Can an IVA save me from bankruptcy?

Faced with the prospect of going bankrupt, many people will go to any lengths to find a solution that can `save` them from bankruptcy. This isn`t always the right approach - for some people, bankruptcy could well be the best (or only) solution to their debt problems.

For many others, though, bankruptcy isn`t the answer. An IVA (Individual Voluntary Arrangement) could be a much more appropriate way for them to clear their debts.

Could bankruptcy be right for me?

Bankruptcy could be right for you if:

• Your debts are high,
• Your income is low,
• You don`t own any property or other valuable assets,
• You don`t expect your finances to get better in the foreseeable future, and
• You can`t see how you could repay your debts in a reasonable timeframe.

How is an IVA different from bankruptcy?

	Bankruptcy	IVA
Effect on home	Can force the sale of your home if a family member or friend can`t buy out your `interest` in it.	Very unlikely to force you to sell your home; will probably require you to release some equity.
Effect on career	Will keep you from holding certain positions, such as company director or local government councillor.	Some companies may not employ someone with an IVA.
Publicity	Will be advertised in newspapers.	Not advertised at all, although it will appear in the (publicly available) Individual Insolvency Register.
Duration	1 year in most cases. Payments can last for 3 years. A Bankruptcy Restriction Order may be granted in exceptional cases, which can last 15 years.	5 years in most cases.

In other words, an IVA could be more appropriate than bankruptcy if you own your own home, if you work in certain professions, or if you don`t want your insolvency publicised.

Whether or not that`s the case, it`s a huge decision, and one you shouldn`t make without talking to a debt adviser who can explain your options and help you make the right decision.

IVAs & bankruptcy - don`t forget...

A bankruptcy and an IVA are both a form of insolvency. They can both give people a chance to repay what they can (of certain debts - but not mortgage debt, tax debt, etc.) and write off the rest. However, they`ll both stay on a borrower`s credit rating for six years from the time they start, which can make credit both harder to obtain and more expensive.

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