Is An IVA A Good Idea? Examining The Pros And Cons Of An IVA


Many people who are in debt in the United Kingdom right now, are wondering whether the IVA might be a good option for them in getting themselves out of debt.

On this page we give commentary on the advantages and disadvantages (pros and cons) of the IVA (individual voluntary arrangement to help you assess if it is a good idea for you in your current financial situation.

Pros of the IVA (Advantages, Good Points):

  • It’s possible to write off up to 85% of your debts with an IVA, this is done by consolidating monthly repayments and writing off the remainder of debt at the 5 to 6 year point which concludes the IVA, meaning that any of the existing debt is written off.
  • You don’t have to deal with the people you owe money to on an IVA, the appointed representative handles any liaison and communication with your creditors (lenders) who issued the credit to you in the first place, meaning you have a massive reduction in stress and are free to just make your repayments.
  • You only need £80 in disposable income to be on an IVA, meaning you don’t necessarily need to be in full or even part time employment, in actual fact you can still get an IVA if you are on benefits or Universal credit.
  • Monthly bills are consolidated and made much more manageable, so for example if before entering into the IVA you were paying £500 per month towards debts, then on an IVA it is entirely possible you could only be paying £160 per month for example, and at the end of the 60 months term there is no more debt to repay.
  • Setting up an IVA is relatively simple, it involves a drafted proposal, which is written for you by the insolvency practitioner, this is then presented to creditors and the courts for approval and can be underway, if approved within 3-5 weeks.

Cons of the IVA (bad points, disadvantages):

  • The IVA application must be approved by 75% of the lenders (creditors) who have lent money to you, and it also must be approved by the courts.
  • The IVA takes a commitment to meet the monthly consolidated repayments, you can’t stop making the repayments otherwise you can expect the IVA to be broken and this can involve a bankruptcy petition.
  • The IVA will still show reduced repayments on your credit file, however it is better than the alternative which would likely be reduced payments or even defaults in the long run.

Overall the suitability of the IVA or the question of whether or not the arrangement is a good idea for you to help you get out of debt, will depend also on the amount of money you owe to your lenders, if you owe £5,000 or more of debt then you can get an IVA and it could be suitable for you, the best way to find out if this debt solution will work for you is to speak to an IVA adviser, like those at to help you decide and see if you qualify.