Young Wrexham

Individual Voluntary Arrangements (IVAs)

Individual Voluntary Arrangements (IVAs) are an alternative to bankruptcy if you are struggling with debt. They are legally binding agreements between yourself and the person you owe money to (your creditor).

They allow you to reach a compromise about repayments, avoiding bankruptcy. This compromise should offer the creditor a larger repayment on the debt that they could expect if you went bankrupt.

The advantages of an IVA are:

• You can still keep your home, if you are a home-owner, if it is excluded in the agreement
• The agreement is more flexible than bankruptcy and tailored to you personally
• The creditor can expect a larger repayment
• The costs of setting up an IVA are less than going bankrupt

The disadvantages of an IVA are:

• The IVA usually lasts for a longer time than bankruptcy and can be up to five years
• Your home might still be at risk if it is not specifically excluded in the agreement
• If repayments are not met, you may be forced into bankruptcy

To set up an IVA, you must draft a proposal to present to your creditor. If they agree to the terms, you must then appoint a licensed insolvency practitioner to review the proposal and submitting it to court.

If you are in debt or considering an IVA, talk to your local Citizens Advice Bureau or the Insolvency Service before making a decision. The Citizens Advice Bureau can also offer assistance in drawing up a draft IVA and talking to your creditor.