steps like:

• Registering on the electoral roll
• Using a credit-builder card responsibly
• Keeping up with all household bills on time
• Avoiding applications for credit in quick succession

What About Secured Debts?

An IVA only covers unsecured debts, including credit cards, personal loans, store cards, overdrafts, catalogue debts, and some forms of council tax arrears. Secured debts like your mortgage or a car on hire purchase aren’t included.

That said, your mortgage and essential living costs are factored into your budget before your IVA payment is calculated. You won’t be asked to pay more than you can genuinely afford.

Can Creditors Reject Your IVA Because of Bad Credit?

Creditors can reject an IVA proposal, but not because of your credit score. They’d typically reject if:

• The offered repayment amount is too low
• They believe you can afford to pay more
• There’s evidence of fraud or reckless borrowing
• They think bankruptcy would recover more money

In practice, most IVA proposals are accepted. The approval rate across the UK has consistently stayed above 90% in recent years. Creditors know that an IVA typically returns more than bankruptcy, so they have a financial incentive to agree.

Alternatives if You Don’t Qualify for an IVA

If your debts are below the typical threshold or your circumstances don’t suit an IVA, other options are available:

• Debt Relief Order (DRO): For debts under £30,000 with minimal assets and low income
• Debt Management Plan (DMP): An informal arrangement to repay debts at a reduced rate
• Bankruptcy: Wipes most debts clean but has more serious consequences for assets and employment
• Breathing Space: A 60-day pause on creditor action while you get advice

A qualified debt adviser can help you work out which solution fits your situation best.

How to Get Started

If you have bad credit and you’re considering an IVA, the first step is a free, no-obligation debt assessment. A specialist will review your debts, income, and expenses to confirm whether an IVA is the right route for you.

You don’t need to fix your credit score first. You don’t need to be a homeowner. You just need to meet the basic eligibility requirements and be committed to making regular payments.

Ready to find out if you qualify? Use our free eligibility checker to get started today.

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Key Takeaways

• Bad credit does not prevent you from getting an IVA
• IVA eligibility is based on debt level, number of creditors, and ability to pay, not your credit score
• Most IVA applicants already have poor credit when they apply
• An IVA stays on your credit file for six years but gives you a clear path to becoming debt-free
• Creditor approval rates for IVAs are consistently above 90%
• After completion, you can rebuild your credit from scratch

If you’re considering an Individual Voluntary Arrangement (IVA) to deal with your debts, one of the first questions you’ll likely ask is: how long will it take? Knowing the timeline helps you plan ahead and understand what to expect during the process.

This guide covers everything you need to know about IVA duration in the UK, including what affects the length, what happens during the arrangement, and what life looks like once it’s finished.

The Standard IVA Length

A typical IVA in the UK lasts five years (60 months). During this period, you make regular monthly payments to an insolvency practitioner (IP), who distributes the money among your creditors. At the end of the five years, any remaining qualifying debt is written off.

Some IVAs can last six years if you’re a homeowner and need to release equity from your property. This extension happens in the final year if a remortgage is required as part of the arrangement.

Can an IVA Be Shorter Than Five Years?

Yes, in certain circumstances. If you receive a lump sum, perhaps from an inheritance, redundancy payment, or sale of an asset, you may be able to settle your IVA early. This is known as a “full and final settlement” and involves offering your creditors a one-off payment in exchange for ending the arrangement ahead of schedule.

Your insolvency practitioner would negotiate this on your behalf. Creditors aren’t obligated to accept, but many do if the offer represents a reasonable return compared to waiting out the full term.

What Can Make an IVA Last Longer?

Several factors can extend your IVA beyond the standard five years:

• Missed payments: If you miss monthly payments, those months may be added to the end of your IVA. Three missed payments in a row could put your entire arrangement at risk of failure.
• Payment breaks: While IVAs do allow for payment holidays in some cases (redundancy, illness), these months are typically added to the total duration.
• Equity release: Homeowners are usually required to attempt a remortgage in year five. If successful, the released equity goes towards the IVA. If not, the arrangement may be extended by 12 months with additional payments instead.
• Variation to terms: If your circumstances change significantly, your IP might propose a variation that adjusts the payment amount or extends the term.

