IVA v Bankruptcy easy comparison chart

Posted By: on 4th February 2015

BANKRUPTCY INDIVIDUAL VOLUNTARY ARRANGEMENT (IVA)
Advice Free from Bretts Business Recovery Free from Bretts Business Recovery
Bank Account Frozen initially and likely to lose if overdrawn May be retained provided the bank is not a creditor in the IVA
Credit Cannot incur credit for period of bankruptcy Cannot incur credit for period of IVA
Credit File Marked for 6 years Marked for 6 years
Creditor approval required? No Yes (requisite majority)
Creditor Communication Creditors will deal with Official Receiver and you should have no further communication with them. Creditors will deal with the Insolvency Practitioner (IP) and you should have no further communication with them.
Debts Unsecured debt (with a few exceptions) will be written off Unsecured debt will be “settled” in full and final settlement.  Balance will be written off
Default/Non Compliance You may be subjected to a Bankruptcy Restriction Order or your automatic discharge from bankruptcy may be suspended The terms of the Arrangement may stipulate that the IP has to petition for your bankruptcy if breach is not rectified.
Directorship Cannot be a director of a limited company, nor involved in the formation, promotion or management Can be a director of a limited company
Duration Usually 12 months but can be extended Can be up to 5 years
Employment Could be at risk for certain professions and could affect chances of gaining employment Should not affect present employment but might affect chances of gaining employment depending upon your profession
Fees £705 although exemptions may apply Drawn from funds paid into the IVA.  Fees will vary according to each individual circumstances. Usually capped at 15% of realisations.  No up front fees usually charged
Home At risk if equity available.  May retain if in negative equity. If equity available this may need to be included in the IVA but you will have time to sell voluntarily and will control the process
Income Any surplus income will be claimed for the bankruptcy estate for up to three years surplus income will be made available for the duration of the IVA
Legal Action Prevented Is prevented once approval to IVA achieved
Legal Obligations To surrender to the proceedings, attend upon the official receiver and provide all information requested.  Inform of any increase in earnings. An IVA is a legally binding contract between you and your creditors.  You must adhere to the terms of the IVA Proposal.
Motor Vehicle At risk unless you can evidence that it is vital for the purposes of work Allowed to keep if moderately priced
Privacy Registered on the Insolvency Service Website Registered on the Insolvency Service Website
Professional Qualifications Will be lost for professionals such as accountants and solicitors May be retained
Windfalls/ Inheritances May be claimed if you become entitled to before or during the bankruptcy Will be claimed under the terms of the Arrangement