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.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
![https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg](https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748-320-80.jpg)
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
Pressure grows on Labour to remove the two-child benefit cap - here’s everything you need to know
The cap, which was introduced by the previous Conservative government, has been criticised for worsening child poverty
By Chris Newlands Published
-
Regulator moves to protect access to cash amid branch closures and disappearing ATMs
News The Financial Conduct Authority has told banks to start assessing if local communities have adequate cash access from mid-September
By Marc Shoffman Published