All Debt Solutions
Bankruptcy vs IVA
Bankruptcy is a formal insolvency process where a court declares you cannot pay your debts. Most debts are written off, but you may have to surrender assets including your home. It's often seen as a last resort.
How Bankruptcy Works
- 1You apply online through the Insolvency Service (costs £680)
- 2An Official Receiver is appointed to handle your case
- 3Your assets are assessed and may be sold to pay creditors
- 4You're typically discharged after 12 months
- 5Remaining qualifying debts are written off on discharge
Bankruptcy Advantages
- Most debts written off after 12 months
- Creditors must stop all recovery action
- Fresh start relatively quickly
- Income Payment Agreements last maximum 3 years
- Can be suitable for those with no assets
Bankruptcy Disadvantages
- You may lose your home and other assets
- Publicly recorded on the Insolvency Register
- Can affect certain professions and directorships
- Bank accounts may be frozen
- Stays on credit file for 6 years
IVA vs Bankruptcy - Side by Side
| Feature | IVA | Bankruptcy |
|---|---|---|
| Keep your home | Usually yes | May lose your home |
| Duration | 5-6 years | 12 months (then discharged) |
| Debt write-off | Up to 85% | Most debts written off |
| Asset protection | Assets usually protected | Assets may be surrendered |
| Career impact | Minimal career impact | May affect certain careers |
| Control | You agree the terms | Court/OR decides |
Bankruptcy May Suit You If...
- Those with few assets to protect
- People who need a fast resolution
- Those with debts they genuinely cannot repay
An IVA May Be Better If...
- Homeowners wanting to keep their property
- People in restricted professions
- Those who can afford regular monthly payments
Need Help Deciding?
Get free, confidential advice from a qualified professional to find the best solution for your situation.
Do You Qualify?* This information is for general guidance only and does not constitute financial advice. An IVA is a formal insolvency solution - fees apply and your credit rating will be affected.