Individual Voluntary Arrangement or an IVA was brought in by the 1986 Insolvency Act as an alternative to bankruptcy, which is in the favour of both the creditors and the debtors. An IVA company enables the debtors with financial difficulties to come to a mutual agreement with the creditors, rather than having to file for bankruptcy. Through an IVA, those who are facing serious conditions of debts become able to avoid bankruptcy, and at the same time make a fresh start. Those who are considering setting up an IVA must first of all contact a professional insolvency practitioner, who will help in outlining the proposal for debt repayment, clearly demonstrating how it will benefit the creditors and showing what assets and funds are available to them.

After that, the debtors can apply in the court for the interim order, which means that if this order gets granted, then the creditor will not be able to file a petition of bankruptcy. In the end the creditors meet and decide whether they will or will not accept the proposal of the debtors. If the creditors accept the proposal, then the assets go in charge of the insolvency practitioner, who then administers them for creditors complying with the conditions of the proposal.

While filing for IVA, the debtors are required to state the details including the comments of the nominee on the proposal, the list of all the assets of the debtor by a statement of the affairs, a complete listing of all the creditors, a guide to the charged fees by the supervisor and a proxy form. An IVA company with higher returns for the creditors is more likely to be accepted and be successful.

Setting up an IVA definitely affects a debtor's credit rating and will be recorded on their credit file for 6 years from the date of acceptance.. During the course of the IVA the debtor is unable to apply for any other credit card or loan without the consent of their Supervisor. If the debtor successfully completes their IVA it may be viewed favourably by future creditors.

Nobody wants to be declared bankrupt, and an IVA provides debtors with a way to avoid it. Moreover, the procedure of setting up an IVA is quite simple and at the same time, the debtors are able to hold public offices, live their regular life and earn an income for repaying their debts.