Similarities and Differences between an IVA and Bankruptcy

When deciding between the two debt solutions, it is important to understand both the similarities and differences between an IVA and Bankruptcy. Both an IVA and Bankruptcy are debt solutions which are designed for insolvent persons, but each case varies so the right debt solution for you is dependant on a number of differing factors.

Below gives you an idea of the similarities and differences between an IVA and Bankruptcy, but for professional IVA and Bankruptcy advice, please contact one of our IVA team on 0800 048 1766.

Similarities between an IVA and Bankruptcy

There are a number of similarities between an IVA and Bankruptcy, for example, both are forms of insolvency which can be available to those with unaffordable debts. However, there are debts which neither an IVA  (Individual Voluntary Arrangement) or Bankruptcy can write off, such as secured debt and child support payments.

As they are both lengthy insolvency procedures, your credit rating will be affected for at least six years.

Differences between an IVA and Bankruptcy

There are a number of differences between an IVA and Bankruptcy, for example the duration differs. An IVA typically lasts for 60 months whereas Bankruptcy is normally a year, unless you are subject to a Bankruptcy Restrictions Order.

If you are a homeowner, an IVA is often the preferred debt solution as it is very unlikely that you will have to sell your hom, but you will probably be asked to release some of the equity. However, in bankruptcy it is very likely that you will lose your home.

Bankruptcy is much more of a public procedure as it will be advertised in newspapers. An IVA is not advertised but your details will be available on the Individual Insolvency Register.

* Remember, this page only offers an overview of the similarities and differences between an IVA and Bankruptcy. Please contact us on freephone 0800 048 1766 for further advice.