An Individual Voluntary Arrangement is a legally binding agreement between you and your creditors. If you’re in the position where you feel you are going to be unable to meet the terms of your current credit, you can use an IVA to avoid such consequences as bankruptcy and court action.
Basically, if you’re not going to be able to pay back the debt you owe to your creditors under the terms laid out, you can use an IVA to pay the debt back in a way that you can manage. There are other advantages to using an IVA, for example the costs associated tend to be less than with bankruptcy, and you have a greater level of control over what happens to any assets that you may have.
In order to pursue an IVA, and indeed to work out whether it’s the right option for you, you should speak to an Insolvency Practitioner. These are professionals who are qualified and certified to perform legal acts associated with insolvency. A good Insolvency Practitioner will be able to advise you as to what your options are, which will vary according to your own particular circumstances.
Typically IVAs are used by people having debt to two or more creditors, but there is no upper or lower restriction on the amount of debt that can be involved, and indeed no restriction on the amount of repayments that you propose to make. If you and your creditors agree, then it’s a legally binding contract.
When your Insolvency Practitioner takes your IVA proposal to the court, they will apply for an Interim Order, which prevents your creditors from pursuing you legally for the duration of the order. The creditors will generally hold a meeting at which they discuss and decide whether to accept your proposal. If they do, and you keep to the terms of the agreement, they cannot then take any court action against you regarding the debts involved.