If you’ve found yourself struggling with debt, then both IVA’s and bankruptcy will probably become strong considerations to help you rebuild your financial future more positively.

How do I know which option is best for me?

Put simply, when it comes to debt management solutions there’s certainly no ‘one size fits all’ scenario.  In terms of debt there are so many considerations to take into account, such as your own personal circumstances, current income, outgoings and even the type of job you have (since some employment types carry their own implications with regard to debt).

What are the main advantages of an IVA?

If you’re thinking about an IVA, then there are certainly some advantages to be had which include (but are not limited to) the following:

  • You own your own property or other assets of value (such as vehicles, caravans etc.) which you don’t want to lose
  • You may be able to write off council tax debts
  • You’re currently (or intend to be) the director of a limited company
  • Your contract of employment states you might lose your job if you’re made bankrupt (this usually applies to professions such as the police force, prison service and armed forces etc.)
  • You’re considering – or already operate – a Power of Attorney on behalf of someone else
  • You have at least some spare income each month which could be put towards the repayment of an IVA
  • You want to continue using your current bank account
  • You don’t want to inform certain people about your financial situation – for example, your employer (on the assumption your employment contract permits this)
  • Your creditors are threatening to make you bankrupt (which can be avoided by entering into an IVA)

What do IVA’s and bankruptcy have in common?

There are quite a few things that IVA’s and bankruptcy have in common for example:

  • Both of these debt management solutions will be recorded on your credit file and will remain there for a period of six years, which will make it difficult (if not impossible) for you to obtain credit.
  • Your name will appear on the Individual Insolvency Register.  This is basically an online database of everyone who’s either gone bankrupt or been entered into an IVA.  Whilst this register is unlikely to be searched by your employer, friends or family you should remain mindful that the information will be made public and will almost certainly be searched by any future lenders.
  • Both options will write off your existing debt in its entirety provided that you comply with the terms of your chosen arrangement.
  • Both options also mean that you’ll no longer be contacted by your creditors for payment.  In fact, as soon as your chosen advisor puts the necessary paperwork in place then you won’t hear from them again – either by phone, letter or in person.  For most debtors, this provides added peace of mind and can certainly help alleviate some of the stress associated with ever increasing debt.