The point of an IVA is to give people who cannot meet their debt payments a way to settle those debts within the framework of a legal contract. If you have personal unsecured debt that is no longer within your control, then an IVA may keep you from becoming bankrupt.
Negotiate
Individual Voluntary Arrangements are essentially a way to renegotiate your credit agreements, in circumstances in which you cannot meet the requirements as they currently stand. If you end up becoming bankrupt, the chances are your creditors will receive back less of the funds you owe them than what happens with an IVA. This means that creditors are often inclined to accept IVA proposals.
Control
Rather than going down the route of bankruptcy, in which you basically relinquish the responsibility for your debt, through an IVA you retain control of the debt and attempt to settle it in a manageable way. An IVA proposal is put to your creditors, and is an offer you are making to pay them back a certain amount over a period.
Future
Once a successful IVA is complete, i.e. the IVA period has elapsed and you have continued to meet the requirements, the debts included it will be considered settled by the relevant creditors. In many cases, the amount you have paid back will in fact be only a portion of what you originally owed the creditors, but they must abide by the IVA and not pursue your debts any further.
Legal contract
The IVA is a legal contract binding both borrower and lender to its terms. This means that during the IVA, any creditors whose debts are included in it cannot take any legal action against you for those debts. IVAs therefore afford you an attractive level of legal protection. However, if you fail to keep to the terms of the IVA, i.e. to make your monthly payments, there is a chance that it may fail, leaving you once more exposed to court action for outstanding debts.
Manageable
IVAs are not a way to avoid paying your debts back, but rather a way to settle them that fits within the reality of your financial situation. Through an IVA, you can only pay an amount that you can manage while still maintaining a good standard of living. This means that, in order to get an IVA, you must have sufficient income to pay a reasonable amount in monthly payments.
As well as avoiding bankruptcy, IVAs have a lesser impact on your credit rating, and allow you to work towards being debt free in the future. With bankruptcy, any income or assets you may have in the future will always be under threat, whereas with an IVA you can leave the debts behind and look forward to better financial stability.
The point of an IVA then is to strike a balance between the interests of both creditor and borrower. A compromise is reached between you paying back at least some of what you owe, but doing it in a way that is realistically manageable.