An Individual Voluntary Arrangement (IVA) is a formal and legally binding arrangement between you and your creditors to pay back what you can of your debts over a period of time. It is available in England, Wales and N Ireland (Scotland have their own debt solutions).

An IVA must be set up by a qualified person, called an insolvency practitioner. This will be a lawyer or an accountant. The insolvency practitioner will charge fees for the IVA. These can often be high and are based on the amount you pay back through the IVA. The insolvency practitioner deals with your creditors throughout the life of the IVA

The repayment plan should be based on an amount you can reasonably afford and the creditors will need to agree it. If you're making monthly payments the IVA will usually last for 5 or 6 years. It may be possible to offer a lump sum in lieu of the monthly payments.

Any repayments will be paid directly to the insolvency practitioner. They will then distribute the money to your creditors. Some of this will be kept by the insolvency practitioner to pay their fees.

If you receive a windfall during your IVA, for example an inheritance, this will usually be taken and paid to your creditors. If you find out that you're due some money because of something that happened before the IVA, your creditors might have the right to claim it too - even if your IVA has finished.

Once the terms of the IVA have been satisfied, all remaining debt has to be written off. Credit rating is affected for a period of 6 years from the start of the IVA.