The person in debt contacts an Insolvency Practitioner and asks them to draw up an IVA for them. In drawing up the IVA the Insolvency Practitioner works out how much the person in debt can reasonably afford to pay back each month.

The Insolvency Practitioner then contacts all those who are owed money (eg banks, credit card companies etc) and asks them to accept that this is a sensible arrangement.

When the proposed IVA is accepted by all parties the person in debt simply makes the agreed monthly payments for a fixed period of time, usually 5 years. After this time the remaining debt is cancelled.