In the United Kingdom, Individual Voluntary Arangements (IVAs) are a formal alternative for individuals wishing to avoid petitioning for their own bankruptcy.
An Individual Voluntary Arrangement allows a debtor to repay their what they owe for as little as 25 per cent of the original balances in a binding plan in which the creditors eliminate interest.
The IVA was established by the Insolvency Act 1986 and constitutes a formal repayment proposal presented to a debtors unsecured creditors via a Insolvency Practitioner. The proposal is presented to the debtors unsecured creditors versus the debtor opting to petition for bankruptcy.
Creditors (normally) take a commercial decision at a creditors' meeting called to consider the IVA proposal and vote on a poundage basis. To be approved it requires a majority of 75% of those voting - where connected parties (such as family) vote, then of those voting in favour, >50% must be unconnected.
In the UK, an increasing number of consumer debtors with overwhelming levels of debt are turning to specialist debt advice organisations that offer protection from bankruptcy via the use of an Individual Voluntary Arrangement. Many debtors are also opting to move away from a traditional Debt Management Plan as a way of achieving resolution from debt problems as they do not offer a binding agreement upon thier creditors.
It is normally advantageous to set up an Individual Voluntary Arrangement before becoming bankrupt but you can propose one afterwards; if an Arrangement is approved post-bankruptcy then the debtor can apply to the Court for an annullment of the bankruptcy order.
If an IVA is proposed after bankruptcy, it is possible to nominate the Official Receiver to be the supervisor of the arrangement.
To setup an IVA you can contact Myvesta.