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Individual Voluntary Arrangement Or Bankruptcy: What Are The Differences?

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IVA, or Individual voluntary arrangement, is often considered to be a more relevant alternative to bankruptcy, at least in certain situations. Bankruptcy is a much faster procedure, and individuals are discharged of the order in just 12 months. If you are confused between IVA and bankruptcy, here’s what you need to know.

Effects of IVA and bankruptcy on your home

The prime difference between IVA and bankruptcy is the effect it has on your home. In case of Individual voluntary arrangement, you won’t be forced to sell your home, but it might be required to re-mortgage your home before the end of IVA. This is also only asked when the same is affordable, or else, additional one year can be added to the procedure. Bankruptcy, on the other hand, will affect your home in all likeliness, and if you have equity tie-up, it might be necessary to sell the house.

Effect of IVA and bankruptcy on your car

During IVA, which typically takes longer time, you can keep your car, especially when it’s a necessity for your home. In case of bankruptcy procedure, that might not be true, more when your car is of decent or high value.

Effect of IVA and bankruptcy on your career

Expectedly, bankruptcy is likely to affect your career more than IVA, more when you are the director of the company. This is because you will not be allowed to act like a director of a limited company, something that’s not compulsory with IVA. If you are to handling finances of other clients owing to your job, the same can be restricted. Companies may have reservations with regards to candidates who have a bankruptcy record.

Reasons to choose IVA

  • IVA takes time, and you can focus on your credit report
  • Additional payment demands cannot be made by creditors during IVA.
  • More protection for your assets
  • May not need to sell the house

Disadvantages of IVA

  • Lasts longer
  • Your name will be on the insolvency register
  • Your credit report will be affected

You can find more information on individual voluntary arrangements here.

Reasons to choose bankruptcy

  • No more ways to pay your loan
  • No/less equity risk in your home
  • You don’t have many assets
  • It’s quick procedure
  • Creditors cannot demand more.

Disadvantages of bankruptcy

  • It may affect your career
  • You will have to sell your home, if equity is involved
  • Your name will be on insolvency register
  • Your debt will be public

If you want to find more on how assets are handled during bankruptcy, check here.

You have to take the best possible professional advice before taking the final call.

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