IVA or Bankruptcy?

If you’re feeling overwhelmed by debt, you might be considering a formal debt solution. While insolvency is a serious step, it can also be a lifeline – helping you take control and work towards becoming debt-free.

Two common options are Individual Voluntary Arrangements (IVAs) and bankruptcy. Both can write off a portion of your debts, but they work in different ways.

When is a statutory debt solution right for me?

You may be classed as ‘insolvent’ if:

• You can’t pay your debts as they fall due or
• You owe more than the value of your assets

In this case, a formal solution like an IVA or bankruptcy may be appropriate. Both are legally binding and can offer a fresh start – but it’s important to get expert advice to make the right choice for your situation.

IVA and bankruptcy – at a glance

Will I lose my home?

• In an IVA, your home is protected. If you have a certain level of equity, your IVA may be extended by 12 months.
• In bankruptcy, if there’s enough equity to benefit creditors, the property may be sold. Homes with less than £1,000 of equity may be exempt from sale.

Will it affect my job?

• IVAs don’t usually restrict your employment, but it’s worth double-checking if you have any concerns.
• Bankruptcy may affect certain roles such as company directors, financial advisors and some public service roles.

Always check your employment contract or speak to HR if you’re unsure.

How will it affect my credit?

Both IVAs and bankruptcy stay on your credit file for six years from the date they begin.

During this time, getting new credit will be difficult – but once your solution ends, you can begin rebuilding your financial future.

Talk to a debt advisor first

Every situation is different. What works for one person might not be right for another. Before you make any decisions, it’s vital to get expert, impartial debt advice. Call us free on 0800 316 1833, start a conversation with us on WhatsApp or get help online via payplan.com.