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Individual Voluntary Arrangement or IVA is a debt solution, a legally binding document, in the United Kingdom, involving debtors and creditors by which debtors tender the creditors the best deal affordable by them after realizing their assets, so as to avoid the expense of bankruptcy procedures. However, IVA also has its disadvantages. Although the pros of it are many, the cons, too, need to be evaluated well. IVA is a formal agreement. The debtor is legally bound throughout the term of an IVA. If the debtor fails to comply in any way, the agreement is considered failed. The creditors may declare the debtor, in such cases, to be bankrupt.

IVA has an annual review. An IVA requires debtors to provide annual reviews of their financial statements each year. IVA also has very strict and firm payment terms. A debtor is expected to pay off a certain sum of money at the end of each month. Flexibility is allowed only in extreme cases. During the term of the agreement, it is considered a breach by the debtor to take out any credit agreements. The credit rating of the debtor is also noted by the IVA, which records improved credit ratings only at the completion of the agreement.