IVA vs Bankruptcy: Which Solution Protects Your Assets?
Both an Individual Voluntary Arrangement (IVA) and Bankruptcy are formal statutory insolvency procedures governed by the Insolvency Act 1986. The critical difference lies in how they treat your home, professional licenses, and repayment timeline.
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Individual Voluntary Arrangement (IVA)
With over £8,000 in debt and steady income, an IVA provides legally binding protection from creditors, freezes all interest and enforcement, and writes off remaining debt upon completion.
IVA vs Bankruptcy: Statutory Comparison
| Factor | Individual Voluntary Arrangement (IVA) | Bankruptcy |
|---|---|---|
| Home & Property Protection | Protected from forced sale (equity clause) | Home equity claimed; property may be sold |
| Duration to Debt Discharge | 5 to 6 years (monthly plan) | 12 months (Clean break) |
| Upfront Petition Fee | £0 upfront (deducted from contributions) | £680 government fee (payable before petition) |
| Career & Professional Impact | Minimal; most professions allowed | Barred from company directorships, law, finance |
| Credit Register Record | 6 years from start date | 6 years from bankruptcy date |
| Public Registry Listing | Individual Insolvency Register (removed at end) | Individual Insolvency Register + The Gazette |
`r/UKPersonalFinance` Community Verdict
"If you have no home equity and work in a non-restricted job (e.g. not a director, accountant, or lawyer), bankruptcy can be far less stressful than a 6-year IVA because you are 100% debt-free in exactly 12 months. However, if you own a home or run a limited company, an IVA is almost always necessary to shield your assets."
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