An IVA is an individual voluntary arrangement made between a debtor and the creditor.  An IVA is used in order to avoid a bankruptcy.  There are many reasons why you might want to use an IVA rather than other options.  Most individuals don't seek IVA's until they have no other option, except bankruptcy. 

There are no rules to an IVA agreement other than the fact that it is a court agreement.  In other words the documents signed by both parties will hold up in a court of law.  There are a couple of ways an individual voluntary arrangement can work.  The first option is to approach the creditor and offer a lump sum payment that you can afford.  This would end the debt you owe the company.  They would not be able to ask you for more money later down the road or state that you were unpaid.  Your other option is to choose the series of monthly payments.  In this case you make an arrangement that states you are willing to pay a certain amount per month for five years.  The payment amount is normally something you are willing to offer the company.  In other words it should be something that you can afford.

Since you must pay back the amount you agree upon with the creditor, most repayments are calculated based on income and expenses for the month.  This shows the company you are willing to pay as much as you can towards what you owe.  They are more willing to work with you if the amount of the repayments are fair.

Typically with the IVA's the creditor must agree to the repayment schedule you are offering.  They could state that the amount you would repay over the five years is too low for the amount of debt you have.  In this case you would have to renegotiate terms or file for bankruptcy.

What you have on your side is the companies need to recoup some of their losses.  In a bankruptcy the potential debt can be discharged.  This would mean that the creditors don't get any of what they are owed.  It also means that they are willing to work with you to get even a partial amount of what is owed.  The IVA is subject to creditor agreement.  If you have many creditors you are trying to work a deal with you must have the creditor representing 75 percent of the debt agree to the IVA deal.  In other words your largest debt must be accepted in the IVA or all other debts will be refused.

There are downsides to the individual voluntary arrangement. The most important of these cons would be sticking with the IVA even if you experience an emergency situation or other issue.  You cannot miss one payment to the IVA, i.e. the creditor, once the agreement has been made. If you miss a payment then the agreement is over and you must pay the debt in full to satisfy the account or face repercussions in court.