An IVA can help you deal with your unsecured debt by reducing your monthly repayments to an amount you can comfortably afford. Before entering into an IVA, it's important that you understand the rules around remortgaging or selling your home during your arrangement. This article will explore IVAs and the potential property restrictions that you should be aware of.
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What is an Individual Voluntary Arrangement (IVA)?
An Individual Voluntary Arrangement (IVA) is a legally binding agreement between you and the people you owe money to (your creditors) to repay your debt in a more structured and manageable way. It is only available in England, Wales, and Northern Ireland.
All IVAs must be handled by an Insolvency Practitioner (IP), who is a financial professional licensed to act on behalf of individuals facing insolvency. They will communicate with your creditors on your behalf and must approve any significant changes to your financial or housing arrangements during your IVA.
To be eligible for an IVA, you must owe more than one debt and have a regular monthly income to allow you to afford your monthly repayments. There is no minimum or maximum debt level for an IVA, but it's typically only recommended for individuals with total debts of more than £6,000 due to the fees required.
Only unsecured debts can be included in an IVA. This includes payday loans, credit cards, catalogues, store cards, overdrafts, council tax arrears, HM Revenue & Customs (HMRC) debts, and debts owed to family and friends. Certain debts can't be included and must be dealt with separately. This includes secured loans, student loans, court fines, criminal penalties, and debts owed to the Child Maintenance Service (CMS).
As with most debt solutions, an IVA will be added to your credit and will negatively affect your credit rating for six years. Your details will also be added to the Individual Insolvency Register (IIR) for six years, which is a public database of all individuals in insolvency solutions in England and Wales. The IIR can be accessed by anyone, but it is usually only searched by lenders, landlords, and employers if they need to check your insolvency status for whatever reason.
How does an IVA work?
When you apply for an IVA, you must provide information about your current financial situation, including your debt, income, employment status, and assets. If you're a homeowner, you will also need to provide your IP with an up-to-date property valuation, and the available equity (property value minus secured loans) in your home will be calculated.
It's important to note that if the home is jointly owned, only your equity in the property will be considered. If the home is owned solely by you, the total equity will be taken into account.
When you submit your IVA application, it must be reviewed by all the creditors included in the proposal. They will then vote on whether they agree to the arrangement during something called a meeting of creditors. This is rarely a physical meeting, but rather the name given to the voting process where your creditors individually submit their response to your IP via email, post, or telephone.
As long as 75% of your creditors by debt value agree to the IVA, it will go ahead. For example, if your total debt is £10,000, the creditors that represent £7,500 of the debt must vote in favour of the IVA.
Remember, you can't apply for an IVA yourself. Instead, you must contact an IVA provider or reach out to an IP directly. They will then handle your arrangement going forward and act as a middleman between you and your creditors.
If your IVA has been approved, both you and your creditors agree to follow certain processes, including ceasing all contact, legal action, and interest and charges on the included debts. Most IVAs last five years (60 months), but they can be extended to six years (72 months) in certain circumstances.
Once you've made your final IVA payment and it's been confirmed that you have stuck to the terms of your arrangement, the remaining debt will be written off. You can apply for an IVA completion certificate to prove that you have successfully completed the arrangement.
It's important to stick to the rules of your IVA for the duration of your arrangement. Failure to do so (e.g. by missing agreed payments or failing to report windfalls) will constitute a breach of your IVA and cause it to fail. When your IVA fails, all legal protections will be lifted, and you'll become responsible for the included debts again. This will also leave your creditors free to contact you again and potentially take legal action against you to recover payment if they wish.
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Is there an IVA restriction on property?
While the property restrictions with an IVA are less severe than other debt solutions, there are still some limitations that you should be aware of.
For example, your IP or creditors can apply to HM Land Registry to enter a restriction against your property. To do this, you must provide them with a signed RX1 form. This flags to buyers or lenders that there is an active financial claim on the property, which doesn't stop you from selling or remortgaging during an IVA, but can make the process more difficult and time-consuming as you must get permission from your IP.
However, once you have successfully completed your arrangement, the restriction will be formally removed from your title.
It's also important to note that, while your home will be protected in an IVA, you must still declare all property ownership in your application.
Can I sell or remortgage my home if I'm in an IVA?
Unlike other debt solutions - like bankruptcy, which puts your home at risk - you'll never be forced to sell your home while you're in an IVA. However, if you want to voluntarily sell your home, you must obtain written permission from your IP first.
If you want to sell or remortgage because you're struggling with your IVA repayments, there are other options. For example, your IP can grant you up to nine months of payment breaks at their discretion if you can prove you're experiencing extreme financial hardship.
We've outlined the process of selling and remortgaging your home during an IVA below:
Selling your home
As mentioned above, your IVA supervisor must be informed before you sell your home. They will also confirm the price is fair.
