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Individual Voluntary Arrangement (IVA)

The term covers a legal procedure when a debtor and creditors come to an arrangement on how the debt will be repaid. Since an IVA is a legally binding document, the procedure will be controlled by a supervisor (an insolvency practitioner) and the outcome must be approved by the court. An individual voluntary arrangement is a good option for people who cannot cope with the repayment of their debts, since their debts might be reduced with 40 to 60%. Also, since an IVA is a legally binding document, the debtor will not be in touch with its creditors as long as he follows the schedule of the payments. The debtor only keeps in touch with the appointed insolvency practitioner who makes sure that the payments are made to each creditor in the agreed amount. An IVA might be a good choice to filing for bankruptcy because it offers much better conditions and it has less publicity. After repayment of the agreed amounts, the debtor will become debt-free; this usually happens in a few years, depending on the amount the debtor can afford to pay during the term of the IVA.