IVA legislation was introduced through the Insolvency Act of 1986 as a more realistic alternative to bankruptcy for insolvent debtors. Although they are both potential debt solutions, it is important that you are aware of the how the differences between Bankruptcy or IVA will affect you.
One Advice have a dedicated bankruptcy service who can answer any questions which you may have about the bankruptcy process. Call us free on 0800 019 5870.
Assets: One of the main disadvantages to declaring bankruptcy is that you lose control of your finances and your assets. These may be sold to repay the creditor debt, and can include your home.
With an IVA, you can exclude the home from your proposal, so you do not have to risk losing it. Although creditors may ask that you release a percentage of the equity.
Social Stigma: Bankruptcy comes with a social stigma and it is hard to keep your bankruptcy order private as they are always publicly advertised in your local paper, and will contain your name, home address and occupation.
An IVA is not published in your local paper, although details are available online. It is a private agreement between the debtor and the creditor. The privacy of the agreement means that there is less of a social stigma attached.
Career Status: Once you have been made bankrupt, you are usually not allowed to be involved in promoting, forming or managing a company without the permission of the court. Any business that you own will be shut-down immediately.
An IVA will not damage your career status and you can continue to run your own business or be a company director or in professional roles involving finance.
Remember that One Advice are here to offer you free debt advice on a range of financial solutions, including Bankruptcy, IVA or Debt Management Plans.
Not sure which debt solution is right for you? Take the 1 Minute Debt Test to find out now.