Individual Voluntary Arrangement (IVA)

Individual Voluntary Arrangements are an alternative to bankruptcy, whereby a debtor in financial difficulty comes to an arrangement with his creditors on how the debt will be cleared.

Individual Voluntary Arrangements are essentially an alternative to bankruptcy, whereby a debtor in financial difficulty comes to an arrangement with his or her creditors on how the debt will be cleared. The debtor agrees to make regular payments to an insolvency practitioner, who will divide this money between the creditors.

Established by the Insolvency Act of 1986, it is a legally binding arrangement conducted via a licensed insolvency practitioner and monitored by the courts. The arrangement is usually conducted over a five-year period where the debtor pays as much as they can afford, after which time they will be released from their debts.

However, while an IVA gives some protection against creditors, if the debtor owns a home they may still be required to release equity from it. Bankruptcy proceedings can also still be brought against them if they fail to make the agreed payments. Limited companies can seek Company Voluntary Arrangements, which are similar agreements with a company's creditors.

Recommended

Modern monetary theory (MMT)
Glossary

Modern monetary theory (MMT)

Modern Monetary theory, or MMT, has become popular on the left, both in the UK and abroad. (Wags say that it stands for "magic money tree".) 
21 Sep 2020
Price to sales ratio
Glossary

Price to sales ratio

A company's market cap divided by the company's annual sales (or revenue) gives us the price/sales ratio.
28 Aug 2020
Too embarrassed to ask: what is a p/e ratio?
Too embarrassed to ask

Too embarrassed to ask: what is a p/e ratio?

Find out how to use the price/earnings ratio (p/e ratio for short) – a useful starting place for investors looking to value a company.
26 Aug 2020
Stock split
Glossary

Stock split

A stock split increases the number of a corporation's issued shares by dividing each existing share.
21 Aug 2020

Most Popular

Oil producers are back at their Covid-19 lows – is it time to buy?
Oil

Oil producers are back at their Covid-19 lows – is it time to buy?

With demand for oil hammered by Covid-19 and talk of “peak oil demand”, there are lots of good reasons to be bearish on oil producers. So, asks John S…
22 Sep 2020
IAG's share price is ready for take-off - here's how to play it
Trading

IAG's share price is ready for take-off - here's how to play it

The owner of British Airways has had a turbulent year, but is now worth a punt. Matthew Partridge explains the best way to play it.
8 Sep 2020
Will a second wave of Covid lead to another stockmarket crash?
Stockmarkets

Will a second wave of Covid lead to another stockmarket crash?

Can we expect to see another lockdown like in March, and what will that mean for your money? John Stepek explains.
18 Sep 2020