Individual Voluntary Arrangement (IVA)
A formal insolvency procedure allowing an individual to reach an agreed settlement with creditors, typically paying a proportion of debts over 5 years.
An Individual Voluntary Arrangement (IVA) is a formal, legally binding agreement between an individual and their creditors to repay debts over a fixed period - typically 5 years. It is an alternative to bankruptcy, allowing the individual to retain assets (including their home in some cases) while settling debt obligations at a reduced level.
IVAs are relevant to business finance because they appear on personal credit files and are visible to lenders assessing director creditworthiness. A director with a current or historical IVA will find most mainstream lenders unwilling to proceed. Specialist lenders on the Spark Finance panel work with adverse credit cases including IVAs - particularly where the IVA is historical and has been satisfied.
An IVA appears on the Insolvency Register and the individual's credit file for 6 years from the date it was registered. Even after it drops off the register, some lenders may still ask about previous insolvency events. Full and honest disclosure is essential when applying for finance.
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