Individual voluntary arrangements (IVA)

An IVA is a deal between a person and all of his creditors as an alternative to bankrupcy. It can be supported by an order of the court and thus is legally binding.

The IVA must involve an Insolvency Practitioner (IP) acting as the supervisor and must be sanctioned by a meeting of creditors.


1.  The following documents are prepared and sent to the debtor’s creditors:

» IVA proposals for payment infull or part of the debt in full and final settlement.

» Statement of affairs, verified by a Statement of Truth, and a comparative outcome statement with bankruptcy.

» A breakdown of the debtor’s monthly income and expenditure.

2.  The proposals are then reported on by the IP who at this point is known as the ‘Nominee’ stating whether the IVA has a reasonable prospect of being approved and implemented.

3.  If protection is required, an interim order can be obtained from the court to stay the actions of all creditors whilst the IVA is being formulated.

4.  The preliminary interim order is no longer compulsory in order to enter into an IVA, this flexibility may reduce costs in cases where creditors are co-operative.

5.  A meeting of creditors to consider the proposals is convened at which a 75% majority by value of creditors attending, in person or by proxy, and voting is required to approve the proposals.

6.  The IVA is implemented and all creditors are legally bound to the arrangement, even those who should have received notice but did not.  The funds are paid to an account held by the IP who is now known as the ‘Supervisor’.

7.  Creditors are repaid regularly over the term of the arrangement or as set out in the approved proposals.


The Insolvency Amendment Rules 2010 provide that the nominee is no longer required to report to the court in cases where there has been no application for an interim order.

A person’s home in many cases can be excluded and he / she can continue to live there and contnue to pay the mortgage for the foreseeable future. This is however dependant upon the proposals made to creditors.

Secured creditors rights are not and cannot be affected by an IVA proposal.

IVA proposals can be tailored to suit the debtor’s circumstances and can be based on:

» Contributions out of income, whether employed or self-employed.

» A lump sum payment from a third party or re-mortgage.

» A sale of surplus assets.

…or any combination of the above.

the duration of an IVA may be for any period up to a maximum of 5 years.

There are fewer restrictions on an individual in an IVA than there are in Bankruptcy.

An IVA can be proposed whilst the debtor is still bankrupt and if the proposals are approved, the bankruptcy order can be annulled.

There is also a ‘Protocol’ compliant IVA which relates to the consumer debtor who’s debts consist solely of credit cards and loans, whereby creditors may not unfairly reject a compliant IVA proposal.

HM Revenue and Customs has, with effect from 1 December 2020, regained a partial preferential status in all formal insolvencies in respect to taxes paid by employees and customers which the insolvent business was temporarily holding, giving rise to secondary preferential status.

The alternatives to an IVA are bankruptcy or Debt Relief Orders (DROs).  Although we do not offer these as a service, click below for some information about these:-

> Bankruptcy

> Debt Relief Orders (DROs)

For more information and/or for a free initial meeting and confidential advice without obligation, please call 01582 469700.

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