People take loans for a variety of reasons which have to be repaid according to a pre-decided repayment plan. But, at times they are unable to make their repayments on time. When a person gets into serious financial problems where there is no scope of repayment, he looks to other options like bankruptcy or Individual Voluntary Arrangement (IVA). IVA is a legal contract between the debtor and his creditors, so that the debtor does not have to file for bankruptcy and the creditors manage to get most of their funds back from the debtor. When an individual enters an IVA with his creditors, there is no fear of losing his assets or property and the creditors stop bothering him for repayment of their funds. Creditors prefer IVA over bankruptcy as this method helps them to recover most of their funds which they might otherwise stand to lose if the debtor files for bankruptcy. Debtors prefer IVA as this method helps reduce their debt to an affordable level and which they repay off over a period of about three to five years. Debtors have to make a monthly payment for the pre-decided period after which their debts are written off.