It can be difficult to secure a new mortgage with an IVA on your credit file, but it isn't impossible. If you're finding it difficult to get approved by a mainstream lender, contact a specialised mortgage lender that specialises in helping individuals with recent or ongoing financial problems secure a mortgage deal with good terms.
It's always worth working out with your IP whether you'll be able to afford a new mortgage before starting the process of selling your home. If you're not in a rush to relocate, it's recommended to wait until you've completed your IVA and it has been removed from your credit file.
If you're able to successfully sell your home, you may be able to offer the funds made from the sale as a type of lump sum known as a full and final settlement to pay off your IVA early. However, to be discharged from your IVA early, you'll usually still need to pay your supervisor's fees and statutory interest alongside the final settlement amount.
Find out if your debts qualify
Check my eligibilityRemortgaging your home
Before the introduction of the IVA Protocol in 2025, it was a requirement to remortgage during the final year of your IVA if you had equity of £5,000 or more. However, for all IVAs taken out after July 1, 2025, individuals with equity of £10,000 or more will have their arrangement extended by a year instead, and equity release is only required if it is explicitly specified in the terms of the arrangement.
Under an IVA, remortgaging follows a similar process to taking out a mortgage. In other words, it is difficult but certainly not impossible. Your IP will also need to approve the remortgage, and they will usually only do this if doing so would release equity to pay off your outstanding debt.
Whether you're selling or remortgaging, you will likely require a specialist broker or lender to help you find a good deal for your personal circumstances. In most cases, a mainstream lender will decline your application or apply strict terms or high interest if you still have an active IVA.
Will my home be affected by an IVA if I rent?
When you enter an IVA, it's normal to worry about who will be informed and whether it can affect your current living situation. In short, as long as you pay your rent on time and your ongoing rent payments are not included in your arrangement, your landlord will not be notified of the IVA.
However, because your IVA will be listed on your credit file and the IIR for six years, and your credit score will be damaged, it can be more difficult to pass a background check if you want to move into a new rental property. You may also find that you don't have enough money for a deposit while you're in an IVA, as your budget will be limited.
It's extremely unlikely that you'll be evicted from your rental property solely on the grounds of your IVA unless your tenancy agreement explicitly includes an insolvency clause that allows you to be evicted in the event of insolvency.
What are alternative debt solutions to an IVA?
An IVA can be a suitable debt solution for you if you're struggling with unsecured debt and you want to keep your home. However, there may be other debt solutions that you are eligible for, which we've outlined below:
Debt Management Plan (DMP)
A Debt Management Plan (DMP) is an informal agreement between you and your creditors to deal with your non-priority debts in a more manageable way. It is available in England, Scotland, Wales, and Northern Ireland.
During a DMP, you make a single monthly payment towards your debts until they have been repaid in full. Once you've made your final payment, your debt will be fully repaid.
However, because a DMP is an informal agreement, you won't be protected from creditor contact or legal action. Your creditors may agree to freeze interest and charges, but they are not legally obligated to.
Bankruptcy
Bankruptcy is a legal process that can offer relief if you're unable to pay your debts. It is available in England and Wales.
After approval, you don't have to make any payments towards your debts as long as your earnings fall below a certain threshold. If you have cash left over after your essentials have been paid, you may have to pay something towards your debts.
If your financial situation doesn't improve after 12 months of bankruptcy, all included debts will be written off, and you'll be free to make a fresh start.
Debt Relief Order (DRO)
A Debt Relief Order (DRO) is a debt solution available in England, Wales, and Northern Ireland. It is often considered a cheaper, simpler form of bankruptcy.
The eligibility criteria for a DRO can be strict. For example, you must not own your home, owe less than £50,000, have £75 or less disposable income each month, have assets worth no more than £2,000, and if you own a vehicle, it must be worth no more than £4,000.
During a DRO, you don't have to make any payments towards your debts. Once the DRO period is complete, all included debts will be written off.
Where can I get further debt advice?
If you're struggling with unaffordable debt, it's important to know that there is help available. Whether you've decided to enter into a debt solution or you're just looking for expert advice, don't hesitate to reach out for support.
There are many debt advice companies, like UK Debt Expert, and charities out there that can assess your current financial situation, including all your debts, income and assets, and advise on the best way forward.
The sooner you take the first step, the sooner you can start to regain control of your finances.
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It's normal to worry about what could happen to your home if you were to take out a debt solution, but the good news is that you'll never be forced to sell your home while you're in an IVA.
It can be challenging to sell or remortgage your home while you're still in an active IVA, as your credit rating will still be damaged. However, waiting until the IVA ends and has been automatically removed from your credit file or getting a mortgage with a specialised lender can improve your chances.
If you're worried about how an IVA may impact your home, it's crucial that you seek advice as soon as possible. Don't wait until your arrangement has been finalised before checking whether an IVA could affect your housing situation.
