An Individual Voluntary Arrangement (IVA) is a legally binding agreement between you and your creditors. This involves making an arrangement where you agree to make reduced payments towards your debt, with the total amount to be paid lowered from the original amount.
In general, this suits both debtors and creditors – the debtors now have payments at a level they can manage, and the creditors get a portion of their money back, when the other outcome was bankruptcy and zero return.
IVA’s need to be drawn up by a licensed professional. Repayment amounts will be calculated based on your total debt and monthly income/outgoings. An application must then be made for an Interim Order. Once this has been granted, no creditor can take legal action against you.
To have the IVA granted, creditors are asked to vote whether they are for or against the arrangement. If only one of them votes for approving it, it will be granted. If they vote against it, and hold less than 25% of your debt, the voting will be suspended to give other creditors an opportunity to vote.
If the dissenting voter holds more than 25% of your debt, the IVA will not be granted.
The important thing to remember is that an Individual Voluntary Arrangement is legally binding. As long as you keep making your payments, at the end of the term you will be free of the debts, no matter how much of it you actually paid off.