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What is an IVA

IVA or bankruptcy?

Individual voluntary arrangements (IVA) and bankruptcy are both forms of insolvency but they work very differently.

Both are legal processes that can write off some or all of your debt. This means they offer protection from your creditors taking further action against you to recover a debt.

If you’re not sure which option is best for you, the information below will shed a bit more light on which solution might be a better fit for your situation. Each of these solutions will affect different areas of your life, so you must think carefully about what's important to you before deciding on a solution.

Is an IVA right for you?

Free online debt advice in 20 mins

Get help with Debt Remedy

Or call our expert debt advisors

0800 138 1111

8am to 8pm Monday to Friday, 8am to 4pm Saturday. Freephone inc. mobiles.

How will an IVA or bankruptcy affect my home?

IVAs and bankruptcy will have different effects on your home, and this will depend on whether you rent or own it.

If you rent your home during an IVA: If you rent your home, an IVA should have no effect and it’s very unlikely you’d need to move.

If your rent your home and go bankrupt: If you go bankrupt you can usually stay in the same property if your rent is up to date.

However, some private landlords include a condition in the tenancy agreement which means you could be asked to leave if you go bankrupt, You could also lose your home if you have rent arrears when you go bankrupt.

If you own your home during an IVA: You won’t be forced to sell your home but you might be asked to remortgage it six months before the end of your IVA. You’ll only have to remortgage if it’s affordable, and if you can’t, you might have to either pay an extra 12 months of payments into the IVA, or raise money from a third party instead.

If you own your home and go bankrupt: If you’ve got equity in your house it’s very likely that the official receiver (who deals with your bankruptcy) will make you sell it. If there isn’t any equity in it, you may be able to keep it.

However the official receiver does have two years and three months to decide what to do with it and this means that if the house if it goes up in value during this time you could be asked to sell it.

Owning a car during bankruptcy or an IVA

If you apply for an IVA you'll normally be able to keep your car (or van, or motorbike) as long as it's a moderately priced make and model.

If you apply for bankruptcy the official receiver will expect you to sell your car (or van, or motorbike) unless it's essential (for example, you couldn't get work without it) and it's got a low value.

Will bankruptcy or an IVA affect my job?

Some jobs might be affected if you're on an IVA or go bankrupt. Insolvency might cause problems for:

  • Company directors
  • Law and property roles
  • Finance and accountancy roles
  • Pub licensees

The best way to find out if an IVA or bankruptcy would impact on your job is to check with your professional membership body or trade union, or ask to speak to your HR department confidentially.

Bankruptcy is more likely to affect your job than an IVA, and in both cases it’s more likely to cause a problem if you work at a senior level.

It’s important to check if your job will be affected, but in our experience most jobs are not.

What do an IVA and bankruptcy have in common?

There are a few things that an IVA and bankruptcy have in common, regardless of which one you go ahead with. They would both:

  • Be recorded on your credit file for six years from the date they begin. While this information is on your credit file you may find it difficult to take out any further credit.
  • Mean your name is entered on the Individual Insolvency Register. This is an online database of everyone who’s gone bankrupt or been in an IVA or debt relief order.
  • Write off your debt. Because an IVA and bankruptcy are insolvency solutions you’ll either get the balance of your debt written off when the IVA is completed or you receive your discharge from bankruptcy.
  • Mean you stop getting any further contact from your creditors. IVAs and bankruptcy are formal debt solutions which means once they’re up and running your creditors aren’t allowed to contact you by letter or on the phone.

Get expert advice

We’d never recommend doing an IVA or going bankrupt without getting proper advice first. Use our online tool Debt Remedy, it’ll only take you about 20 minutes, and we’ll recommend the best solution for your situation.

If an IVA or bankruptcy is the right option for you we’ve got dedicated teams on hand to support you through the process.