An IVA is a legal agreement between a person in debt and their creditors.

It usually involves making one monthly payment over the term of 5 years (60 months), although you may also be required to release some of the equity that is available in your home at the end of the IVA (but only of you can afford to). An IVA firm administers the arrangement and deals with your creditors on your behalf. All interest and charges are stopped during the IVA, any assets you own, such as your home, are legally protected and any debt remaining at the end of the arrangement is written off.

It takes the form of a proposal which is put together by a licensed insolvency practitioner (IP) who acts for you.

You will have a long conversation with an IP or their staff and they will draft your proposal and send it to you. When you are happy with it and the IP is happy it is a good offer for the creditors they will summon a meeting of creditors.

This is a virtual meeting - you don't have to attend, just be by a phone.

If 75% by value of those creditors who vote are in favour the arrangement is passed and is binding on all creditors.

You need to be able to stick to a budget for 5 years and you also need to be aware that part of your monthly repayment will go to your IP for managing the arrangement. IVAs are not suitable for everyone, which is why you need to have all the options explained to you - including solutions like Bankruptcy and Debt Relief Order - so you can make an informed choice.

This question was answered by Debt Advice Foundation, an independent UK debt advice charity. If you're considering entering into an IVA or need further help with your IVA, Debt Advice Foundation provides a free, confidential helpline and can advise you and on whether you qualify. Click here to find out more.

An IVA (‘Individual Voluntary Agreement’) is a form of insolvency which allows an individual with serious debts problems to repay their creditors whilst avoiding bankruptcy. The IVA itself usually lasts for a period of 5 years.
You need to have either a lump sum available to offer to creditors or a reasonable amount of reliable disposable income to pay into your IVA on a monthly basis to go towards your debts. Before an IVA can commence the majority of creditors need to agree that this is an acceptable option for them.
If you have equity in your property you could be asked to remortgage within the final year of your IVA to release funds for your creditors. However, you will not be expected to remortgage above 85% loan to value. If you have less than 15% equity in your property it will not be considered within your IVA proposal. NOTE: Creditors may reject an IVA if your level of debt is lower than the equity in your property.

This question has been answered by Christians Against Poverty, a leading debt charity offering hope and a solution to anyone in debt.