IVA Or Bankruptcy

IVA Or Bankruptcy – Free Advice

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IVA Or Bankruptcy – Which Is Better?

To be considering bankruptcy you must be in a fairly serious financial crisis and to be searching for help on deciding whether it is a better option than an IVA, you obviously already have some idea about what your options are. You are off to a good start by seeking help and you are asking the right question.

To be eligible for an IVA you need to be in a situation where you are facing bankruptcy as your only other option, in other words in a very serious debt situation. You also need to live in the UK. The relationship between your debts and your income will be such that it looks completely impossible to ever repay what you owe out of what you are bringing in. This is exactly what an IVA was designed for, so all you need to do is understand the consequences, benefits and disadvantages of each option so that you can make an informed decision.

Most advice you will find on the internet will simply be trying to get you to take an IVA, as it is essentially marketing the services of a debt company. I do not provide any debt services so the information on this site is about helping you find the best option for your unique circumstances.

IVA Or Bankruptcy – What Is An IVA?

An individual voluntary arrangement is a formal agreement whereby you make regular payments towards your outstanding debts, based on what you can afford. You do this for a set period, usually five years, and at the end of that time any debts left unpaid get written off and you are free from debt and free from any creditors being able to pursue you for anything. How much gets written off depends on your situation, but many people get about half their debt written off with an IVA and some get up to 70% or more wiped out.

There are significant differences between an individual voluntary arrangement and a debt management plan. An IVA is a formal and binding contract, whereas the DMP is informal, so much easier to change your mind about. Also, a DMP is about repaying everything that you owe, whereas an IVA makes it possible to deal with much more serious debts by writing a large part of them off.

IVA Or Bankruptcy – Does An IVA Have Advantages Over Bankruptcy?

Bankruptcy is a very serious step with implications that will stay with you for a long time. There are consequences that affect your whole life, such as not being able to take up certain jobs or positions and not being able to run a company.

An IVA is generally seen as a less drastic step, so there are some perceived advantages when compared to the effects of bankruptcy.

One of the most feared consequences of bankruptcy is losing your home. The chances of this happening with an individual voluntary arrangement are significantly less, as you do not automatically lose control of everything you own and you have more control over which assets are included in the IVA.

If you are a business owner you can carry on trading under an IVA, whereas with bankruptcy you would be expected to close the business and lay off any staff that you employ.

There are costs involved in whichever option you go for because professional people have to be paid to set things in motion and administer your affairs, but the costs tend to be less for an IVA.

Another big drawback with bankruptcy is the stigma that is associated with it. Being known as a bankrupt is seen as a shameful thing and part of the process is that your bankruptcy needs to be published in the press. There is no public declaration of your setting up an IVA, so you can control who does and does not know about it.

When you are in an individual voluntary arrangement you can still keep a normal bank account, though you will not be able to ask for new credit.

IVA Or Bankruptcy – How Do I Decide Which Is
Best For Me?

When you are in this situation you need professional help and advice before making any decision. There are lots of debt management companies out there happy to offer advice, but many of them will tend to steer you in the direction that results in fees going to them, even if that is not the right course of action for you, so you need to take some care over who you talk to.

You should shop around and compare advice before deciding anything, as you would for anything else. That in itself is not enough though; you should only approach companies that are known to be well established and with a track record of helping people out of debt.

You can apply for debt advice quickly and easily online, after which a debt advisor will phone you up to go through things in more detail before offering advice. You can apply to a few companies without any commitment and make a decision when you are ready.

You can find a list of some of the most reputable IVA Specialists on the main IVA page of this site.

Alternatively you can apply for debt help now using the form at the bottom of this page if you are a UK resident. A debt advisor from the company that is our top recommendation will then get back to you.

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Is It Better To Use An IVA Or Declare Bankruptcy?