In summary, this a formal contract between you and your creditors which provides a better financial outcome for them than they would achieve by making you bankrupt and an overall outcome which you deem preferable to bankruptcy.
 

Provided 75% of your creditors (each £1 of debt equates to one vote) accept your Proposal (which is usually drafted with your advisor’s assistance) then provided you comply with its terms, unsecured creditors cannot take any legal enforcement action against you.

IVAs are very flexible but creditors usually expect them to be for 3-5 years, depending on what your debts are and what dividend you are proposing to pay. You do not have pay 100p in the pound but your offer almost always has to be better than the dividend they would receive if you were to be made bankrupt.

There are two charges; (1) the Nominee’s fee to obtain an Interim (Court) Order, if appropriate; assisting you with the preparation of your Proposal; convening and holding the creditors’ meeting. Fees vary but for a ‘simple’ IVA Proposal they would not exceed £2,000 plus VAT and disbursements. (2) The Supervisor’s fees (the person appointed by creditors at the meeting – usually the Nominee but not necessarily so) are set out in the Proposal and agreed by creditors and are paid out the assets introduced into the IVA.

You can continue to trade, if self employed, without interference provided you comply with the terms of the IVA. The IVA is not advertised locally but there is a national register where all IVAs are recorded and details are available to the public. Obtaining credit (for example to remortgage) is more difficult but not impossible. Trade creditors will often continue to supply, albeit perhaps on different terms initially.