An Individual Voluntary Arrangement (IVA) allows a debtor to avoid bankruptcy proceedings against him in case of an inability to pay back the debt to his creditors by opting for an IVA. This insolvency handling mechanism was introduced in the UK under the Insolvency Act of 1986 to allow a debtor to avoid bankruptcy proceedings and provide an alternate mechanism to take care of insolvency. An IVA contract between the debtor and the creditors outlines the terms for repayment of an outstanding debt. A debtor can avoid bankruptcy with an IVA with his creditors under mutually agreed upon terms and conditions that are clearly specified in an IVA contract.

Bankruptcy proceeding against a debtor is quite lengthy and tedious and is best avoided by the debtor as well as the creditors. A Bankruptcy IVA is a legal contract between the debtor and the creditors supervised by a Licensed Insolvency Practitioner that outlines the terms and conditions for repayment of an outstanding debt. In this context, an Individual Voluntary Arrangement provides an alternate option to both the contractual parties for settling their dues in a fast and effective way.

An Individual Voluntary Arrangement (IVA) involves calling a creditors' meeting to discuss the various provisions of an IVA contract. The meeting is supposed to be attended by all the creditors and a voting process is followed to decide on the acceptance or rejection of the proposal submitted by the debtor in the form of an IVA contract. For a general acceptance of an IVA contract, more than three-quarters of the creditors present at the meeting should vote in favour of the proposal. If any of the creditors present in the meeting are associates of the debtor, then at least half of the he remaining creditors should vote in favour of the proposal for it to be considered accepted by a consensus among the creditors.

An IVA contract can be custom-made to suit the individual requirements of a debtor. This makes an IVA contract highly flexible in nature compared to bankruptcy proceedings that are very lengthy and tedious for the creditors in general and the debtor in particular. In this way, one can avoid bankruptcy with IVA.