What Happens During the Five Years?

Living with an IVA means committing to a structured repayment plan. Here’s what to expect:

• Monthly payments: You’ll pay an agreed amount each month based on your disposable income. This is reviewed annually.
• Annual reviews: Your IP will assess your income and expenses each year. If your income has gone up, your payments may increase. If it’s dropped, they could decrease.
• Credit restrictions: You won’t be able to take on new credit of more than £500 without your IP’s permission. Your credit file will show the IVA for six years from the start date.
• Windfall clause: If you receive any unexpected money (inheritance, lottery win, bonus), you’re normally required to declare it. A portion or all of it may need to go towards your IVA.
• Creditor protection: Once your IVA is approved, your creditors can’t chase you for the debts included in the arrangement. No more letters, calls, or threats of legal action.

What Happens When Your IVA Ends?

Once you’ve completed all your payments and met the terms of your arrangement, your IP will issue a completion certificate. At this point:

• Any remaining debt included in the IVA is legally written off
• You’re free from the restrictions of the arrangement
• Your IVA will stay on your credit file for six years from the start date (so it may already have dropped off or will do shortly after completion)
• You can start rebuilding your credit score

Most people find that within 12 to 18 months of completing their IVA, their credit score has improved enough to access mainstream financial products again.

IVA vs Other Debt Solutions: Duration Comparison

To put the IVA timeline in context, here’s how it compares to other options:

• Debt Management Plan (DMP): No fixed end date. Can last anywhere from 5 to 15+ years depending on the debt amount and what you can afford to pay.
• Debt Relief Order (DRO): Lasts 12 months, after which qualifying debts are written off. Only available for debts under £30,000 with limited assets.
• Bankruptcy: Typically discharged after 12 months, though restrictions can last longer. Stays on your credit file for six years.

An IVA offers a middle ground: a fixed endpoint with debt write-off, without the more severe consequences of bankruptcy.

Is Five Years a Long Time?

It can feel like it at first. But consider the alternative: many people struggling with unmanageable debt spend far longer than five years trying to keep up with minimum payments that barely touch the balance. An IVA gives you a clear finish line and a genuine fresh start.

The structure can actually be reassuring. You know exactly what you’re paying, for how long, and what happens at the end. There are no surprises, and your creditors are legally bound by the arrangement.

Getting Started

If you’re wondering whether an IVA is right for your situation, the first step is getting professional advice. A qualified insolvency practitioner can assess your debts, income, and circumstances to recommend the best solution for you.

At Swift Debt Help, we connect you with experienced advisors who can talk you through your options at no cost. Whether an IVA, DMP, DRO, or another solution is most suitable, you’ll get honest, straightforward guidance.

Find out if you qualify for an IVA

If you work for yourself and you are struggling with debt, you might be wondering whether an IVA self-employed option is available to you. The short answer is yes, self-employed people can absolutely enter into an Individual Voluntary Arrangement. Being your own boss does not disqualify you from this popular debt solution, though there are some additional considerations your insolvency practitioner will need to work through.

This guide covers everything you need to know about getting an IVA when you are self-employed, from eligibility and income assessment to the evidence you will need and how your payments are structured.

What Is an IVA and Can the Self-Employed Apply?

An Individual Voluntary Arrangement is a formal, legally binding agreement between you and your creditors to repay a portion of your debts over a set period, typically five to six years. It is managed by a licensed insolvency practitioner (IP) and, once approved, it freezes interest and charges on the debts included.

There is no employment requirement to qualify. Whether you are a sole trader, a freelancer, a contractor, or a limited company director, you can apply for an IVA. Your employment status does not determine eligibility. What matters is that you have a regular income and owe enough debt to make the arrangement worthwhile. If you are unsure about the debt threshold, our guide on how much debt you need for an IVA explains the typical minimums.

IVA Self-Employed Eligibility: What You Need

The core eligibility criteria for an IVA are the same regardless of your employment status:

• You typically need to owe at least £6,000 in unsecured debt (though some providers set higher thresholds)
• You need to owe money to two or more creditors
• You must be able to demonstrate a regular income, even if it varies month to month
• You need to show that you can afford to make meaningful monthly contributions towards your debts

The key difference for self-employed applicants is proving that regular income. Employed people can simply provide payslips, but if you are self-employed, your IP will need to dig deeper into your finances. For a full walkthrough of the application process, take a look at our guide to applying for an IVA in 2026.

