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IVA or Individual Voluntary Arrangement

The iva or individual voluntary arrangement is a legal and binding contract that you can enter into with your creditors if your debts are of a sufficient level. In the UK the government introduced the concept of the iva as a result of the increasing number of individuals that were being forced into bankruptcy. In order to enter one of these contracts you will need to obtain iva help from a licenced Insolvency Practitioner who supervises the process for you. The IP enters into negotiations with your creditors in order to agree a reduction in the amount of your debt and a structured repayment plan.

What are there any risks or disadvantages of entering into an IVA?

The risks associated with entering into an iva arise if you find that you are not able to stick to your contractual commitments. This usually occurs where the spending budget that has been agreed with within your iva is too low. It is essential that you are realistic when you set your agreed spending budget in your iva proposal.

Before submitting your iva proposal you need to calculate what is the minimum amount of money that you need to live on. Once you have done that you can ascertain whether there is a sufficient surplus to be able to make repayments out of. If you are on benefits for example you are likely to find that the monthly surplus in your income is very small and in such circumstances it is very likely that in some months you will be unable to make your repayments and will breach the terms of your individual voluntary arrangement.

If you would like to talk to someone about this please email us at and we will get back to you.

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