Individual Voluntary Arrangement (IVA)

An IVA, is a legally binding agreement set up between you and your creditors for you to repay an amount you can afford either as a one of lump sum payment or a monthly payment usually over five years. It allows any unsecured debts to be written off at the conclusion of the IVA, and will usually mean your creditors get more of their money back than if they force you into bankruptcy.

Its biggest advantage is the control it gives you over your assets subject to certain restrictions. With bankruptcy, control of your assets rests entirely with a Trustee.

Someone called a Nominee (an Insolvency Practitioner) is responsible for proposing the IVA on your behalf. In order to have this proposal agreed you will need the majority of your creditors to vote in favour (75% by value of debt – if any of those votes are from associates, business associates, friends or family a second count will be taken where 50% must vote for the IVA proposal).

If the IVA is accepted, the Nomineeā€™s role changes to Supervisor whose primary responsibility is to manage the IVA on behalf of your creditors. Nominee and Supervisory fees are met via a proportion of your IVA contributions.

There are two types of IVA.

The first is a contributory in which you normally pay 60 payments over a five-year period. The second is where you pay a single lump sum to your creditors.

If you cannot keep up with your payments or agree revised terms with your creditors then you may be forced into bankruptcy.


  • You may continue to act as a Director of a company
  • Any outstanding debt is written off, once the terms of the IVA have been fulfilled
  • You have more control over how your home is dealt with compared to bankruptcy
  • Unsecured creditors cannot take any enforcement action to recover their debt. They are bound by your IVA once it has been agreed
  • Your creditors are not permitted to add further contractual interest charges to your debt


  • An income-based IVA normally lasts five years and utilises all disposable income, bonuses and windfall payments
  • You may not have enough disposable income or a large enough, lump sum available to make an acceptable offer to your creditors
  • An IVA is likely to have an equally detrimental effect on your credit rating as bankruptcy
  • Your IVA is listed publicly on the Insolvency Register and will be recorded by credit reference agencies
  • If you are committed to a 5 year arrangement it will take longer to rebuild your credit rating as you will only be able to start this process once the IVA has concluded
  • Not all creditors assess proposals themselves and instead rely on a outside agencies to vote on their behalf. This means that if multiple creditors use the same agency the outcome of the proposal can be influenced by just one vote instead of a number of votes

How to obtain an Individual Voluntary Arrangement

First you will need to draft an IVA proposal to your creditors. As with all other solutions to debt, care needs to be taken with making this type of proposal and you should seek independent advice as to whether an IVA is the right solution for you.

Your Nominee will have to review your proposal, typically a standard document that has been modified to your specific circumstances. This will include an analysis of your income and expenditure as well as a background history that explains how your financial circumstances arose. Once the proposal has been agreed by you as being the very best offer that can be made, this is then distributed to all the creditors.

Your Nominee chairs the meeting of creditors and negotiates terms between you and them to approve the IVA proposal.

Be aware that creditors may also impose their own modifications on the IVA such as exclusions from you obtaining credit, ensuring payments increase if your income rises, insisting that you be petitioned for bankruptcy if you fail to make payments and so on.

The Supervisor will monitor you to ensure you are complying with the terms of your IVA arrangement, disposal of any assets and fulfil any other requirements of the creditors.

Call 0330 400 0481 for a free, no-obligation discussion to decide whether an IVA is an appropriate solution to your debt problem.
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