An Individual Voluntary Arrangement (IVA) loan provides credit to an insolvent debtor for paying back the dues of the unsecured creditors by means of an Individual Voluntary Arrangement (IVA) contract. An Individual Voluntary Arrangement (IVA) is a mechanism used by a debtor to avoid bankruptcy proceeding against him in case of an inability to pay back the debt to his creditors. Individual Voluntary arrangements were 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 Individual Voluntary Arrangement 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. Bankruptcy proceeding against an insolvent debtor is quite lengthy and tedious and is best avoided by the debtor as well as the creditors. 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. A debtor can avoid bankruptcy by opting for an Individual Voluntary Arrangement with his creditors under mutually agreed upon terms and conditions that are clearly specified in an IVA contract.

A debtor may pay a single monthly installment for a period ranging form three to five years to settle his debts. After the stipulated period, any remaining debt is wiped clean by the licensed Insolvency practitioner thereby rendering the insolvent debtor totally free of any debt. A loan IVA helps facilitate a write off of up to three-quarters of the total debt of an insolvent. An IVA loans is suitable for those debtors whose total debts have crossed a limit of £ 15,000. However, an IVA loans requires regular repayments without failing on the part of the insolvent debtor. Any default in the repayment of an IVA loan installment may lead an IVA supervisor to initiate bankruptcy proceedings against the debtor that may render the whole purpose of going for an IVA useless.

The terms of agreement of an IVA loan are such that an insolvent debtor is required to give as much as possible in a manageable way towards the repayment of an loan IVA. In this way, an IVA loan can provide access to additional financial resources during times of crisis.