Can I Be a Company Director with an IVA In the UK? ( A Guide For 2026)

Are you currently in an Individual Voluntary Arrangement (IVA) or considering one, but worried about whether you can still be a company director? Many people in the UK face this question, as balancing personal debt solutions with business responsibilities can feel confusing.

In this guide for 2026, we explain exactly what the law says, what you need to check before continuing as a director, and the practical steps to take. Read on to understand your options and stay in control of your company while managing your debts. 

What Is an IVA?

An Individual Voluntary Arrangement (IVA) is a formal agreement between you and your creditors to repay your debts through a structured payment plan. It is a legally binding debt solution that is set up and managed by an Insolvency Practitioner (IP).

Usually, an IVA is used when someone cannot afford to repay their debts in full but wants to avoid bankruptcy. Instead of facing legal action or pressure from multiple creditors, the IVA allows you to make one affordable monthly payment based on your income and essential expenses.

How an IVA Works as a Debt Solution

• Your finances are assessed: An Insolvency Practitioner reviews your income, debts, household bills, and overall financial situation to work out what you can reasonably afford to pay each month. 
• A repayment proposal is created: The IP drafts an IVA proposal that outlines how much you will repay and over what period (usually five to six years). 
• Creditors vote on the plan: For the IVA to be approved, creditors representing at least 75% of the debt value must agree to the proposal. 
• Once approved, the IVA becomes legally binding: All included creditors must stop further interest, charges, and enforcement action. 
• You make one fixed monthly payment: This amount is based on what you can afford, not what you owe. At the end of the IVA term, any remaining qualifying debt is usually written off. 

An IVA offers a structured way to regain control of your finances while protecting you from creditor pressure. It allows you to repay what you can realistically afford while working toward becoming debt-free. 

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What the Law Says About Directorship and Insolvency

When it comes to running or managing a company, the law sets out specific rules about what you can and cannot do if you are dealing with financial problems. These rules mainly come from the Insolvency Act 1986 and other company law regulations.

The Rules for Directors Under the Insolvency Act 1986

If you are a company director, you must follow certain legal duties, including acting in the company’s best interests, keeping proper financial records, and avoiding wrongful trading.

The Insolvency Act 1986 outlines the situations where someone may be restricted or disqualified from acting as a director. These include serious financial misconduct, failure to meet director duties, or being involved in specific types of insolvency cases.

However, being in an Individual Voluntary Arrangement (IVA) is not one of the situations that automatically restricts you from being a director.

The Difference Between Being Bankrupt and Being in an IVA

Bankruptcy and an IVA are both insolvency solutions, but legally they are very different for directors:

This difference is crucial. Bankruptcy removes your ability to act as a director, but an IVA does not.

Why an IVA Does Not Automatically Stop You Being a Director

An IVA is designed to help individuals repay their debts in an affordable way without forcing them into bankruptcy. Because it does not carry the same legal restrictions, it does not automatically prevent you from:

• Continuing as a director,
• Setting up a new company,
• Having an active role in business management.

The only exceptions occur when other rules apply, such as:

• Your company’s Articles of Association contain restrictions.
• Your employment contract or service agreement has clauses against directors with insolvency arrangements.
• You work in a profession with strict regulatory requirements.

Aside from these specific cases, the general position under UK law is clear, which is that you can remain a company director while you are in an IVA. 

Can You Remain a Director While in an IVA?

Yes. You Can Usually Stay as a Director Even If You Enter an IVA

If you are already a company director and you enter an IVA, the general rule in the UK is that you can continue in your role. An IVA does not automatically force you to resign or stop you from managing your business.

This is because an IVA is a voluntary and controlled debt solution, not a court-imposed restriction like bankruptcy. As long as the IVA is approved and you follow its terms, you are legally allowed to keep running your company.

Most directors choose an IVA instead of bankruptcy specifically because it allows them to maintain their directorship and continue earning an income.

Can You Become a Director After Entering an IVA?

Yes. In most cases, you can still be appointed as a company director even if you already have an IVA. There is no law in the Insolvency Act 1986 that prevents someone with an IVA from taking on a new directorship.

However, there are a few things you must keep in mind:

• Company rules (Articles of Association) may include restrictions.
• Shareholders might need to be informed or approve your appointment.
• Some industries have stricter rules (e.g., finance, law, insurance, property management).
• Banks and lenders may look at your IVA when assessing business accounts or credit facilities.

