IVA or Bankruptcy?

IVA - Your Best Solution?
It is our opinion that for those who qualify, an IVA is normally the best solution for both them and their creditors. Apply for an IVA now.

An IVA can be the best debt solution for many people, but there will always be advantages and disadvantages compared with other options. Here we explain the main differences between an IVA and Bankruptcy.

IVA Advantages compared to Bankruptcy

• Creditors agree to write off the debt you can't afford to repay.
  This is subject to maintained agreed repayments for usually 60 months. The actual value of debt write-off is dependant upon personal circumstances.
• An IVA is a private matter and is not advertised.
  However, your name and address will appear on the Individual Insolvency Register.
• You are unlikely to be subject to employment restrictions or lose your job.
  There may be a specific clause relating to IVAs in your employment contract.
• You get to keep your home.
  You may have to re-mortgage to release equity in the final year of the IVA. In bankruptcy, you will lose your home if the equity in it is needed to pay debts.
• All reasonable assets can be kept.
• You may continue to run your own business.
  In bankruptcy, your business will be wound up and your employees dismissed.
• No question of rash or hazardous behaviour.
  In bankruptcy, you may become subject to a Bankruptcy Restriction Order if the Official Receiver considers you have been blameworthy and/or reckless in contributing to your bankruptcy.
• No potential of judicial investigation into your finances.
  In bankruptcy, the Official Receiver will investigate your financial affairs and report any irregularities to the courts. This could result in criminal proceedings.
• Under certain circumstances an IVA can result in an existing bankruptcy being annulled.
  This is called a Fast Track IVA.

IVA Disadvantages compared to Bankruptcy

• You pay back more of your debt.
  This is the advantage for the creditors. IVAs were created, in part, to allow creditors to get back more of their money than they would through bankruptcy. In bankruptcy, you are only normally required to make payments from income for up to 3 years. With an IVA you agree to repay what you can afford every month for five years.
• You can still be made bankrupt.
  If you fail to maintain the agreed IVA payments, your creditors may choose to start bankruptcy proceedings against you. This may leave you in a worse financial position than if you chose bankruptcy over an IVA in the first place, as debt is only written off at the successful completion of the IVA.