What's the difference between an IVA and bankruptcy?
Quick Answer: An IVA lets you keep more control over your assets, especially your home, while bankruptcy may require surrendering them.
Both IVAs and bankruptcy are formal insolvency solutions, but they differ significantly in how they work, their impact on your life, and their consequences.
Asset protection is the biggest difference. In an IVA, you typically keep your home and other assets. In bankruptcy, your assets may be sold to pay creditors. Your home can be sold, and valuable possessions may be seized by the Official Receiver.
Duration differs too. An IVA lasts 5-6 years, while bankruptcy typically results in discharge after 12 months. However, Income Payment Orders in bankruptcy can last up to 3 years.
Career impact: certain professions restrict or ban individuals who have been declared bankrupt. These include accountants, solicitors, police officers, military personnel, and company directors. An IVA generally has less career impact.
Control: with an IVA, you agree the terms with your creditors through your IP. In bankruptcy, the Official Receiver and court make decisions about your assets and income.
* This information is for general guidance only and does not constitute financial advice.