An Individual Voluntary Arrangement (IVA) is a formal agreement between you and your creditors to pay off your debts in manageable installments. One of the most common questions about IVAs is how long they typically last. The duration of an IVA can vary depending on individual circumstances, but the standard length is around five to six years.
Typical Duration of an IVA
Most IVAs last five years, during which you make regular monthly payments based on what you can afford after essential living costs. In some cases, an IVA can be extended to six years. This usually happens if you have a payment break during the arrangement or if your creditors agree to extend the plan to ensure that the debt is adequately repaid.
What Happens During an IVA?
Once the IVA is set up, you’ll begin making agreed-upon monthly payments to your insolvency practitioner (IP)/ FCA Regulated Debt Advisor, who will distribute these funds to your creditors. Throughout the duration of the IVA, your financial situation will be reviewed annually to ensure that your payments remain affordable. If your financial circumstances change, your payments may be adjusted accordingly.
It’s important to note that once the IVA is completed, any remaining debt that you couldn’t repay will be written off, meaning you’ll be free from those obligations. This is one of the key advantages of entering into an IVA, as it offers you a way to clear your debts without going through bankruptcy.
What Could Affect the Duration?
Several factors could extend the duration of your IVA, including:
- Payment breaks: If you face financial difficulty, you may be granted a payment break, but this will likely extend the overall length of the IVA.
- Changes in income: If your income increases, your monthly payments may be increased, but if your circumstances worsen, the term could be extended to compensate for lower payments.
Conclusion
In most cases, an IVA will last for five years, with the possibility of a sixth year depending on your situation. During this time, you’ll be making payments that are affordable based on your income, and once the IVA is completed, any remaining debt will be written off. It’s a structured way to regain control of your finances and work toward a debt-free future.