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Thinking about going ahead with an IVA?

We're here to help. Free, online debt advice available now.

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i England, Wales and Northern Ireland only

What is an IVA

Individual voluntary arrangement (IVA) or bankruptcy?

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

IVAs are arranged by StepChange Voluntary Arrangements, part of StepChange Debt Charity.

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 which one to take.

IVAs aren't available if you live in Scotland. In Scotland, a protected trust deed is a similar solution, but has different benefits, risks and fees associated with it. There are two types of bankruptcy in Scotland which work differently to the solution available in the rest of the UK: Full administration (Sequestration) and Minimal Assets Process or MAP bankruptcy.

mum at the table with bills

Thinking about going ahead with an IVA?

We're here to help. Free, online debt advice available now.

Get debt help

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 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.

Clare Lindley and James O'Carroll of StepChange Voluntary Arrangements are licensed to act as insolvency practitioners in the UK by the Insolvency Practitioners Association.

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 that 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. This record is not permanent, and will be removed three months after the solution ends
  • 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 that you stop getting any further contact from your creditors. IVAs and bankruptcy are formal debt solutions which means that once they’re up and running, your creditors aren’t allowed to contact you by letter or on the phone to recover money from you

How will an IVA or bankruptcy affect my home?

IVAs and bankruptcy will have different impacts 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’ll 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 or take out an IVA. 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 to work without it) and it's got a low value.

Get help now

If you’re considering an IVA, it’s important to get free and impartial debt advice first. You can only get an IVA with the help of an insolvency practitioner.

  1. The first step is to see whether an IVA is right for you. To do this use our free online advice tool or call us and speak to one of our expert advisors.
  2. If an IVA is the best solution to your debt problem our specialist company, StepChange Voluntary Arrangements, can help you through the set up process.
  3. We'll review your finances and put forward the IVA proposal to your creditors. 

Fees are detailed in your IVA proposal, which an IP will assist in drafting. Any fees have to be approved by creditors. Your IP will explain what fees you need to pay for your IVA.

StepChange Voluntary Arrangements is a registered trading name of Consumer Credit Counselling Service Voluntary Arrangements Limited, a wholly owned subsidiary of StepChange Debt Charity.

"They were so kind, they listened patiently and helped me through the process" Alison, Kent