How Self-Employed Income Is Assessed

When you apply for an IVA as a self-employed person, your insolvency practitioner will carry out a thorough assessment of your income. This is not about catching you out: it is about building a realistic picture of what you can afford to repay each month.

Your IP will typically look at:

• Your last two to three years of accounts or tax returns
• Recent bank statements (both personal and business)
• Any contracts or ongoing work agreements
• Your average monthly turnover and profit
• Seasonal patterns in your earnings

From this, they will calculate an average monthly income figure. This average is what your IVA proposal will be based on. If your income fluctuates significantly, your IP may build in a buffer or include a variation clause in your arrangement, which we will cover shortly.

Dealing with Variable Income

One of the biggest concerns for self-employed people considering an IVA is the reality of variable income. You might earn well one month and very little the next. This is completely normal for freelancers, tradespeople, and seasonal businesses, and the IVA process accounts for it.

There are a few ways this is typically handled:

Averaged payments: Your IP calculates an affordable monthly payment based on your average earnings over a reasonable period. This smooths out the peaks and troughs.

Variation clauses: Many IVA proposals for self-employed people include a clause that allows payments to flex up or down depending on your actual income. If you have a quiet month, your payment reduces. If you have a bumper month, you may pay a bit more.

Annual reviews: Your IP will conduct an annual income and expenditure review. If your circumstances have changed significantly, your payments can be adjusted. This protects both you and your creditors.

Payment holidays: In some cases, if your business hits a genuinely difficult patch, you may be able to take a short payment holiday. This is not guaranteed, but a good IP will work with you rather than letting the arrangement fail.

The important thing to understand is that an IVA is designed to be affordable. No one benefits if the payments are set so high that you cannot maintain them.

What Evidence Will You Need to Provide?

Self-employed IVA applicants typically need to gather more paperwork than employed applicants. Your IP will usually ask for:

• Self-assessment tax returns for the last two to three years
• Business accounts (profit and loss statements, balance sheets)
• Three to six months of business and personal bank statements
• Details of any business assets (vehicles, equipment, stock)
• A list of all your debts, including business and personal
• Proof of regular business expenses
• Any contracts or letters of engagement with clients

If you use an accountant, they can often help pull this together. Having organised records makes the process smoother and faster. Not sure which debts would be included? Our guide on what debts are included in an IVA breaks it all down.

How IVA Payments Work When You Are Self-Employed

Once your IVA is approved by your creditors (this requires 75% by debt value to vote in favour), you will start making regular monthly payments. These go to your IP, who distributes the funds to your creditors.

For self-employed people, the payment structure might look slightly different to a standard IVA:

• Payments are based on your average disposable income after essential living costs and business expenses
• Business expenses are treated as a priority, so your ability to keep trading is protected
• If you have business assets, these may need to be disclosed, but essential tools and equipment are usually protected
• Your IP will factor in tax liabilities (self-assessment payments) as a necessary expense

The arrangement typically lasts five to six years. At the end, any remaining debt included in the IVA is written off. You can read more about what happens when you reach the finish line in our post on 5 things that happen at the end of an IVA.

Can You Keep Running Your Business During an IVA?

Yes. Unlike bankruptcy, which can place restrictions on running a business, an IVA allows you to continue trading. This is one of the key benefits of an IVA for self-employed people.

You can:

• Continue operating your business as normal
• Take on new clients and contracts
• Maintain your professional reputation (an IVA is not published in a public register that clients would typically check)
• Keep essential business assets

There are some restrictions, though. You will need to inform your IP before taking on any new significant credit, and any major changes to your business (such as forming a new company or taking on a business partner) should be discussed with them first.

Tips for a Successful IVA When Self-Employed

Based on how self-employed IVAs typically work, here are some practical tips to give yourself the best chance of success:

Keep your records tidy. The better your financial records, the smoother your application and annual reviews will be. Use accounting software or work with a bookkeeper.

