The Insolvency Act 1986
The Insolvency Act of 1986 introduced Individual Voluntary Arrangements (IVA) as an alternative to bankruptcy.
An IVA enables an individual in debt (debtor) to make a formal proposal to the people they owe money to (creditors) to reach a settlement. If the creditors approve the proposal, the IVA becomes a legally binding contract.
A standard IVA will offer to pay a fixed monthly sum, based on what the debtor can afford, into a fund over a five year period. After five years the debt is cleared as long as the debtor has adhered to the terms of the IVA.
In many cases the creditors end up getting less than 30% of their debts repaid, and monthly payments into an IVA can be as low as £250 per month.
Click here for a copy of The Insolvency Act 1986
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