IVA vs. Bankruptcy

Difference Between IVA and Bankruptcy

The terms IVA and bankruptcy stand for solutions for debts that are not manageable. Careless expenditure through credit cards and other financial situations make people be in a financial problem and they cannot pay back their creditors. In times like these, there are two methods of coming out which are Individual Voluntary Arrangement (IVA) and Bankruptcy.


Bankruptcy is a legal proceeding where, you file a case in the court of law, to get immunity from your creditors. Everything including your home and car are sold out to pay back your creditors. Any outstanding amount if remains are deemed to be written off. Bankruptcy gets settled in less than 1 year. Bankruptcy is a larger social stigma than IVA. While IVA can waive of just 75% of the debt, bankruptcy can waive of the entire debt. It is impossible to have an account in case of bankruptcy.



IVA is a legal agreement that you reach with your creditors on the advice of an IVA counsel. This is a legal process that was established by the government as per Insolvency Act 1986. In this case you agree to pay a monthly sum of money agreed upon by the creditors for a period of time which normally is 5 years. If you make payments regularly till the five year period is completed, your debt is written off. Unlike the bankruptcy, in case of IVA, no assets are sold and your houses and cars are kept intact. You can have a zero balance account in case of IVA.