An Individual Voluntary Arrangement, or IVA, is a financial agreement which legally binds both you and the entities you owe money to. Depending on how you are holding up financially, and how much you still owe on your debt, the amount of your payment may vary. The length of time you are allotted to pay the amount back can last for up to five years. After you complete the full term of payments the rest of the debt you owe is then considered to be legally settled.

IVAs are a recognized contractual obligation, not a form of debt management service. An IVA will require the use of an insolvency practitioner, a person who has been certified in the construction and documentation of IVAs. If you are considering an IVA, speak with an insolvency practitioner. They will be able to resolve your ability to enter into the contract and decide if it is practical for your set of circumstances.

The insolvency practitioner will interview you about your financial situation, in order to determine possible repayment figures. They will then write a proposition that outlines the terms based on the information provided during the interview. After examining the documents for accuracy, you will have to sign them. Once this is done, the courts will accept an interim order on your behalf, which will stop any creditor from pursing legal action based on your debts to them.

Your creditors will then be notified of a meeting to discuss your circumstances with the insolvency practitioner. Creditors usually handle these conferences via mail or fax – not in person. Creditors will be asked to accept or deny the terms of the proposition put forth by your insolvency practitioner. In order for your IVA to receive final approval, at least three-quarters of the creditors will have to agree to the terms.

Your insolvency practitioner will still be a part of the settlement once your creditors approve the IVA. Usually, the insolvency practitioner is charged with managing the IVA, including the task of making sure that the payments are made as agreed and distributed to the appropriate parties. If you make all of the required payments, you will be able to cancel your debt without losing your property or going through foreclosure proceedings, even if you still owe money to the creditors. As much as 65% of the total owed may be written off by the creditors after you make your final payment.

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