What is an Individual Voluntary Arrangement?

By Andrew Waldenson

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An Individual Voluntary Arrangement is an arrangement through the county court and the debtor to pay off outstanding debts over a short period of time. The length of an IVA usually averages out to about five years for most cases. With the short term deals, high monthly payments are normally required while the rest of one's debts are written off. With some IVA's a large sum of money is offered to creditors instead of the monthly installments while the rest is pushed aside. In a number of incidents, both a lump sum and monthly payments are required.

To begin an Individual Voluntary Arrangement, one must attain an insolvency practitioner or an IP, who can legally write out an IVA proposal. Once an IVA is agreed upon between the IP and the debtor, the IP can apply at the county courts for an “interim order." This order stops creditors from starting bankruptcy procedures against an individual without consent from the court. The IP then sends the IVA to all of the creditors, and sets up a “creditors' meeting." The creditors' are given a 14 day notice to attend the meeting. A 75% agreement for the IVA must be reached for the document to be enforced. It's a time consuming process but maybe worth it for some in the end.

After the agreement has been reached between the creditors and the debtor, the IP supervises while one makes the monthly payments and eventually pulls themselves out of debt. IVA's are not for everybody. One must have enough money left over at the end of the month to make the monthly payments and still be able to support themselves and their families. But for those who can afford it, IVA's are a viable option for those who don't want to or can't afford to file bankruptcy.

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