IVA or Bankruptcy

If you are dealing with your debts, you may be torn between two possible debt solutions: IVA or Bankruptcy. But how are you supposed to know which one of these debt solutions is right for you? What makes you suitable for an IVA or Bankruptcy (or an entirely different debt solution!) is dependant on your personal financial situation and could also be down to personal preference.

The best way to fully understand the differences between IVA or bankruptcy is to be sure that you get professional financial advice. One Advice can offer both of these debt solutions as well as their alternatives. With the advice of our expert debt advisors you can be sure to fully understand both the benefits and considerations of these two debt solutions, so call us today.

What are the differences between IVA and Bankruptcy?

Bankruptcy should always be seen as an extreme debt solution which should only be considered after all other debt solutions have been fully explored. If you declare bankruptcy, or are declared bankrupt by your creditors, you will lose control of your finances. If you are a homeowner you will more than likely lose your home.

An IVA is a repayment plan where you formally commit to making set repayments to your unsecured creditors over an average period of 60 months. Once you have successfully completed the IVA any unpaid debt will be written off, meaning that you are debt free. Your IVA payments will be based on what is affordable to you after essentials expenses, such as your mortgage, have been accounted for.

Is IVA or Bankruptcy the right debt solution for me?

The right debt solution for you is dependant on a number of different factors. Before deciding on IVA or Bankruptcy as your preferred debt solution it is essentials that you understand both the short-term and long-term consequences of both debt solutions.

Bankruptcy is more of a public declaration of insolvency as details about your bankruptcy will be published in your local newspaper. An IVA is more private although details are still available online through the insolvency register.

With bankruptcy you must hand over all financial control which means that your car or home could be sold in order to repay some of the debt to creditors. An IVA allows you much more control over your finances as you should still be allowed to keep your bank account and your home can be excluded from your IVA proposal (although you may have to release some of the equity in your home).

If your debts are less than £12,000 and you wish to avoid declaring bankruptcy, a debt management plan could be your preferred debt solution. You make reduced monthly payments to your creditors at a level which is affordable to you. So no matter what your financial circumstances One Advice can find a debt solution suitable for you.