IVA vs bankruptcy — which is right for you?
An Individual Voluntary Arrangement (IVA) and bankruptcy both deal with problem debt, but suit very different situations. Here is how they compare.
The comparison
| | Bankruptcy | IVA | |---|---|---| | Cost | £680 | ~£5,000 (built into payments) | | Duration | Usually 12 months to discharge | Typically 5 years of monthly payments | | Debts | Most unsecured debts written off at discharge | Remaining unpaid debts written off at the end | | Your home | Equity may need to be released; can be sold | Usually protected | | Credit file | 6 years | 6 years | | Directorship | Cannot be a company director | Allowed | | Best for | Significant unsecured debt, little ability to repay, limited home equity | Stable income, a home you want to protect, mid-to-high debt |
When bankruptcy tends to be right
- Significant unsecured debt you cannot realistically repay.
- Little or no equity in your home.
- Low or unstable income.
When an IVA tends to be right
- Stable income for monthly payments.
- Meaningful home equity you want to protect.
- Preference for a private arrangement over a public bankruptcy.
Rule of thumb
- Little income, no home equity → bankruptcy is usually cheaper and faster.
- Stable income, home to protect → an IVA normally keeps your home safe.
The downsides to weigh
- Bankruptcy: your home may be sold if you have equity; you cannot act as a company director during the bankruptcy.
- IVA: failure can push you into bankruptcy; five years of payments and the fees are high.
Both can be paused by Breathing Space while you speak to a free debt charity. Whatever you choose, the Insolvency Service or a licensed insolvency practitioner will need full, honest disclosure of debts, assets and income.
Get advice first
Both are formal, legally binding routes. Always speak to a free debt charity — StepChange (0800 138 1111) or National Debtline (0800 808 4000) — or a licensed insolvency practitioner before deciding. The wrong choice can be costly.
Use Debtrupt's Options comparison for a side-by-side recommendation based on your numbers.
England & Wales only. General information, not legal advice.