A guide, not advice. This explains how things generally work. A licensed insolvency practitioner will tell you what applies to your company or to you.
IVA vs Bankruptcy: Which Is Right for You?
Both an Individual Voluntary Arrangement (IVA) and bankruptcy are formal personal insolvency solutions that can write off debt you cannot pay. But they work very differently, and the right choice depends on your income, your assets, and your priorities.
At a Glance
| IVA | Bankruptcy | |
|---|---|---|
| Duration | 5 to 6 years | Usually discharged in 12 months |
| Your home | Usually kept (may release equity in final year) | At greater risk of sale |
| Monthly payments | Required for the full term | Possible for up to 3 years via Income Payments Agreement |
| Public record | Less visible | Advertised publicly |
| Debt written off | A portion, at the end | Most debts, at discharge |
| Career restrictions | Fewer | More - some roles restricted for undischarged bankrupts |
When an IVA Is Better
An IVA usually suits individuals who:
- Have a regular income to support monthly payments
- Want to keep their home
- Have significant unsecured debts they cannot repay in full
- Are in a profession where bankruptcy would be problematic
When Bankruptcy Is Better
Bankruptcy may suit individuals who:
- Have few assets to protect
- Have no realistic way to make the monthly payments an IVA would require
- Want a quicker resolution (discharge in 12 months)
- Have debts so large that an IVA would not offer creditors a meaningful return
What Both Have in Common
- Both are formal, legally binding procedures
- Both stop creditor legal action once in place
- Both write off a portion of your debt
- Both appear on your credit file and affect your ability to borrow
- Both are supervised by a licensed insolvency practitioner (bankruptcy by the Official Receiver or a trustee)
Speak to a Licensed Practitioner
The choice between an IVA and bankruptcy is personal and depends on your circumstances. Our Manchester-based practitioners will assess your situation honestly and tell you which is right for you - free and confidential.