June 2026 saw a 22% increase in individuals entering Individual Voluntary Arrangements (IVAs) compared to the average monthly figures recorded throughout 2025. This legally binding agreement allows debtors to negotiate with creditors—under the supervision of an Insolvency Practitioner—to restructure repayments over five years at a sustainable level. Creditors then receive a predetermined percentage of the debt owed, which they must accept as full settlement.
Asset protection and flexibility
Many find this option more palatable than bankruptcy because it can allow more flexibility in terms of how an individual’s assets are dealt with. Creditors also view it as an appealing choice since it often yields a better overall outcome than a bankruptcy filing. The procedure is usually used by individuals whose outgoings have become disproportionate to their earnings. They may have a large mortgage and frequent credit card use. If circumstances change unexpectedly, such as redundancy or a business downturn, spending can quickly become unsustainable even if future costs are reduced.
Figures for the same period do not show a corresponding growth in business failures, though struggling owners exist. Business issues often stem from factors outside control, like higher employment taxes or supply chain disruptions. An entrepreneur might have left a role to start a new company, working hard to build something from scratch. This can be a time when a director spends the most time on the business but cannot extract earnings at the needed level. While an IVA is certainly an option here, there are many reasons to avoid a formal insolvency process.
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The impact on an individual’s credit rating can be long-lasting, and the status of the IVA will be listed in the public domain. This visibility often makes the process unattractive for business owners who wish to maintain a professional reputation. Before reaching a crisis point, an individual may do better to take proactive steps to engage with creditors on a more informal footing. They could ask a mortgage company about lower rates or request reduced monthly payments. Creditors might accept a payment holiday, or interest and charges could be frozen. If high-interest liabilities exist, a family member could help reach a full and final settlement.
Maximizing future income
Ultimately, the best way to maximize options for managing debts is to generate future income. This may mean obtaining new employment after a redundancy. For a business owner, it means making changes in the business to allow it to thrive and generate profits. That could involve investment in business development or a review of existing customer contracts to establish which are profitable and which are a drain on resources. Business owners will be aware that other companies face their own problems, which can be another source of unexpected issues. If a customer goes bust and does not settle their debt, it can have a knock-on effect that is difficult to manage.