An IVA is a legally binding agreement between an individual and their creditors to pay back debts over a period of time.

The new animated step-by-step guide takes people through important factors to consider before making this financial commitment to manage their debts.

This includes checking the suitability of an IVA for their circumstances, fees charged by Insolvency Practitioners, what payments may look like and how it affects their future finances, such as their credit rating.

The video has been created by the Insolvency Service and provided to Insolvency Practitioners so they can show it to everyone who is considering taking on an IVA before they sign up.

Claire Hardgrave, co-director for strategy, policy and analysis at the Insolvency Service, said: “We know that deciding how to deal with unmanageable debts can be a difficult and stressful process for people.

“There are a range of debt solutions available, and they all help give people a fresh start, but it’s really important to understand the detail of what you’re signing up for.

“With this video and our key facts document, we’re aiming to help boost understanding of what IVAs are and what happens when people agree to one.

“I am really grateful to regulators and the insolvency profession for all their support, sharing the video with their clients and empowering those struggling with debt to make informed decisions about their finances. IVAs are an important part of the debt-relief landscape.”

The video is the latest product of a commitment by the Insolvency Service to support improvements in insolvency practice.  

Recently, the Insolvency Service published a revised Individual Voluntary Arrangement (IVA) protocol to improve the service currently offered to people in debt and safeguard them from poor practice.   

It includes an easy-to-read ‘key facts’ document which will be given to people in debt before they sign up to an IVA.  

The protocol, ‘key-facts’ document, and video, are a direct result of collaboration between the Insolvency Service, regulators, the trade association R3, creditors, Insolvency Practitioners and debt advice organisations.