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Many people may wonder whether an IVA is a better option than bankruptcy. While they are two forms of debt solutions, they share the basic concept. So, how do you know which one is best for you? The answer depends on your individual circumstances.
Whether bankruptcy or an IVA is the right debt solution for you will depend on various factors; what you earn, what you own, whether you work full time or not and what kind of job you have are just a few.
However, if you are struggling with significant amounts of debt and need an expert opinion on your best plan of action, you should consult a debt specialist who will be able to help. There are cases when bankruptcy is better than an IVA:
For example:
- you are a tenant
- you have a low or unreliable income
- you are approaching retirement
An IVA will be better suited to your financial situation if:
- you are a homeowner
- you have a reliable, reasonably high income
- you hold a certain job (e.g. company director or politician)
An IVA and bankruptcy are similar in various ways. In both cases, the borrower only pays a portion of their debt while the rest is written off. They both limit your ability to borrow as well as your credit rating, making it harder and more expensive to obtain credit for at least 6 years. They’re both unable to write off certain types of debt like secured loans and court fines.
An IVA usually lasts for five years, has very little effect on your career and it is highly unlikely that you will lose your home, although you might have to release some equity. It’s not advertised in the press either.
Bankruptcy lasts for just one year in most cases but it can last 3 years and even 15 years in exceptional cases. Bankruptcy will also affect your job, especially if you hold certain positions like company director, local government or school governor. You may be forced to sell your home in the event of a bankruptcy and it’s a public process. Speak to a professional before making any major decisions that could affect the rest of your life.
For more information see:
IVA pros and cons
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