A procedure for an individual whereby a scheme of arrangement of his affairs or composition in satisfaction of his debts is put forward to creditors. Such a scheme requires the approval of the Court and is under the control of a licensed insolvency practitioner who acts as supervisor. Insolvency Defined as having insufficient assets to meet all debts, or being unable to pay debts as and when they are due. If a creditor can establish either test, he will be able to present a winding-up petition. For a bankruptcy petition, inability to pay is the only available ground.
A fairly recent alternative to a Bankruptcy, an IVA is not quite so onerous as bankruptcy, and its flexibility will vary according to the individual. It is a way of working with your creditors to provide a mutually beneficial solution without having to undergo the trauma of a Bankruptcy. Although not as onerous as a Bankruptcy it will severely limit the range of Lenders available to you.
At the end the IVA the debtor is considered debt free, even if the debts are not paid off in full – anything outstanding is written off, leaving the debtor free to start afresh.