IVA has been around in the UK since 1987, and around 4,400 each month enter in to a legally binding agreement with the court and agree to pay a certain amount every month, the agreement is set for 60 months.
Now this product works in a specific way, a way in which if your creditors agree, you will be able to pay your creditor/lender at a rate in which suits your budget. The majority will agree and they will reduce your level of debt sometimes reduce your debt to 25P for every £1 you owe, however more lenders/creditors are now only accepting 40p in every £1 you owe to them.
If your creditors/lenders agrees to accept your IVA and allow you to make one affordable payment every month for the 60 months which is dependent on your income and expenditure and opinion on what the creditors agree to be affordable; your debts can be paid back over 5 yrs or 60 months after that the remaining of your debt will be wiped clear.
However here is something for you to thing about; if you are a home owner you will be asked to release any equity in the first year this will be for your Insolvency Practitioner (IP) to distribute to your creditors and also asked to do same again in year four of your IVA again for your (IP) to distribute to your creditors. In some instances you may end up paying more back to your debts in the long run. Be very careful when entering in to an IVA please research what you are entering and be sure on all the facts. If you enter in to contract on an IVA if you do not keep up with payments you are liable to be made bankrupt.
If you are not a home owner and enter in to contract same rules apply however in my experience people with no assets are less likely if missed payments not to be made bankrupt as there is no financial gain for your lenders to do so.