IVA:
The Individual Voluntary Arrangement is - IVA is a formal agreement between you and your creditors where you will come to an arrangement with people you owe money to, to make reduced payments towards the total amount of your debt in order to pay off a percentage of what you owe then generally after 5 years your debt is classed as settled.

An IVA contract is brokered on your behalf by a Licensed Insolvency Practitioner (IP) who will assess your situation and approach your creditors on your behalf. He or she will attempt to negotiate a settlement with your creditors, or at least the majority of them. For your creditors though, even a reduced payment of up to 75% of your original loan amount could be a better option for them than the expense of pursuing a claim for bankruptcy. They can also claim tax and VAT relief on the bad debt.

In a standard IVA you will pay what you can realistically afford monthly over a period of five years. This will be a single monthly repayment into a fund managed by your Insolvency Practitioner. After the period of the IVA is over, your debts will be cleared and you will be debt free.

Any IVA agreement becomes legally binding, so you should not enter into one if you have no realistic prospect of meeting your repayments. However, the contract is legally binding on your creditors too. That means if you manage to keep up your repayments, your creditors cannot take any further action against you. Also, unlike bankruptcy, an IVA is a private agreement between your debt advisors and your creditors, and no one else need know your circumstances. Furthermore, in an IVA you don't risk losing your job if you work in a profession where being bankrupt can lead to you being dismissed.


An individual voluntary arrangement begins with a formal proposal to your creditors to pay part or all of your debts. You need to apply to the court and you must be helped by an insolvency practitioner. Any agreement reached with your creditors will be binding on them.

How does it work?

• First, find an authorised insolvency practitioner prepared to act for you. You can find an Insolvency Practitioner by using our IP Finder Tool (a searchable database of 1000 Insolvency Practitioners). You can also find a Practitioner through your local court or your local Official Receiver's office.
• Then you apply to the court for an "interim order". This prevents your creditors from presenting, or proceeding with, a bankruptcy petition against you while the interim order is in force. It also prevents them from taking other action against you during the same period without the permission of the court.
• The insolvency practitioner tells the court the details of your proposal and whether in his or her opinion a meeting of creditors should be called to consider it.
• If a meeting is to be held, the date of the meeting and details of the proposals are sent to your creditors. Only those creditors who had notice of the meeting are bound by the arrangement, so it is important that you have accurate records of all your creditors' names and addresses. Otherwise, the arrangement might fail because the practitioner cannot contact all the creditors and, therefore, bind them to it.
• At the meeting, the creditors vote on whether to accept your proposals. If enough creditors (over 75% in value of the creditors present in person or by proxy, and voting on the resolution) vote in favour, the proposals are accepted. They are then binding on all creditors who had notice of, and were entitled to vote at, the meeting.
• The insolvency practitioner supervises the arrangement and pays the creditors in accordance with the accepted proposal.

What will an individual voluntary arrangement cost?

You should ask several practitioners what they charge before you ask any of them to act for you. Insolvency practitioners are usually accountants, some are solicitors and their fees are similar to those charged by members of these professions for other kinds of work.

When can you make an individual voluntary arrangement?
It is better and cheaper for you to set up an individual voluntary arrangement before you become bankrupt but you can propose one afterwards. If you do propose an individual voluntary arrangement after bankruptcy, it is possible for you to nominate the Official Receiver to be the supervisor of the arrangement. This type of arrangement is called a fast-track voluntary arrangement and is only suitable in certain cases (a separate publication called 'Fast-track voluntary arrangements' is available from your local Official Receiver's office).

Are there any restrictions?
Generally speaking no, but the court cannot make an interim order if you have applied for one in the previous 12 months. There is no maximum or minimum level of debt and no maximum or minimum level of repayments, except what is acceptable to your creditors. An arrangement might particularly suit you if:

• you have friends or relatives prepared to help pay or contribute towards paying your debts;
• your income enables you to pay regular sums to creditors.

What are the advantages of an individual voluntary arrangement compared to going bankrupt?

• It gives you more say in how your assets are dealt with and how payments are made to creditors. You may be able to persuade your creditors to allow you to retain certain assets (such as your home). You will obviously have to act responsibly and flexibly in order to reach agreement with your creditors.
• You avoid the restrictions which apply to a bankrupt (see section 10).
• Because you will not have to pay some of the fees and expenses which are charged in a bankruptcy, the overall costs are likely to be less.

Can an individual voluntary arrangement be proposed by a member of a partnership?
Yes. You can propose an individual voluntary arrangement on your own which must take into account the claims that the creditors of the partnership have against you personally. It will not affect the rights of the partnership creditors to take action against the partnership itself or against any other partner.

Alternatively, you and your partner(s) may wish to propose an arrangement involving the partnership creditors and the personal creditors of the partners. This can be done in two ways:

• the partners may propose interlocking voluntary arrangements, with each partner making proposals for their own debts and the debts of the partnership; or
• the partnership may propose a partnership voluntary arrangement (usually accompanied by voluntary arrangements for each partner).

An authorised insolvency practitioner must help you to make proposals to creditors. He or she will be able to advise you which procedure to follow.

Warning: If you enter a voluntary arrangement but fail to give full details of your assets and debts or fail to do what you have agreed under the arrangement, then the insolvency practitioner, or any creditor bound by it, may still petition for your bankruptcy

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