Could an IVA help you manage business debt in 2026?

If you’re trying to move out of the red and into the black but have so far struggled to manage making repayments and actually living, then it might be time to consider other options.

April 25, 2026

If you are juggling business and personal debt and the monthly repayments feel unmanageable, an Individual Voluntary Arrangement (IVA) could be one route back to financial stability. An IVA is a formal, legally binding agreement between you and your creditors to repay what you can afford over a fixed period. Insolvency Service guidance from 2024 states that an IVA usually lasts for five or six years. It is not a way to “escape” debt, but it can freeze interest and charges and give you a clear repayment plan.

For women running UK businesses, especially sole traders whose personal and business finances are legally intertwined, understanding how an IVA works is essential before signing anything. This guide explains the rules that apply in 2026, the debts an IVA covers, and the alternatives you should explore first.

What an Individual Voluntary Arrangement is

An IVA is a formal insolvency procedure set up and supervised by a licensed Insolvency Practitioner. It is governed by the Insolvency Act 1986 and is available in England, Wales and Northern Ireland. If you live in Scotland, the equivalent process is a Trust Deed.

The Insolvency Practitioner assesses your income, essential spending and debts, then proposes a monthly repayment amount to your creditors. Under the Insolvency Act 1986, creditors representing at least 75% of the total debt value must vote in favour for the IVA to be approved. Once approved, the IVA binds all creditors included in it, even those who voted against it.

Once approved, interest and charges on the included debts are frozen. You make the agreed monthly payment to the Insolvency Practitioner, who distributes it to your creditors after deducting their fees. At the end of the term, any remaining debt included in the IVA is written off.

Which debts an IVA can cover

An IVA can include most unsecured debts, such as:

credit cards and store cards
personal loans and payday loans
bank and building society overdrafts
utility arrears and council tax arrears
tax debts owed to HMRC, in some cases
money owed to suppliers, if you are a sole trader

However, an IVA cannot include:

student loans
child maintenance arrears
court fines and compensation orders
secured debts such as your mortgage or car finance, unless the lender agrees
some hire purchase agreements

If your business is a limited company, the company itself cannot enter an IVA. Instead, the company may use a Company Voluntary Arrangement, which is a separate procedure also supervised by an Insolvency Practitioner. As a director, you remain responsible for any personal guarantees you gave to lenders.

What an IVA means for women in business

Sole traders are personally liable for business debts, which means an IVA can cover both personal and business borrowing. If you trade through a limited company, your personal debts and the company’s debts are separate, although personal guarantees can blur that line. An IVA does not automatically stop you from acting as a director, unlike bankruptcy, but you should check your company’s articles of association and any finance agreements first.

Before considering an IVA, check whether you can improve cash flow by claiming all allowable business expenses, restructuring tax payments, or switching from sole trader to limited company status. Our guides on allowable expenses for the self-employed, Self Employed Tax UK for 2026/27, and sole trader vs limited company explain the options.

The Insolvency Service records the IVA on the public Individual Insolvency Register. Experian guidance from 2024 states that an IVA stays on your credit file for six years from the approval date. During that time, obtaining new credit, a business loan, or a mortgage is likely to be difficult.

The pros and cons of an IVA

Advantages

One affordable monthly payment based on what you can realistically afford
Interest and charges on included debts are frozen
Creditors included in the IVA cannot take further enforcement action
Remaining included debt is written off at the end of the term
You can usually keep your home, although you may need to release equity if you own property

Disadvantages

Your credit rating will be affected for six years
Insolvency Practitioner fees are deducted from your payments
If your income rises, you may have to increase your payments
If you fail to keep up payments, the IVA could fail and creditors may pursue bankruptcy
Windfalls, bonuses or inheritance over a certain amount may have to be paid into the IVA

Alternatives to an IVA

An IVA is not the only option. Depending on your situation, you may be better served by:

Debt Management Plan: An informal agreement with creditors to reduce monthly payments. It is more flexible than an IVA but does not guarantee interest is frozen.
Debt Relief Order: Suitable in England and Wales if you have low income, few assets and debts of £50,000 or less, as set by the Insolvency Service in 2024. A Debt Relief Order freezes debt for 12 months and can write it off.
Bankruptcy: A last resort for those who cannot repay their debts. Assets may be sold, and you could lose your home.
Company Voluntary Arrangement: If your business is a limited company with its own debts.
Negotiating directly with creditors: Many creditors will agree to a temporary payment holiday or reduced payments if you explain your situation.

Where to get free, regulated debt advice

Never pay for debt advice. Free, impartial help is available from:

These organisations can help you decide whether an Individual Voluntary Arrangement, Debt Management Plan, Debt Relief Order or another solution is right for you. If an IVA is suitable, they can refer you to a licensed Insolvency Practitioner.

Action steps to take before signing

List every debt, creditor, balance and monthly payment.
Calculate your realistic disposable income after essential living and business costs.
Contact a free debt advice organisation before speaking to any commercial IVA provider.
If an IVA is recommended, ask the Insolvency Practitioner for a written breakdown of fees and the total amount you will repay.
Check how the IVA will affect your credit file, your home, and any business contracts before signing.

An Individual Voluntary Arrangement can give you a structured way to deal with unmanageable debt, but it is a serious legal commitment. For UK women in business, the first step is always free, impartial advice to make sure the solution fits both your personal and business circumstances.

Hannah Ashworth

A UK business writer and editor covering enterprise, funding, and leadership for women founders. She writes practical, data-driven guides on grants, self-employment, and growth strategy - translating complex regulatory and financial information into clear advice for women running or starting businesses. Before joining Prowess, Hannah worked in small-business advisory and content strategy.

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