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Debts an individual voluntary arrangement covers

This advice applies to Wales

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 must be set up by an insolvency practitioner.

An IVA can be flexible to suit your needs but it can be expensive and there are risks to consider. Most debts can be paid off through an IVA but there are some exceptions. This page tells you what debts can be included in an IVA.

Debts you can include

Most debts can be included in an IVA. However, IVA’s are normally used for the following types of debts:

  • bank and building society loans and overdrafts
  • credit cards
  • personal loans
  • store cards
  • catalogues
  • charge cards.

These are all called non-priority debts. You can also include priority debts such as:

  • council tax arrears
  • tax debts
  • electricity and gas debts.

Mortgages, secured loans and rent

Secured loans are debts which are secured against your home. This means if you can’t pay the debt, they can take your home from you. You can include secured loans, mortgage or rent arrears in an IVA. However, your creditor will have to give their permission for it to be included and they are unlikely to do this.

Amount of debt that can be included

Any amount of debt can be included in an IVA. There are no minimum or maximum limits set by the law. However, your creditors are unlikely to agree to an IVA unless your total debt is more than £10,000.

Number of debts that can be included

Any number of debts can be included but normally, an IVA will be suitable if you have more than three debts and two different creditors.

However, IVA’s can be flexible. If you decide an IVA is right for you, your insolvency practitioner will advise you on whether your debts are suitable for an IVA.

Debts you can’t include

Debts you can’t include in an IVA are:

  • maintenance arrears that have been ordered by a court
  • child support arrears
  • student loans
  • magistrates' court fines.

What to do about debts you can’t include

If you have debts that can’t be included in the IVA, you'll have to deal with those separately so you need to make sure you have enough money to pay these debts before paying money into an IVA.

You may want to choose a solution that can deal with all of your debts together.

Brexit - if the UK leaves the EU with no deal

An IVA might not be right for you if you owe money to people or businesses in the EU. These debts might not be covered by an IVA. 

Your creditors could keep asking you for money, for example by calling you and sending you letters. 

If you live or work in the EU, they could take you to court in the EU. 

Get legal advice if you have creditors in the EU. Find free or affordable legal help.

Joint debts

You might have some ‘joint debts’ which are owed by you and another person, such as a partner.

An IVA can only cover one person, so the other person will still be responsible for the whole of the debt. It may not be a good idea to include joint debts in the IVA.

You can't take out a joint IVA, but you and the other person might be able to take out individual IVAs that are connected - these are called ‘interlocking’ IVAs. Your insolvency practitioner will be able to advise you about this.

If you have a lot of joint debts and the other person does not want an IVA, you might need to take a different option.

Next steps

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