IVA is short for Individual Voluntary Arrangement, and offers a way for over indebted individuals to avoid bankruptcy, if they cannot afford to repay their unsecured debt. There are differences between the two debt solution, and the right debt free path for you will be dependant on your individual circumstances.
Below gives you an idea of the differences between IVA and Bankruptcy, but the best way to understand the right option for you is to get specialist advice. Please contact one of our IVA and Bankruptcy advisors on 0800 048 1752.
| IVA | Bankruptcy | |
| How does it work? | An IVA is a formalised agreement between you and your unsecured creditors. You will have to make set monthly payment for a typical period of 60 months. Creditors will be bound by the terms of the IVA as long as you continue to make payments, and will freeze all interest and charges on your debt. At the end of the IVA period, all unpaid debt will be written off. | Bankruptcy is an extreme debt solution and should only be considered once all other debt solution have been fully exhausted. Once you have been made bankrupt, your assets, including your home, will be sold in order to make some form of payment towards your debts. You remain bankrupt for a year after which you are discharged, although if you are subject to an income payments agreement you will have to make payments towards your bankruptcy over the 12 months. |
| What is the cost? | You will have to commit to making an affordable monthly payment for an average period of 60 months. The total IVA cost is dependant on your personal circumstances so please call today for further information. | Declaring yourself bankrupt is not a free process. There will be court fees that you need to pay. |
| Who will know? | Unlike Bankruptcy, an IVA will not be published in your local newspaper. But details about your IVA will be available on the individual insolvency register and will remain on your credit file for a typical period of six years. | Details about your Bankruptcy Order will be public, and will be published in the London Gazette and your local paper. It will also appear on your credit file for an average period of six years. |
| Am I suitable? | IVAs are not suitable for everyone. Only those with high levels of debt (typically over £12,000) will qualify. Your creditors will also have to agree to the terms of the IVA. You must be sure that you can commit to the monthly payments, as your creditors could make you bankrupt if you miss payments. | Bankruptcy is not the easy way out of unaffordable debt. There are both short term and long term implications which cannot be avoided. For example, you may lose your home and find it hard to borrow money in the future. |