What is an Individual Voluntary Arrangement (IVA)?
An individual voluntary arrangement (IVA) is a way of dealing with a number of debts owed to various creditors. It is essentially a contractual agreement between the debtor (person who owes the money) and the creditors (those to which the money is owed) which allows the debtor to:
- Settle their outstanding debts by paying a proportion of them to their creditors or;
- Come to an arrangement with their creditors over the payment of their debts, perhaps with the debtor's assets being held or controlled in a trust for the creditors as beneficiaries.
The IVA will only start if the creditors holding 75% of the debt agree to it. It will apply to all creditors, including any who disagreed to it.
What is the difference between an IVA and a CCJ?
A CCJ is a document issued by the court following a court hearing which documents how much money is owed to a creditor and the time period for paying it. For a CCJ to be issued the creditor must have pursued legal proceedings in the county court against the debtor. Please see here for more information on CCJs.
Whereas a CCJ relates to an individual debt, an IVA relates to multiple debts and is an agreement between the creditors and debtor whereby the creditors may not require full payment of the debt. It is a voluntary arrangement that allows the debtor to pay a proportion of the debts based on what they can afford but can only be entered into if agreed by creditors holding 75% of the debt.
An IVA may include CCJs however can also include debts in which no formal legal proceedings have been pursued by the creditor.