Individual Voluntary Arrangement

An IVA, or Individual Voluntary Arrangement, is an arrangement between a debtor and their creditors in which a debtor is required to pay a single monthly instalment to an IVA Company who will then distribute these payments to creditors in lieu of the normal repayments. The amount of debt repayment usually reduced under an IVA and the debtor can become completely debt free in five years. The amount to be repaid under an IVA is negotiated between a debtor and their creditors. Depending on the debtor’s ability to pay, the creditors will usually write off a portion of the debt at the end of the IVA. An IVA may be a preferable option for a debtor that is unable to pay his/her debts and wants to avoid bankruptcy.
 
An IVA can usually only be proposed where a debtor has at least 3 creditors and debts of at least £18,000. The debtor should also be able to make a contribution of at least £200 per month into the IVA. An IVA must be arranged through a licensed Insolvency Practitioner, typically working for an IVA company. The IVA company will help a debtor with the collation of the necessary financial information for the creation of an individual voluntary arrangement proposal for submission to the creditors. If you, as a defaulting debtor, present an IVA proposal before your creditors and 75% (by value) of them approve it in a creditors meeting, they cannot harass you any further for debt defaults or take further legal action. Creating an suitable IVA proposal can persuade your creditors to vote in favour of the IVA proposal. The duration of a typical IVA agreement is five years during which time the debtor makes a monthly contribution to the IVA Company overseeing their IVA. These contributions are then distributed pro-rata to their creditors and at the end of the IVA any remaining debt is written off.

IVAs form a practical debt solution for people who are looking for a way out of debt.