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How does an IA work?

An IA is one way to help you deal with your debts. You contact your creditors (people you owe money to) and ask them to agree to accept regular lower repayments towards all or part of your debts. Your creditors don’t have to accept your IA and can cancel it at anytime.

Get free help and advice about debt

You can get free and independent advice about IAs and if they are the best way to deal with your debt problem from organisations like the National Debtline.

• Debt - where to get free help and advice

• Dealing with debt problems - a guide

Your IA responsibilities

You are responsible for making all the agreed repayments and keeping your creditors up to date about your finances.

If your financial situation gets worse, for example, you lose your job, you can try to negotiate another arrangement. If your circumstances improve, your creditors may expect you to increase your repayments.

Cost of an IA

There is no cost to set up an IA, but small repayments may not cover any interest or charges. If this happens, the amount of debt you have to repay and the time it takes to pay it off can increase.

Steps to get an IA

You can set up an IA yourself, but you should make sure that it is the right way to deal with your debts. To set one up and make sure it’s the right way to deal with your debts, get free help and advice from organisations like Citizens Advice or the National Debtline.

Other organisations can help you set up an IA, but they may charge a fee. You should get them to confirm their costs before asking them to help you with the IA.

Step one: work out a budget. This will show you how much you can afford to pay your creditors each month after you have paid essential living expenses (like your rent, mortgage and household bills).

Step two: write out your IA, showing what you can reasonably afford to repay and over what period of time.

Step three: write to each of your creditors explaining your situation and asking them to accept your IA.

You can get free advice from organisations like Citizens Advice and the National Debtline if your creditors don’t accept your IA.

• How to work out a budget

CASHflow – a recognised way of setting up an IA

You may be able to use a free advice process called CASHflow to help you set up your IA. Using CASHflow shows that you have taken advice about your debts and worked out your repayments in a fair way. This can make it more likely that your offers are accepted.

In order to use CASHflow you need to speak to one of the free advice organisations that use it, which include National Debtline, many Citizens Advice Bureaux and local advice agencies.

• More information about CASHflow Opens new window

Useful contacts

• Money, tax and benefits contacts