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How to apply for an IVA

This advice applies to England

Before you start, make sure an IVA is the right debt solution for you. What’s right for you will depend on:

  • your personal circumstances
  • what debts you have
  • your available income

You can check if an IVA is right for you.

Find an insolvency practitioner

You can’t set up an IVA by yourself. You’ll need to find an insolvency practitioner to do it for you.

You can find an authorised insolvency practitioner on GOV.UK.

Check how much it will cost

To compare costs and get the best deal, it's a good idea to contact a few insolvency practitioners and ask them for an estimate of how much it will cost to set up and manage an IVA for you. 

Look out for insolvency practitioners who offer an introductory meeting for free or at a reduced rate, to talk through whether an IVA is suitable for you.

If you’re thinking of using a debt management company

You don’t need to use a debt management company to get an IVA set up. If you’re thinking about using one, check what service they offer at the start. Some companies will charge you a fee just for referring you to an insolvency practitioner when you could go directly to one yourself.

If you do decide to use a debt management company, look for one that doesn't charge extra fees on top of the insolvency practitioner's fees.

There have been some cases where debt management companies have advised people to get an IVA when this has not been the best solution for them. You can check if an IVA is right for you.

Gather the information you’ll need to apply

You’ll need to give your insolvency practitioner details of your debts and how much money you can pay towards your debts. For example:

  • proof of your income, such as payslips, benefits letters or recent bank statements
  • proof of savings such as bank statements
  • details of your mortgage or rent agreement
  • information about what assets you own, such as a car, and how much they are worth
  • details of your debts and creditors - who your creditors are, how much you owe and all the letters and papers you have relating to your debts and creditors
  • a budget sheet listing all your income and spending - check how to work out your budget

Meet with your insolvency practitioner

Before the IVA is set up, you might have an informal meeting with your insolvency practitioner to discuss whether an IVA is right for you. Meetings might take place over the phone or at the insolvency practitioner's office.

The insolvency practitioner should explain all options available to you before you commit to an IVA. They should also make sure you read and understand the leaflet ‘Dealing With Money Worries’. You can also read the Dealing With Money Worries leaflet on the R3 website. ​​R3 is the trade association of UK insolvency practitioners.

If you decide to go ahead, you’ll have another meeting in which you'll begin the formal process of setting up the IVA.

Be completely honest about your circumstances

If you keep any information from your insolvency practitioner, you might end up with an IVA that you can’t stick to.

It’s a criminal offence to hide something from your insolvency practitioner which might affect your IVA. It's also a criminal offence to deliberately give them false or misleading information. You could get fined or even sent to prison.

Check what your insolvency practitioner should do

Your insolvency practitioner will help you set up your IVA and manage it until it ends.

Before your insolvency practitioner sets up the IVA, they might apply to the court to ask them to stop your creditors from taking any action against you. For example, this means your creditors can’t get a court order against you or try to make you bankrupt.

Your insolvency practitioner should then help you:

  • decide how much you can afford to pay towards your debts
  • create a repayment plan
  • share the repayment plan with your creditors


Decide how much you can afford to pay

Your insolvency practitioner will look at your financial situation with you, including your spare monthly income, savings and assets. Assets such as property or a car might be included in the IVA to raise more money to repay your creditors – most IVAs have a special clause about how your home is treated.

Your insolvency practitioner might also suggest that certain assets aren't included, for example, a building or van you need to run a business or a car that you need to get to work.

With the help of your insolvency practitioner, you'll work out a repayment plan based on what you can afford.

Create a repayment plan for your creditors

Your insolvency practitioner will help you write a proposal for your creditors and the court. In the proposal you'll agree to repay your creditors in part or in full over a certain period of time, normally 5 or 6 years.

Your insolvency practitioner will also prepare a report for the court which includes their opinion as to whether the proposal will work or not.

Share your repayment plan with your creditors

After your proposal is drawn up, the insolvency practitioner will call a creditors' meeting. This will usually be done remotely. You should attend so you can represent your own interests.

The creditors will consider the IVA and whether to accept it or not. Many creditors have signed up to an IVA protocol. The protocol contains guidelines on how an IVA proposal should be drawn up. Creditors are expected to accept a proposal that has been drawn up under the protocol and not ask for unnecessary changes to it.

Your creditors will vote on whether or not to accept the proposal. It will be accepted if the creditors that represent over 75% of the debts you owe vote ‘yes’.

Example

You have a total of £100,000 debt. You have 4 creditors:

Creditor A (£6,000)
Creditor B (£70,000)
Creditor C (£20,000)
Creditor D (£4,000)

Creditor D doesn't vote and Creditor C doesn't agree to an IVA. Creditors A and B do agree to the IVA and, because they are owed 76% of the debt, the proposal is accepted. Creditors C and D still have to keep to the terms of the IVA.

Your creditors might suggest changes to your IVA proposal before they’ll accept it. For example, they might ask for a change to the monthly amount you’ll pay.

If your IVA proposal is accepted

Your IVA will be confirmed by the court and your insolvency practitioner will give you a written copy. This will show what you’ve agreed to pay and how long your IVA will last.

Your IVA will be published on the Insolvency Register website. Your name and address will usually be included.

If you're worried about your address being published

You can ask for your address not to be published if you're worried someone might see it and hurt you or your family. You can apply for an order for non-disclosure of your current address on GOV.UK.

You'll make payments directly to your insolvency practitioner. After they’ve taken their fees, they’ll divide the rest between your creditors based on what the IVA says.

You’ll usually make monthly payments unless you’ve agreed to pay a one-off lump sum.

If your circumstances change during your IVA you must tell your insolvency practitioner. Check what to do if your circumstances change during your IVA.

If your IVA isn’t accepted

You’ll still need to pay the fees you owe to the insolvency practitioner. These can usually be added to your existing debt.

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