An Individual Voluntary Arrangement (IVA) is a formal, legally-binding agreement between an individual and their creditors to repay their debts over a set period of time. It is a type of insolvency that allows individuals who are unable to pay their debts in full to make regular payments to their creditors, while being protected from further legal action.
To enter into an IVA, the individual must first propose a repayment plan to their creditors, which must be approved by a minimum of 75% of the creditors. The individual then makes regular payments to their creditors, as agreed upon in the IVA, and once the agreed upon payments have been completed, any remaining debts are written off.
An IVA is typically used as an alternative to bankruptcy, as it allows individuals to retain control over their assets, such as their home, and can be less damaging to their credit score. However, it is important to note that an IVA will still be recorded on an individual’s credit report, which may affect their ability to obtain credit in the future.
An IVA prevents you from falling further into debt, from increased interest charges and fees. It also gives everyone involved a clear timeline for repayment of the debts.
