Individual Voluntary Arrangement (IVA) – This is a legally binding agreement supervised by an insolvency practitioner between a debtor and the creditors. The purpose of this is to enable the debtor to reach a compromise with the creditors and avoid the consequences of bankruptcy.

Usually, an IVA lasts for five years. During this time you will be making a monthly payment agreed in the proposal. As long as you adhere to the terms of your IVA and complete it successfully, a portion of your remaining debt will be written off at the end of five years. The advantage of an IVA is that you’ll only be making one lower monthly payment toward your debt and will no longer have to deal with creditors either. To be eligible for an IVA your unsecured debt will also need to be over £15,000 and owed to three or more creditors.

Unlike the informal debt management plan an IVA is legally binding and precludes all creditors notified and therefore included in the IVA from taking any enforcement action against the Debtor post-agreement assuming the Debtor complies with the his obligations in the IVA