Individual Voluntary Arrangements

An Individual Voluntary Arrangement (IVA) is procedure which enables an individual to put a proposal to his/her creditors for a composition in satisfaction of his/her debts or a scheme of arrangement of his/her affairs. This procedure is viewed an alternative to bankruptcy.

A proposal will be made to the creditors under which they agree to accept a certain sum of money in settlement of the debts due to them. The procedure is extremely flexible and the form which the voluntary arrangement takes will depend on the terms of the proposal agreed by the creditors, who may propose modifications to the scheme. Typically such a composition or scheme may encompass delayed or reduced payments of debt, third party funds being introduced by family members or a disposal of assets to enable repayment of the individual’s liabilities.

An IVA can be agreed for between 1-5 years during which time interest on debts is frozen and repayments are made to creditors from the realisation of assets or from contributions made out of earnings. Most IVAs normally encompass a debt write off as individuals entering into such a scheme are unable to pay their debts in full.

The proposed arrangement requires the approval of at least 75% in value of the creditors either present or voting by proxy, and once approved is legally binding on the individual and all his/her creditors, whether or not they voted in favour of it.

A proposal for an IVA may be made by an individual even if he is already subject to bankruptcy proceedings.

A guide to IVAs is available as a document to download.