In general, though, guidance from insolvency experts and regulators confirms that having an IVA does not block you from becoming a director of a new or existing company. 

What Issues Should You Check Before Acting as a Director with an IVA

While an IVA does not stop you from being a company director, there are several important areas you must review before you continue in your role or take on a new directorship. Doing the following checks will help you avoid breaching rules, damaging your company’s stability, or risking your IVA. 

1. Company’s Articles of Association

Every limited company has a document called the Articles of Association, which sets out the rules for how the company is run. Some companies include clauses that restrict or prohibit directors who:

• Have an IVA 
• Have entered any form of insolvency arrangement 
• Have financial restrictions that could affect their duties 

If such a clause exists, you may have to:

• Seek shareholder approval 
• Apply for a change to the Articles 
• Step down temporarily 

Therefore, always review your company’s Articles to avoid accidentally breaching them. 

2. Employment Contract or Service Agreement

If you are both a director and an employee of the company, your employment contract or director’s service agreement may have rules about financial status or insolvency.

Some agreements include:

• Clauses requiring financial stability.
• Requirements to disclose insolvency arrangements.
• Conditions that could trigger dismissal or suspension.

Check your contract carefully and speak to HR or legal advisers if needed. 

3. Personal Guarantees for Company Debts

If you have signed personal guarantees for loans, leases, or supplier credit, entering an IVA can affect:

• Your personal liability.
• How lenders treat your guarantee.
• Whether the lender demands repayment directly from you.

Personal guarantees do not automatically disappear when you enter an IVA. Your Insolvency Practitioner must review these, because:

• Some debts may still fall outside the IVA.
• Creditors may react differently to your arrangement.
• It could impact your ability to manage company finances.

4. Effect on Personal and Company Bank Accounts, Borrowing, and Banking Relationships

Banks often take a cautious view when a director has an IVA. You may face:

• Limited access to personal overdrafts and credit.
• Requests for additional checks on company accounts.
• Restrictions on business loans or credit limits.
• Possible changes to the company’s banking facilities.

In some cases, a bank may:

• Ask for another signatory.
• Review the company’s risk status.
• Decline new credit applications.

This does not stop you from being a director, but it may influence how your business manages money..

5. Specific Professions or Companies With Stricter Rules

Some industries have regulatory bodies that set higher standards for financial conduct. These can include:

• Financial services 
• Legal professions 
• Accountancy 
• Property and estate management. 
• Charity organisations. 
• Security or government-linked roles. 

In these fields, having an IVA could:

• Require disclosure.
• Trigger a review of your position.
• Limit certain roles.

Always check your professional regulator’s rules. 

6. Impact on Credit Rating and Public Record

An IVA stays on your credit file and the public Insolvency Register for six years. This may affect:

• Business loans.
• Company credit applications.
• Supplier credit terms.
• Personal finance needed to support business operations.

While it doesn’t block you from being a director, it may influence how financial institutions and business partners view your risk level. 

Practical Steps If You Are a Director in an IVA or Intend To Be

If you are already a company director or planning to become one, while in an IVA, there are important steps you should take to protect both your business and your IVA arrangement. Following these steps helps you stay compliant and avoid unnecessary risks. 

1. Talk to Your Insolvency Practitioner About Your Directorship Status

Your Insolvency Practitioner (IP) should always be your first point of contact. They can explain:

• Whether your IVA affects your directorship.
• How your business income should be reported.
• What impact the company’s situation might have on your IVA payments.

Your IP may also need to review any business-related financial documents to make sure your IVA remains affordable and compliant. 

2. Check the Articles of Your Company for Any Restrictions

Before continuing as a director, check your company’s Articles of Association for clauses related to:

• Insolvency 
• Financial standing 
• Mandatory resignation rules 

If the Articles include restrictions, you may have to seek:

• Shareholder approval, or,
• A formal amendment to the Articles.

Resolving this early prevents governance breaches. 

3. Disclose to Other Directors or Shareholders When Necessary

While you do not have to tell everyone about your IVA, disclosure may be necessary when:

• Required under the Articles.
• Requested during board meetings.
• Needed for transparency with shareholders.
• Linked to your service agreement or employment contract.

Clear communication helps maintain trust. And it avoids misunderstandings about your financial status. 

