Dealing with Debts: IVA and Bankruptcy at a Glance

Individual voluntary arrangement is often seen as an alternative to bankruptcy, and both are extremely different procedures that affect individuals in different ways. In this post, we take a look at these differences.

Reviewing effects of IVA and bankruptcy on your car, career and home

Both IVA and bankruptcy will get your name on the insolvency register, but there are a few essential differences. In case of IVA, you won’t be forced to sell your house, but depending on the situation, you may need to re-mortgage it. If re-mortgaging isn’t affordable to you, an additional period of 12 months will be added to the procedure. Bankruptcy will affect your home in all likeliness, provided you have equity tied up to the house. As for the car, you may keep your car during IVA procedure, although the same cannot be said with bankruptcy, unless your car is of extreme low value.

Bankruptcy will affect your career adversely as compared to IVA, and more so when you are acting as a director of the company – something that will not be allowed after the procedure. Those in financial sector may not be allowed to handle client finances following or during bankruptcy, and some companies are hesitant in hiring employees, who have a bankruptcy record.

Positive aspects of IVA

  • IVA can take a maximum of seven years, so you can work on your credit score
  • As far as asset protection is concerned, individual voluntary arrangement works better.
  • It doesn’t affect your career like bankruptcy
  • More beneficial when you own your business

Disadvantages of IVA

  • It lasts longer, which means that you will have to go through it
  • IVA will affect your credit rating
  • Your name will be on the insolvency register
  • The procedure can be costly

You can find individual voluntary arrangement details here.

Positive aspects of bankruptcy

  • Bankruptcy might be the only choice in some situations
  • It’s ideal when you don’t have a lot to lose
  • Completed in a much shorter period
  • Creditors cannot demand more than what’s stated in bankruptcy order

Disadvantages of bankruptcy

  • If you are into accounting, real estate, and financial sectors, bankruptcy will affect your career
  • Your name will be on the insolvency register
  • Your debt will be public

To know more on assets that may be affected during bankruptcy and other details, you can check here.

Take genuine bankruptcy and IVA advice before taking a call.

February 2019
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