Be honest about your income. It can be tempting to overstate earnings to appear more stable, or understate them to reduce payments. Neither helps. Your IP needs an accurate picture to build a sustainable arrangement.

Separate business and personal finances. If you have not already, open a dedicated business bank account. This makes it much easier for your IP to assess your situation and for you to track what is business expenditure versus personal spending.

Communicate with your IP. If your income drops significantly or your business circumstances change, tell your IP early. They can often adjust the arrangement before things become a problem.

Plan for tax. Make sure your self-assessment payments are factored into your IVA budget. Falling behind on tax while in an IVA creates new debt, which is the last thing you need.

Build a small emergency buffer. Discuss with your IP whether you can keep a modest reserve for business cash flow. Many IPs understand that self-employed people need some working capital.

Alternatives to an IVA for Self-Employed People

An IVA is not the only option. Depending on your circumstances, you might also consider:

Debt Management Plan (DMP): An informal arrangement where you make reduced payments to creditors. Less rigid than an IVA, but creditors are not legally bound to the terms and can still chase you.

Bankruptcy: A more drastic option that writes off your debts, but it can affect your ability to run a business and may result in losing assets. Our comparison of IVA vs bankruptcy explains the differences in detail.

Debt Relief Order (DRO): Only available if your debts are under £50,000, your assets are minimal, and your disposable income is very low. Not suitable for most self-employed people with active businesses.

Full and final settlement: If you have access to a lump sum (perhaps from family or savings), you may be able to negotiate a one-off payment to settle your debts for less than the full amount owed.

Each option has pros and cons, and the right choice depends on your specific situation. Speaking to a debt adviser is the best way to understand which route makes sense for you. You can also read more about how to apply for an IVA if you decide that is the right path.

Get Help with Your Debt Today

If you are self-employed and struggling with debt, you do not have to figure this out alone. Getting professional advice early gives you the best chance of finding a solution that works for both you and your business.

At Swift Debt Help, we can connect you with experienced advisers who understand the unique challenges of self-employment and debt. Fill in our contact form to get started, or give us a call to discuss your options. There is no obligation, and all initial consultations are free.

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Disclaimer: The information in this article is for general guidance only and does not constitute financial advice. Every individual’s circumstances are different, and you should seek professional advice before making any decisions about debt solutions. Swift Debt Help is not a financial adviser. We connect people with licensed, regulated professionals who can assess your situation and recommend appropriate solutions.

When debt becomes unmanageable, two of the most common solutions people consider are an Individual Voluntary Arrangement (IVA) and bankruptcy. Both can help you deal with serious debt, but they work in very different ways, and the right choice depends on your circumstances.

This guide breaks down how IVAs and bankruptcy compare in the UK, what each involves, and how to work out which option makes more sense for your situation in 2026.

What Is an IVA?

An IVA is a legally binding agreement between you and your creditors. You agree to make affordable monthly payments over a fixed period (usually five or six years), and at the end, any remaining qualifying debt is written off.

An insolvency practitioner (IP) manages the arrangement on your behalf. They negotiate with your creditors, handle the paperwork, and monitor your payments throughout the plan.

Key features of an IVA:

• You make one affordable monthly payment
• Interest and charges on included debts are frozen
• Creditors can no longer chase you for payment once the IVA is approved
• After completion, remaining debt covered by the IVA is written off
• Your home is usually protected, though you may need to release equity in the final year

What Is Bankruptcy?

Bankruptcy is a more drastic form of insolvency. You apply through the Insolvency Service (online via the adjudicator process), and once declared bankrupt, most of your debts are written off. The process typically lasts 12 months, after which you are “discharged” and free from most debts.

However, bankruptcy comes with significant consequences. Your assets, including property and vehicles above a certain value, may be sold to repay creditors. You may also face restrictions on your employment and ability to act as a company director.

Key features of bankruptcy:

• Most debts are written off after 12 months
• You may lose your home, car, or other valuable assets
• Your name is added to the Individual Insolvency Register (publicly searchable)
• You cannot act as a company director during bankruptcy
• Certain professions may be affected (solicitors, accountants, police officers, for example)
• It costs £680 to apply

IVA vs Bankruptcy: A Side-by-Side Comparison

Here is how the two options compare across the factors that matter most:

Duration

An IVA typically lasts five to six years. Bankruptcy lasts 12 months, though an Income Payments Agreement (IPA) could extend payments for up to three years after discharge.

