An Individual Voluntary Arrangement (IVA) is a legally binding agreement in England and Wales that allows individuals to repay their debts in a structured way, avoiding bankruptcy.
How Individual Voluntary Arrangement Works
Assessment & Proposal Preparationn An insolvency practitioner reviews the individual’s financial situation and drafts an IVA proposal.
Creditor Meeting & Approval Creditors vote on the proposal; at least 75% (by debt value) must agree for it to be approved.
Legally Binding Agreement Once approved, all included creditors must adhere to the arrangement.
Regular Payments & Supervision The individual makes agreed payments over the set period (typically five years), supervised by the insolvency practitioner.
Completion & Debt Write-Off Any remaining eligible debt is legally written off upon successful completion of the IVA.
Benefits of IVA
Avoids Bankruptcy Prevents the severe consequences of bankruptcy, such as loss of assets and professional restrictions.
Debt Repayment Control Allows structured and affordable payments based on personal financial circumstances.
Legal Protection Creditors included in the IVA cannot take further legal action or demand additional payments.
Debt Write-Off Any remaining debt after completion is legally written off.
Fixed Terms Unlike informal debt arrangements, an IVA has a clear end date, typically after five years.
Why choose IVA?
An IVA may be suitable for individuals who:
- Have unsecured debts of £10,000 or more.
- Owe money to multiple creditors.
- Have a regular income and can commit to structured repayments.
IVA vs. Bankruptcy
IVA A legally binding agreement allowing structured debt repayment and legal protection from creditors.
Bankruptcy A court-led insolvency procedure with asset implications and potential restrictions on future credit and employment. Read about Bankruptcy