2 Legal IVA Loopholes in the UK – What Can You Do?


Can you write off any of your debt?

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How much debt do you have?

This isn’t a full fact find, Thrifty Family doesn’t give advice. We work with The Debt Advice Service who provides information about your options. 

For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circumstances, ongoing fees might apply & your credit rating may be affected.

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Janine Marsh
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Janine Marsh

Financial Expert

My name’s Janine, and I’m a mum of two who’s always been passionate about trying to cut down spending costs. I am now sharing as much financial knowledge as I possibly can to help your money go that little bit further.

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- Financial Expert
Updated 28 October 2023

For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circumstances, ongoing fees might apply & your credit rating may be affected.

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Legal IVA Loopholes in the UK - What Can You Do

An IVA loophole is a legal way you could improve your situation despite using an IVA. You’ll already be aware of the restrictions you’re under while using an IVA, but there might be ways to make things better. 

I’ll recap the key takeaways of IVAs before diving into some real IVA loopholes below. 

What is an IVA?

An Individual Voluntary Arrangement (IVA) is a type of insolvency debt solution whereby the debtor agrees to make ongoing payments for a fixed period and potentially write off some of their unsecured debt in the end.

An IVA can only be set up by an insolvency professional. This person puts forward the IVA proposal to creditors. These creditors then vote on whether to accept the proposal or not. If the IVA proposal is accepted during the creditor meeting and one or more creditors rejected the proposal during voting, all creditors are still included.  

The IVA is managed by the insolvency practitioner for the lifetime of the debt solution. There are fees for their services, but they come out of debt repayments rather than being separate expenses for the debtor to pay. 

Do you have to pay?

There are ways to have debt written off in the UK.

If you genuinely can’t afford your debt repayments then looking into whether you could have your payments lowered or written off might be just what you need. 

If you want to find out whether you qualify for having debt written off or payments lowered then fill out the short form below.


Can you write off any of your debt?

1 of 5

How much debt do you have?

This isn’t a full fact find, Thrifty Family doesn’t give advice. We work with The Debt Advice Service who provides information about your options. 

How does an IVA work?

An IVA commits the debtor to pay one monthly repayment into the IVA. This payment is then deducted with the insolvency practitioner’s fee and the remainder is split between all creditors proportional to how much the debtor owes each of them. 

For example, if half of the total debt is owed to one creditor, that creditor will get 50% of the monthly repayment. 

Monthly repayments in an IVA usually last for five years, which means an IVA is usually only beneficial if you have significant unsecured debts. If you could repay in a shorter time, other debt solutions may be better for you. Speak with a debt charity for personalised advice. 

However, after 60 monthly repayments have been made, the IVA can only end if the debtor either:

  1. Releases equity from a property they own and pays a final lump sum into the IVA
  2. Gets a third party such as a family member to make a lump sum payment to end the IVA
  3. Agrees to 12 more monthly repayments

Once any of the following have been completed, the IVA ends and any remaining debt owed to all creditors is written off. 

How are IVA payments calculated?

Your IVA repayments are calculated based on your income and essential living expenses. Your essential expenses will be deducted from your regular net income to work out how much you can afford to repay without causing financial hardship.

To get your IVA approved, you’ll need to show that you are doing your best and repaying as much for your disposable income as possible. You won’t be expected to not be able to pay essential living costs like rent and food. 

Can you lower your repayments?

If you’re struggling to pay back your debt, then you might qualify for a debt solution.

Some solutions lower your monthly payments while others write off a portion of your debt


To find out whether they could work in your situation, hit the button below.

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Can I hide money from IVA?

No, you shouldn’t hide money during the IVA application process or once the IVA is set up. There can be serious consequences for hiding money during an IVA, and there is even the possibility of being sent to jail. 

If your financial situation improves during the IVA you have an obligation to tell your insolvency practitioner managing your IVA. Your repayments may increase as a result. On the other hand, you can tell them if your income decreases, which may result in an IVA repayment decrease. 

What can you not do with an IVA?

While using an IVA you will live under several restrictions. You won’t be able to:

  • Save significant amounts of money
  • Because you can’t save, it’s hard to go on holidays or pay for luxury/non-essential items
  • Take out further credit without permission
  • Keep any financial windfalls as these might need to be paid into the IVA as per a windfall clause in the IVA agreement

IVA loopholes you need to know!

People are always looking for clever ways to beat the system, and there are some people who want to try and use an IVA to their advantage. 

Have a read of this proposed IVA loophole from a respected forum:

IVA loopholes you need to know

Source: https://forums.moneysavingexpert.com/discussion/267301/an-iva-loophole 

The above is quite clever but not something I would recommend. There are flaws in this plan and probable legal implications too. 

But what about legal IVA loopholes for people who are already using an IVA? Well, I do have some of those to share – you’ve waited long enough if you’ve read up until this point. 

IVA Loophole #1: Additional income threshold

The best IVA loophole is the additional income threshold. This is a legal threshold that allows you to earn a certain amount of money above your usual income. 

The threshold is usually set at 10%. So, for example, if you earned £350 per week, you are allowed to earn another £35 in most cases and be allowed to keep this money. You can even keep some of the money you earn above this threshold, often 50%!

This money could then be saved and then used to pay for luxury items or even a holiday. 

IVA Loophole #2: You can still get a loan

It’s completely legal for you to take out a loan worth up to £500 without having to ask permission from your insolvency practitioner. You only need permission if the amount you want to borrow is more than £500 unless otherwise stated in your IVA agreement. 

This money can be used as you need, but you will need to repay. It may not be wise to use this IVA loophole as it could create further debts. Some creditors won’t approve you due to the IVA, so you may need to search for bad credit lenders instead. 

How can I finish my IVA early?

The only way to finish your IVA early is to make a full and final settlement offer to all creditors. It will end your IVA and the IVA restrictions you’re currently living under. Any remaining debt will be wiped giving you a fresh start.

This will only be possible if you have come into money during the IVA as it won’t be possible to save a significant sum during the IVA itself. 

You may have enough money to make a full and final settlement offer if you have a windfall from inheritance or a lottery win. However, a windfall clause within the IVA will mean you have to pay this into the IVA anyway, but it could still help you end the IVA early.

Alternatively, someone may offer to finance your full and final settlement offer. 

Can I get my IVA written off?

You can only end your IVA early and potentially have some of the debt written off by making a full and final settlement offer. 

There are no other ways of ending the IVA and writing off the debt. If you default on your IVA, your creditors could then petition to make you bankrupt.  

“It will only get worse” 😩

It’s cliché to say, but with debt it’s true; the longer you leave it, the worse the problem gets

There are straightforward and effective ways to deal with debt, but you have to know your options. 

Fill out the short form to find out about the debt solutions that could reduce your monthly payments or even write off some of your debt.

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More of my debt help!

If you’re struggling with your IVA it’s best to discuss your situation directly with your IVA management company. But if you or someone you care about is struggling with other debts, I recommend giving my Get Out of Debt page a quick read!

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My name’s Janine, and I’m a mum of two who’s always been passionate about trying to cut down spending costs. I am now sharing as much financial knowledge as I possibly can to help your money go that little bit further.
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