Our calculator will help you to decide whether an IVA is right for you.
Bankruptcy is sometimes considered a ‘fresh start’ solution, a way to help an individual or a company to clear its debts. The assets are sold to repay as much debts as possible. It is normally recommended to be the final resort. It is always better to seek help from a professional and one may also see the comparison of IVA versus Bankruptcy, to see which one is better suited to your situation.
During bankruptcy, everyone gets to know about the process and it does get published in the newspapers, whereas with an IVA there is no such publicity. In the case of an IVA, the name of the concerned party will only be published on the website of Insolvency Service and is noted in a public register, but will not get published in newspapers.
An IVA also has an advantage over the bankruptcy when it comes to commencement of business in future. There are various restrictions that are put on a bankrupt regarding starting a new business that are not present in an IVA. A bankrupt is not allowed to become a manager, director or to start or promote a company without getting the consent from the court. Furthermore, a bankrupt is not permitted to borrow over £250 during their bankruptcy without advising the lender of their bankruptcy. On the other hand, there are no such legal restrictions in the case of an IVA, although the IVA proposal will usually impart some restrictions on obtaining credit without permission from the supervisor.
In bankruptcy, as the estate of the bankrupt person or company gets transferred to trustee, the future and present assets of the bankrupt are always at risk. Such a threat does not exist under an IVA provided the terms agreed with the IVA company are met. Breach of the terms of an IVA can lead to its failure, and a subsequent petition for bankruptcy. Bankruptcy normally lasts for 1 year, although depending on the circumstances, restrictions can be put in place for up to 15 years.
An IVA is therefore a real alternative to bankruptcy. There are numerous IVA versus bankruptcy guides on the Internet which will help you see which the better option is. It is very important to take good financial advice before deciding which course to take.