Individual Voluntary Arrangement (IVA)

An IVA is an alternative to bankruptcy that allows a person to settle all of their unsecured debts through a single agreed contract.

If a person genuinely cannot pay their debts in full they can propose an IVA. The terms of the proposal may be very flexible but creditors will reasonably expect their prospects of recovery to be at least as good as in a bankruptcy. Typically an IVA proposal is based upon re-mortgaging a property, contributions from surplus income over five years, the realisation of other assets or third party funds. 

Use our Self-Assessment Debt Wizard to get an indication of whether an IVA may be right for you.  Click here to read more about the detail of how IVAs work. 

Advantages

• If you genuinely cannot afford to pay your creditors in full they may settle for as little as 35p in the £. 
• A single lump sum payment may be accepted by your unsecured creditors to clear all of your debt.
• As long as 75% in value,  of voting unsecured creditors accept your proposal it will be binding on all unsecured creditors. 
• Only a  Licensed Insolvency Practitioner, who is strictly regulated, can act as Nominee or Supervisor of an IVA .
• Unlike bankruptcy, there are no statutory restrictions on staying in business or obtaining credit.  

Disadvantages 

• Once entered into, an IVA has strict terms and lacks flexibility, it is a legally binding agreement. 
• Failure to comply with the terms of the IVA could result in you being made bankrupt or having to take other steps such as re-mortgaging.
• The underlying set up cost of an IVA is high and is therefore generally not suitable where amounts owed are less than £15,000.
• Your credit rating will be affected for six years.

The Insolvency Practitioner's Fees

The Nominee and Supervisor's fees and costs are set out in your proposal. These are paid from your contributions into your IVA before creditors receive payment, unless agreed with you otherwise. Go to Our Fees for a more detailed explanation.

Suitable for...

People who genuinely cannot pay all they owe, but can pay something, whether from the re-mortgage of property, financial assistance from a partner or relative or from future income. An IVA is helpful to those who might lose their job or qualification because of bankruptcy.