Your Home

With an IVA, your home is generally protected. You may need to remortgage to release equity in the final year, but if remortgaging is not possible, your IVA term may be extended by 12 months instead. With bankruptcy, your share of any property could be claimed by the trustee and sold.

Your Car

Under an IVA, you can usually keep your car, particularly if you need it for work. In bankruptcy, a vehicle worth more than around £1,000 to £2,000 (depending on the trustee’s assessment) could be sold.

Your Job

An IVA rarely affects employment. Bankruptcy can restrict certain roles, especially in financial services, law enforcement, and the legal profession. If you are a company director, you will be disqualified during the bankruptcy period.

Credit Rating

Both options affect your credit file. An IVA stays on your credit report for six years from the start date. Bankruptcy remains on your file for six years from the date you are declared bankrupt. In practice, the impact is similar, though some lenders view bankruptcy more negatively.

Public Record

Both are recorded on the Individual Insolvency Register, which is publicly searchable. An IVA is also recorded on your credit file but is less visible than bankruptcy in day-to-day life.

Debt Write-Off

With an IVA, you typically repay a portion of what you owe (often between 30p and 70p in the pound), and the rest is written off on completion. With bankruptcy, most unsecured debts are written off entirely after 12 months, though you may make payments via an IPA during that time.

When Is an IVA the Better Choice?

An IVA tends to be the better option if:

• You own a home and want to keep it
• You have a steady income and can afford regular monthly payments
• Your job could be affected by bankruptcy (financial services, law, military, police)
• You are a company director or self-employed
• You want a structured repayment plan with a clear end date
• You prefer to avoid the stigma sometimes associated with bankruptcy

When Is Bankruptcy the Better Choice?

Bankruptcy may make more sense if:

• You have very little income and cannot afford monthly payments
• You do not own property or have significant assets
• You need a faster resolution (12 months vs five to six years)
• Your debts are very high relative to your income and repaying even a portion is not realistic
• You are not in a profession that would be restricted by bankruptcy

What About a Debt Relief Order (DRO)?

If your debts are under £50,000, you have minimal assets, and your disposable income is £75 or less per month, a Debt Relief Order could be another option worth exploring. A DRO lasts 12 months and costs just £90 to apply for. It is sometimes described as “bankruptcy lite” and may suit people on very low incomes.

How to Decide: Questions to Ask Yourself

Before choosing between an IVA and bankruptcy, consider these questions:

1. Do you own your home? If yes, an IVA is usually safer.
2. Can you afford monthly payments? If not, bankruptcy or a DRO may be more appropriate.
3. Would bankruptcy affect your job? Check your employment contract and professional body rules.
4. How much do you owe? Higher debts with some ability to pay often suit an IVA. Lower debts with no assets may suit bankruptcy or a DRO.
5. How quickly do you need relief? Bankruptcy offers faster discharge, but an IVA gives you more control.

Getting Professional Advice

The right debt solution depends entirely on your personal circumstances. What works for one person may not work for another, and getting it wrong can make things harder.

Speaking to a qualified debt adviser is the best first step. They can review your income, outgoings, and debts, then recommend the most suitable option. Many advice services are completely free.

If you are considering an IVA, you will need to work with a licensed insolvency practitioner. They will assess whether an IVA is viable for your situation and handle the proposal to your creditors.

Next Steps

If you are struggling with debt and unsure whether an IVA or bankruptcy is right for you, get in touch with our team for free, no-obligation guidance. We can help you understand your options and find a path forward that works for your situation.

You may also find these guides helpful:

• How to Apply for an IVA in 2026
• What Debts Can Be Included in an IVA?
• How Much Debt Do You Need for an IVA?

What Is the Minimum Debt for an IVA?

If you’re struggling with debts and considering an Individual Voluntary Arrangement (IVA), one of the first questions you’ll have is: how much debt do you actually need? The short answer is that most IVA providers require a minimum of £6,000 in unsecured debt, though some may accept slightly less depending on your circumstances.

