Individual Voluntary Arrangement (IVA)
IVAs may be appropriate for anyone with a regular income who has
perhaps overborrowed or overcommitted and is seeking an alternative
to bankruptcy. An Individual Voluntary Arrangement (IVA), is a
formally arranged credit agreement between you and your creditors
which allows you to make reduced payments against the total amount
you owe. It is a legally binding arrangement supervised by a Licensed
Insolvency Practitioner.
The purpose of an IVA is to assist you in reaching a compromise with
your creditors usually in order to prevent the consequences of bankruptcy.
It will enable you to reduce your debts to a level that you can afford,
and then clear them over a fixed period, usually 3 - 5 years. The single,
affordable monthly IVA repayment is based on your disposable income and budget.
During the period of the IVA, your creditors must freeze any interest on
the debts, and they are not allowed to pursue the debt, or instigate any
legal action to recover it.
At the end of the IVA, assuming all the
requirements of the IVA have been satisfactorily met, all of the debts
are cleared. You could find that you remove up to 70% of your debts.
IVA advantages
 | All interest and charges on your unsecured debts will be frozen. |
| Providing you keep to the terms of your arrangement, you will be protected from any further court action by your creditors. They will also be prohibited from sending letters or telephoning you. |
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Once the individual voluntary arrangement has been successfully completed, your debts are effectively written off.. |
| If you do not wish to consider bankruptcy or cannot go bankrupt because of your job, this can be an excellent option. |
| All unsecured creditors will be bound by the IVA. |
| Your contributions are based on your ability to pay. |
| Individual Voluntary Arrangements are not published in local newspapers, unlike bankruptcy. |
| It will not affect professions such as the Police Force and Armed Forces, neither will it impact on your ability to hold public office or act as a company director. |
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IVA disadvantages
| You will be required to stick to a budget for the term of the arrangement (usually five years). |
| All assets and liabilities must be declared: if you own assets of excessive value, the creditors can ask that they be released for the benefit of the creditors. |
| You will be asked to release some of the equity from your property towards the last six months of the arrangement. |
| Any windfalls, inheritance or bonuses must be declared to the Supervisor of the arrangement. |
| All Individual Voluntary Arrangements are recorded on a public register and are likely to appear on your credit file. |
| If an IVA fails, then there is a risk that either the Creditors or the Insolvency Practitioner will petition for your Bankruptcy. |
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