A guide, not advice. This explains how things generally work. A licensed insolvency practitioner will tell you what applies to your company or to you.
What Is an Individual Voluntary Arrangement?
An Individual Voluntary Arrangement (IVA) is a formal, legally binding agreement between an individual and their creditors to repay a portion of unsecured debts over a fixed period - usually five to six years - through affordable monthly payments. At the end, any remaining unsecured debt is written off.
An IVA is a personal insolvency solution. It is often used by company directors, sole traders, and partners who have personal debts - including personal guarantees they have signed for company borrowing - that they cannot repay in full.
How an IVA Works
- Proposal prepared - An insolvency practitioner drafts a proposal setting out what you can afford to pay each month and what creditors will receive.
- Creditors vote - A creditors' meeting is held; the IVA is approved if 75% in value of voting creditors agree.
- Supervisor oversees - The practitioner supervises the IVA, collecting your monthly payments and distributing them to creditors.
- Completion - Once the agreed payments are made, the remaining unsecured debt is written off and you are debt-free.
Advantages of an IVA
- Write off a portion of unsecured debt - often a significant amount
- One affordable monthly payment replaces multiple demands
- Legal protection - creditors cannot pursue you or take legal action while the IVA is in place
- You keep your home - although you may need to release some equity in the final year
- Less public than bankruptcy - not advertised locally in the same way
Is an IVA Right for You?
An IVA suits individuals who:
- Have unsecured debts they cannot repay in full
- Have a regular income that can support affordable monthly payments
- Want to avoid bankruptcy and its consequences
- Have signed personal guarantees they cannot meet
Speak to a Licensed IP
Our Manchester-based practitioners provide honest, confidential advice on IVAs and how they compare to other personal debt solutions. Call us to discuss your situation.