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.