IVA is the abbreviation of Individual Voluntary Arrangement. An Individual Voluntary Arrangement, or IVA, is a legal binding debt solution designed to assist a person who is struggling with unaffordable personal repayments or lacking the means to repay the loan amount on time. This agreement restructures the expected repayments to a new affordable monthly payment and helps the debtor to keep up to date with the priority expenses, such as loans against property, rent payment, and essential living cost. There is no fear of legal recovery action being taken against the borrower by his unsecured creditors.

Because the IVA is a legal binding arrangement, it protects both parties from trying to make adjustments to the arrangement once it comes into force. This agreement will also stop a debtor being harassed by their creditors. This is because one of the fundamental terms of the IVA that stops lenders from contacting the debtor directly, once the IVA has begun, and all correspondence must be through the insolvency practitioner hired by the borrower. The insolvency practitioner is chosen by the debtor to assist with the IVA proposal and he takes his fee for this purpose. The insolvency practitioner oversees or supervises the IVA for its full term and the smooth repayment of the debt amount.

An Individual voluntary agreement will under normal conditions last for a time period of 5 years. After this time frame, the debtor will be considered debt free, even if they have not been able to repay the full original amount of debt. This agreement is especially suitable when the debtor has a property which he needs to protect from his unsecured creditors. This is because once the agreement is in force, and so long as the debtor adheres to the IVA terms, the unsecured creditors are unable to force the sale of the property. Instead they have to settle for as much equity as can be released via a standard re-mortgage.

The Individual voluntary agreement is also extremely suitable as a debt solution when the debtor has an occupation which may be at risk should the debtor be made bankrupt. Occupations like accountants or legal professionals, or indeed an occupation where there is deemed to be a high level of responsibility or trust such as a Police Officer, someone in the armed services or a bank employee, all find themselves protected by Individual voluntary agreement. This agreement is a real alternative debt solution to bankruptcy. This is a private arrangement between the debtor and the creditors, and although it will appear on the IVA register. This agreement is not made public which is done in the case in bankruptcy.

Compared to debt management, the Individual voluntary agreement is better solution. Debt management is not legal binding so the lenders can deviate from from their promises at any point of time. But in case of IVA, this fear is not there. Apart from this debt management is also not effective when the debt burden is exceptionally high.