What Is An IVA?

An IVA is an Individual Voluntary Arrangement.  It is part of the Insolvency Act of 1986 and so is government approved.  An IVA is a way for someone heavily in debt to avoid bankruptcy by coming to an arrangement with their creditors to pay off a proportion of the debt over a fixed time period.  The exact nature of the arrangement depends on what is agreed between the debtor, his insolvency practitioner and the creditors but usually the debtor pays a lump sum up front, followed by a series of monthly payments.  The repayments are calculated by analysing the debtor's income and expenditure.  The agreed repayment programme forms part of a legally binding contract that the debtor must stick to or else risk being forced into bankruptcy by his creditors.  An IVA can only go ahead if creditors representing more than 75% of the debt agree to it.  If you are considering taking out an IVA, you should seek the advice of a licensed insolvency practitioner.