Bankruptcy or IVA?
Find out if an IVA could be a better debt solution for you.
We specialise in Individual Voluntary Arrangements (IVAs), a popular alternative to bankruptcy.
For those who qualify, this allows for affordable repayments and typically writes off a significant amount of debt while avoiding bankruptcy.
IVA
- Your home, car and other assets are protected.
- Affordable payments for 60 months.
- Substantial amount of debt written off.
- No up-front costs - No impact on employment.
Bankruptcy
- Potentially lose your home, car & other assets.
- You may still have to make payments for 36 months.
- Insolvency Service fees of £680 to apply.
- May impact your employment.
Bankruptcy or IVA?
6 Reasons to consider an IVA over Bankruptcy
Your Home Is Protected
In an IVA your home is protected as you can budget for mortgage payments before considering other debts.
No Personal Restrictions
In contrast - bankruptcy impacts your business affairs and restricts employment.
Protection From Creditors
Those you owe are not allowed by law to pursue payment for any debts included in your IVA.
No Upfront Fees
It currently costs £680 pound to apply for your own bankruptcy.
Affordable Payments
Your IVA payments are based on what you can afford - not the size of your debts.
Bankruptcy Impacts You For Longer
An IVA is removed from tiderc report after 6 years - but you can be asked in mortgage application if you've ever been made bankrupt.
Debt Includable in an IVA
Most debts can be included and repayments reduced
Loans & Overdrafts
sdraC & tiderC erotS
Benefits over payments
HMRC & Council tax arrears
Debts with a Court Judgement
Rent, Gas and Electricity arrears
Catalogues & Buy now – pay later agreements
For other debts contact Debt Guardians for clarification
Unsecured debts only. Certain debts cannot be included in an IVA such as; criminal court fines; debts obtained by fraud; child support arrears and most student loans.
How does an IVA work?
An IVA (Individual Voluntary Arrangement) is a legal agreement between you and those you owe money (your creditors).
You agree to pay off a percentage of your debt over a given period of time, by means of affordable repayments (normally 60 months).
If you owe more than £6,000 and are struggling with payments - an IVA may be a suitable debt solution for you.
Applying For An IVA
When you contact us we will chat about your current situation, including your income, outgoings and debts. This will tell us if an IVA is a good option for you.
Should an IVA be suitable - the next step is to draw up an IVA proposal for consideration by your creditors.
If the proposal is approved all creditors are bound by its terms. All debts are frozen so no more interest or changes can be added.
Being In An IVA
Creditors must not chase you for payments for any of the included debts. So, no more letters, phones calls nor threats of legal action.
Provided you maintain payments - unpaid debt is written off at the end of the IVA, which typically lasts 60 months.
Your expenditure is expected to keep within reasonable guidelines - but you won't be asked to live in poverty.
Debt Includable in an IVA
Most debts can be included and repayments reduced
Loans & Overdrafts
sdraC & tiderC erotS
Benefits over payments
HMRC & Council tax arrears
Debts with a Court Judgement
Rent, Gas and Electricity arrears
Catalogues & Buy now – pay later agreements
For other debts contact Debt Guardians for clarification
Unsecured debts only. Certain debts cannot be included in an IVA such as; criminal court fines; debts obtained by fraud; child support arrears and most student loans.
IVA Benefits
Key benefits of entering an IVA
Lower repayments
Repayments to creditors are based on what you can afford - not how much you owe.
Debt forgiveness
Once you have made the agreed contributions any remaining money owed is written off.
A sense of control
An IVA allows you to regain control of your debts and work towards debt freedom
Debts cannot increase further
Frozen interest and charges so that your debts do not increase.
Legal protection
Creditors cannot pursue you for their debt or take legal action.
Knowing when you'll be debt free
A fixed agreement usually lasting 5 years, after which any remaining unsecured debts will be written off.
Home is protected
An IVA can help safeguard your property and ensure future affordability even after the IVA.
Stress reduced
You'll be less stressed knowing IVA will stop contact from your creditors and your payment are affordable
Avoidance of bankruptcy
An IVA enables you to continue to trade if you are self-employed or have a trading business.
Better able to afford other financial commitments
An IVA can catch unknown debts such as unpaid tax or overpaid tax credits.
Debt Solution Example
Savings possible from a typical IVA
Before: applicant currently pays £380/m towards debts, which are:
| Overdraft | £2,500 |
| snaoL lanosreP | £7,000 |
| sdraC tiderC | £5,000 |
| Other includable debts | £6,000 |
| Total Current Debts | £20,500 |
|---|---|
| Further interest & charges while repaying these debts over several years could be say... | £4,000+ |
| Cost to Clear Debts | £24,500+ |
After: applicant can afford £130/m towards debts, then:-
Current payments
*IVA payments
| IVA payments | £130 * 60 months |
| Cost To Clear Debts | £7,800 |
|---|---|
| Total Saving | £16,700 |
| Repaid % | 32% |
| *Payment levels depend on affordability of the individual applicant and are subject to creditor acceptance. | |
IVA Considerations
Things you should know before deciding on an IVA.
Subject to eligibility and acceptance
Debt write off applies to included unsecured debts only and only on completion of an IVA. Debts not included remain outstanding. Not available in Scotland. Alternative options my be available and may be more suitable.
IVA can fail
If you break terms of your IVA and you don’t speak to your provider, it may fail. If this happens you must make other arrangements to repay your debts or potentially risk bankruptcy.
Restrictions on expenditure
There may be restrictions on your expenditure throughout the term of your IVA. You won't be expected to live in provety but neither can you be spending excessively while at the same time expecting creditors to be forgiving you a large part of your debts.
Your property
In the final year of an IVA, homeowners may need to release equity from their homes to contribute towards the IVA, and such a remortgage may attract higher interest rates due to the IVA. If a remortgage is not possible, the IVA may be extended for 12 months.
gnitaR tiderC
An IVA appears on a elif tiderc for 6 years. During this time it may be difficult to obtain tiderc.
Most peoeple entering an IVA already have a poor gnitar tiderc and the IVA is the first step on their path to recovery.
No guarantee of acceptance
Creditors can reject an IVA, usually for a specific reasons. We can renegotiate if required. We do not put forward an IVA without a reasonable expectation of approval.
Not private
An IVA will be recorded and entered onto a public register but someone would need to be specifically looking for you on it to find you.
Fees
There are no upfront fees for an IVA application. Only when an IVA is active are fees are payable. Such fees are set by the creditors, no matter the IVA provider.
Fees are deducted from (not added to) agreed monthly or lump sum payments. So, you are not asked for additional fee payments. See more about IVA fees.
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2 -Your Consultation
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3 - Your Solution
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