An IVA is a legally binding agreement between you and your creditors. It allows you to repay a portion of what you owe over a fixed period, typically five to six years, with any remaining debt written off at the end. But there are specific criteria you need to meet before you can apply.

IVA Debt Thresholds: What the Numbers Look Like

While there’s no single figure written into law, the debt industry generally works to these benchmarks:

• £6,000 minimum in total unsecured debt across all creditors
• At least two separate creditors (you can’t set up an IVA with just one)
• Enough disposable income to make meaningful monthly contributions (usually £80 or more)

Some insolvency practitioners will consider lower debt levels if you have a lump sum to offer, but this is less common.

What Counts as Qualifying Debt?

Not all debts can be included in an IVA. The arrangement covers unsecured debts only, which includes:

• Credit cards and store cards
• Personal loans
• Overdrafts
• Catalogue debts
• Payday loans
• Council tax arrears
• HMRC debts (income tax, National Insurance)

Secured debts like your mortgage or a car finance agreement on HP cannot be included. Student loans are also excluded from IVAs.

Can You Get an IVA with Less Than £6,000 of Debt?

Technically, yes, but it becomes harder. If your total debt is under £6,000, creditors may question whether an IVA is proportionate. The setup costs for an insolvency practitioner make very low debt levels less practical for everyone involved.

If your debts are below this threshold, you might be better suited to a Debt Management Plan (DMP), which has no minimum debt requirement and offers more flexibility, though it doesn’t carry the same legal protections as an IVA.

Is There a Maximum Debt Limit for an IVA?

No. There’s no upper limit on how much debt you can include in an IVA. People with debts ranging from £6,000 to well over £100,000 have successfully used IVAs to manage their finances. The key factor isn’t how much you owe, but whether you can demonstrate a realistic repayment plan.

Other Eligibility Requirements

Meeting the debt threshold alone won’t guarantee approval. You’ll also need to satisfy these conditions:

• UK resident or have a strong connection to England, Wales, or Northern Ireland (Scotland has its own equivalent called a Protected Trust Deed)
• Regular income sufficient to make monthly payments after essential living costs
• Creditor approval, meaning 75% of voting creditors (by debt value) must agree to the arrangement
• You must be able to show that the IVA offers creditors a better return than bankruptcy

How Monthly Payments Are Calculated

Your IVA payment is based on what you can genuinely afford after covering essential expenses. An insolvency practitioner will review your income and outgoings, including:

• Rent or mortgage payments
• Utility bills and council tax
• Food and household costs
• Transport and commuting
• Childcare and dependant costs
• Insurance and essential subscriptions

Whatever remains after these costs is your disposable income, and a portion of this goes towards your IVA payments. Most arrangements require payments between £80 and £300 per month, though this varies significantly based on individual circumstances.

What If Your Circumstances Change?

Life doesn’t stand still during a five-year arrangement. If your income drops or your costs increase, you can request a payment variation or even a payment holiday from your insolvency practitioner. These aren’t guaranteed, but they’re regularly granted when there’s a genuine change in circumstances.

Conversely, if your income increases significantly, your payments may go up too. Your insolvency practitioner will conduct annual reviews to check whether your contributions remain fair.

How Much Debt Gets Written Off?

This is the part most people want to know about. On average, IVA participants have between 50% and 70% of their total debt written off at the end of the arrangement. The exact figure depends on how much you’ve been able to repay over the term.

For example, if you owe £20,000 and pay back £8,000 over five years, the remaining £12,000 is legally written off. Your creditors cannot chase you for it once the IVA completes successfully.

Alternatives If You Don’t Qualify

If an IVA isn’t the right fit, there are other options worth considering:

• Debt Management Plan (DMP): informal, flexible, no minimum debt, but no legal protection
• Debt Relief Order (DRO): for debts under £50,000 with minimal assets and low income
• Bankruptcy: for severe debt situations where other solutions aren’t viable
• Breathing Space: a 60-day legal pause on creditor action while you seek advice

Getting Free Advice

Before committing to any debt solution, speak to a qualified adviser. Free services like StepChange, National Debtline, and Citizens Advice can help you understand your options without pressure.

If you’d like to discuss whether an IVA is right for your situation, get in touch with our team for a free, no-obligation chat about your options.