IVA or Bankruptcy?

IVA or Bankruptcy? Here we explain the main differences between the two.

IVA Advantages compared to Bankruptcy

IVA Or Bankruptcy – 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.

• 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.
• You may continue to run your own business or be director of a private limited company.
  In bankruptcy, you cannot be a company director.
• No question of rash or hazardous behaviour.
  In bankruptcy, you may become subject to a Bankruptcy Restriction Order if the Court 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 Court. This could result in criminal proceedings.
• Under certain circumstances an IVA can result in an existing bankruptcy being annulled.

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 IVA may be terminated by your IVA provider or 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.