4. Keep Company and Personal Finances Separate

It is essential to separate your personal money from company funds. This helps you:

• Stay compliant with director duties.
• Avoid accusations of misusing company money.
• Prevent complications during your IVA reviews.

Use separate bank accounts, keep clean records, and avoid paying personal debts from the company account. 

5. Make Sure the Company Remains Solvent and You Fulfil Your Duties

As a director, you must ensure the company is run properly, especially if you’re in an IVA. Make sure to:

• Keep the company solvent.
• Avoid trading if the company cannot pay its bills.
• Maintain up-to-date financial records.
• Act in the best interests of creditors if the company faces difficulties.

Failing to meet these duties could lead to:

• Director disqualification.
• Personal liability.
• Further insolvency action.

Keeping the business healthy is not only a legal requirement. It also supports your IVA payments and financial recovery. 

What Happens if Things Go Wrong

Being a director while in an IVA is usually manageable. But problems can arise if you fail to meet your obligations, either within your IVA or in your role as a director. Here’s what could happen if things go wrong. 

1. Breaching Your IVA Terms

If you miss payments or fail to follow the conditions of your IVA, your Insolvency Practitioner may mark the arrangement as failed.

This can lead to serious consequences:

• IVA failure: The agreement ends, and you lose its legal protection. 
• Creditors may contact you again: They can restart collection activity, add charges, or demand payment in full. 
• You may face bankruptcy: Your Insolvency Practitioner or creditors may choose to petition for your bankruptcy. 

If you become bankrupt, you cannot act as a director, and you may be forced to resign immediately. 

2. Risk of Director Disqualification

Even though an IVA itself does not disqualify you, you can still be banned from being a director if you:

• Fail to keep proper company records.
• Allow the company to trade while insolvent.
• Mismanage company finances.
• Put creditors at risk.
• Use company funds for personal expenses.

Director disqualification can last from 2 to 15 years and will prevent you from managing, forming, or promoting a company. 

3. How the Company May Be Affected by Your IVA

Your personal IVA does not directly involve your company, but it can still create complications, including:

i. Banks and lenders becoming cautious

Banks may review or tighten:

• Business overdrafts 
• Credit facilities 
• Loan agreements 
• Account access 

They may also request another director or signatory for safety.

ii. Suppliers may reduce credit terms

Some suppliers check credit files and may shorten payment terms or refuse trade credit.

iii. Impact of personal guarantees

If you have personally guaranteed any company debts, lenders may:

• Call in the guarantee.
• Refuse to extend further credit.
• Seek direct repayment from you.

This can place pressure on both your personal finances and the company’s stability.

iv. Reputation and confidence issues

Shareholders, partners, or clients may become cautious if they discover you are in an IVA, especially in finance-related industries. 

Overall, things typically run smoothly if you follow your IVA rules and fulfil your duties as a director. Most problems occur only when obligations are ignored or financial responsibilities are mishandled. 

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Advantages and Limitations of Being a Director With an IVA

Being a company director while in an IVA comes with both benefits and limitations. Therefore, being aware of the points below can help you make informed decisions and manage your business responsibly. 

Advantages

1. You can continue as a director: An IVA does not automatically prevent you from holding or taking on a directorship. This allows you to maintain your role in running your company.  
2. Maintain your income: As a director, you can continue drawing a salary, which may help you meet your IVA payments and manage personal finances. 
3. Keep control of your business: Unlike bankruptcy, an IVA allows you to remain in charge of your company’s operations and strategy, helping to protect your long-term business interests. 
4. Structured repayment plan: The IVA provides a clear, legal framework for repaying debts without creditor harassment, allowing you to focus on your company while working toward financial recovery. 

Limitations

1. Credit rating impact: Your IVA will remain on your credit file and the public Insolvency Register for six years, which can affect your ability to obtain personal or business credit. 
2. Banks may be cautious: Financial institutions may impose restrictions, require additional signatories, or limit your borrowing capacity because of your IVA. 
3. Directorship may be restricted by company or contractual rules: Some companies’ Articles of Association or employment contracts may have clauses preventing directors from continuing in their role while in an IVA. 
4. Professional limitations: Certain regulated industries (finance, legal, property, and accounting) may require disclosure of your IVA or impose restrictions on your role. 
5. Ongoing financial obligations: Being a director means you are still responsible for company compliance and solvency, which can be challenging if your personal finances are limited. 

Overall, while an IVA allows you to remain a director and manage your company, it comes with practical and financial limitations that you must manage carefully. 

