How Individual Voluntary Arrangement Is Different From Bankruptcy ?

Individual Voluntary Arrangement Or Bankrupcty, Which One Is A Better Insolvency Solution?

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Individual Voluntary Arrangement or IVA, was introduced by the Government with the idea of allowing the creditors to recover more money from the debtors than they could have recovered in case of bankruptcy. The debtors need to understand the differences between both IVA and bankruptcy in order to make their choice. Hope, after reading this article on IVA vs Bankruptcy, you would be able to finalize the best insolvency solution from the two options differentiated, here.

The Individual Voluntary Arrangement or IVA is basically an agreement done between you and your creditors, wherein you agree to make contribution on monthly basis to the Insolvency Practitioner appointed by you, who inturn will distribute this amount among your creditors after deducting their charges. This facility is only available for people residing in England, Wales and Northern Ireland. Though, both IVA and Bankruptcy are formal insolvency solutions, they do have certain key differences between them. These key differences can help you to decide which one to choose in order to write off your unsecured debts.


  • IVAs allow for payment breaks and adjustments in case there are any changes in the financial capabilities of the individual; a feature which is not allowed under bankruptcy insolvency solution.
  • For IVAs the maximum repayment duration is 5 to 6 years while for bankruptcy this duration is only 3 years.


  • Under an IVA, individuals have control over their assets while in of bankruptcy the control is transferred to the Official Receiver or Trustee.
  • If an individual under debt owns a house, then in the of bankruptcy, this house would be certainly sold off and all the available equity would be paid into bankruptcy. With respect to IVA, the individual would be allowed to retain the house at the start, but during the final year of IVA, the individual would be allowed to make an attempt to remortgage the house so as to release some element of the equity.
  • Under IVAs, vehicles can be retained by the individuals while in bankruptcy, vehicles are required to be sold off unless they are of low-value or deemed to be to be retained.


  • Under IVAs the individuals working as a are generally allowed freedom to continue as a sole trader or as a director of the limited company, allowing them to make relevant contributions, whereas in the of bankruptcy no such freedom is available for traders.
  • Insolvency can affect the jobs in fields of law, finance, real estate, accountancy etc. Hence, a proper check should be done before opting for IVA or bankruptcy.

Bank Accounts

  • Under, IVAs the individual’s bank account is not frozen unless there is a debt with the bank account provider itself.

    If this is a case, then the individual needs to change the bank before proposing IVA. In case, of the bank accounts are generally frozen.

Thus, one should surely, consider Individual Voluntary Arrangement or IVA as an alternative solution to Bankruptcy.

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