An IVA is touted as an alternative to bankruptcy, and that's exactly what it is - one of the limited options when you are insolvent, as in you're unable to pay your debts as they fall due.
The differences between IVAs and bankruptcy is that an IVA protects your assets, and also allows you to keep offices (such as being a director of a limited company) that you wouldn't be allowed to hold if you were in bankruptcy. Only enter an IVA if you have assets, such as a house, otherwise 9 times out of 10 bankruptcy is a better option!
An IVA is a legal agreement, ratified by the court, between a debtor and their creditors. It usually lasts for five years with monthly payments being made, though sometimes can be a single lump sum payment from a remortgage or redundancy or similar. An Insolvency Practitioner supervises it and is paid to do so (around £1,500 a year is normal) from the contributions you make. The remaining monies you pay in are split between your creditors. Failure to keep up payments into an IVA may result in a petition for your bankruptcy from the supervisor. After 5 years your debts are considered settled, if you keep to the payment schedule and you're free to start again.
You can enter into a Debt Management Plan, which is a less formal version of an IVA - there is no court involved, and the agreement is more voluntary (your creditors do not have to go with the majority). Many creditors are more accepting of DMPs these days and the CCCS can recommend organisations that will help you set these up without taking a huge chunk of your contributions. These can go on for some time, and some creditors can be truly difficult, but the benefit is interest is often frozen until you're in a position to get back on your feet.
The third alternative is bankruptcy, which lasts 12 months and writes off all your debts (much as with an IVA) with the exception of student loans. If you are able to you may be asked to pay contributions for up to 3 years and any assets you have may be realised for your creditors - in most cases this is a property or a particularly valuable car. There are some restrictions, regarding applying for credit or being a director of a limited company, but these last for just a year. If you're really struggling and have no assets to protect it's probably far more sensible to do this, draw a line under your indebtedness and move forward without the stress of debt hanging over you.