What Should I Do If My Debts Are Huge And I Cannot Afford To Settle Them?

Sometimes, it may be difficult to agree on a payment plan with your creditor or debt collection agency, particularly if the payments are financially overwhelming.

In such cases, you might want to explore potential debt solutions in the UK. There are several options available in the UK, each with its own eligibility criteria. Choosing the right option can help resolve your debt issues, but the wrong one may make your financial situation worse.

However, it is essential to seek professional advice before committing to any debt solution. A debt advisor can help you assess your situation and guide you in selecting the most appropriate option.

Some of The Key Debt Solutions Available in England, Northern Ireland, and Wales:

• Debt Management Plan (DMP): An informal arrangement where you make monthly payments toward your debts. There is no legal commitment, but your creditors may agree to reduce interest or freeze fees.
• Debt Relief Order (DRO): Designed for individuals in severe financial distress, this option freezes interest and allows a year of no payments, potentially leading to debt resolution.
• Bankruptcy:  A formal legal process that can clear most debts if you are unable to repay them. Bankruptcy provides a financial reset, but it also has serious long-term consequences, including restrictions on your financial affairs and potential asset loss.

Debt Solutions Available in Scotland

1. Protected Trust Deed: A formal agreement to repay part of what you owe over four years. The remaining debt may be written off afterward. It is legally binding and affects your credit rating.
2. Debt Arrangement Scheme (DAS): A government-backed scheme allowing you to repay your debts through a Debt Payment Programme (DPP) based on what you can afford. Interest and charges could be frozen, and creditors can’t take legal action.
3. Sequestration (Scottish Bankruptcy): A formal insolvency process where most debts may be written off, but assets may be sold to repay creditors. It offers a fresh start but comes with serious consequences.
4. Minimal Asset Process (MAP): A simplified form of bankruptcy designed for individuals with low income and few assets. It allows eligible debts to be written off after six months, provided the individual fully cooperates with the process. However, in practice, the process may take longer depending on the complexity of the case. MAP also offers lower fees and reduced administrative burden compared to full bankruptcy.

Caution: These debt solutions have both advantages and drawbacks, so it’s important to carefully weigh your options before making a decision.

Furthermore, if you are unsure which debt solution suits your situation, speak to a professional debt advisor. Free, independent advice services like MoneyHelper can help you assess your finances and find the best option for you.

Final Thoughts on Whether Can I Be a Company Director with an IVA In the UK

The short answer is yes, you can be a company director while in an IVA in the UK. Unlike bankruptcy, an IVA does not automatically prevent you from holding or taking on a directorship. Many directors choose an IVA specifically because it allows them to continue running their business and earning an income while repaying their debts in an affordable, structured way.

However, being a director with an IVA comes with responsibilities and considerations. You must ensure the company remains solvent, keep personal and business finances separate, comply with company rules, and meet the terms of your IVA. In fact, certain industries, company articles, or contractual clauses may impose additional restrictions.

By staying informed, seeking guidance from your Insolvency Practitioner, and carefully managing your finances, you can maintain your directorship while resolving your debts. Keep in mind that an IVA provides a legal framework to recover financially without forcing you to step away from your business. Thus, making it a practical solution for directors who want to protect both their personal and professional futures. 

Key Takeaways

• An IVA (Individual Voluntary Arrangement) is a legally binding debt solution that allows you to repay what you can afford without going bankrupt. 
• Unlike bankruptcy, being in an IVA does not automatically prevent you from being a company director. 
• You can usually continue as a director if you enter an IVA and can even become a director after starting one, subject to company rules and industry regulations.  
• Always check your company’s Articles of Association and any employment contracts or service agreements for clauses that may restrict directors with an IVA. 
• Personal guarantees for company debts may still be enforceable and can affect both your IVA and your business finances. 
• Keep personal and company finances separate to comply with legal duties and avoid complications with your IVA. 
• Certain industries (finance, legal, accountancy, property management) may require disclosure or impose stricter rules for directors in an IVA. 
• Failure to follow your IVA terms or director duties can lead to IVA failure, bankruptcy, or director disqualification. 
• Being a director with an IVA may affect your credit rating, banking relationships, and access to business finance, but does not prevent you from operating your company. 
• Seek guidance from your Insolvency Practitioner and professional debt advisors to ensure compliance and make informed decisions while managing your debts. 

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