Comparing the two debt solutions

Both Individual Voluntary Arrangements and Bankruptcy are forms of Insolvency, but each have different processes and impacts.

It’s important to make sure you are well informed of any solutions before going ahead, so we’ve highlighted some key points about these two solutions below.


Key similarities include:

Publicly visible: With both these options, your details will be visible on the Insolvency Register, which is publicly available. In addition, Bankruptcy will also be detailed in the London Gazette.

Debt write off: With an IVA, you pay towards your debts for 5 – 6 years, after which the remainder of your debt is written off by your creditors. Bankruptcy involves as much money being recovered from you as possible to cover your debts, and the rest being written off after around one year.

Affects credit file: These solutions will be noted on your credit file for 6 years, so during this time you’ll find it hard to get credit or further loans. After this period is complete, this will no longer be detailed and you can start to rebuild your credit score.

They are formal solutions: An IVA is a legally binding contract, and Bankruptcy is an official Court Order. Both are recognised by law and so breaking their terms means you could face consequences.

debt arrangement


Key differences include:

Assets: With an IVA, your assets are protected – you may be asked to release equity in your home, but you will never be forced to sell or leave. With Bankruptcy, your assets may be sold to pay your creditors, so you may lose your home and other valuable belongings.

Fees: To apply for Bankruptcy, you must pay a fee of £680 before proceedings can begin. With an IVA, any fees involved are incorporated into your monthly payments.

Employment: There may be more implications for you and your job with Bankruptcy; for example, you may not be able to be a director of a limited company. IVAs mainly affect you if you work in law or finance or if this is highlighted in your contract.

debt fees

Qualifying Criteria


  • To be considered for an IVA, you should have a debt level of at least £6,000
  • You must owe money to multiple lenders
  • You should have disposable income of at least £80 or more each month
  • Only unsecured debts can be included in an IVA, so you must be able to demonstrate that you can afford your other debts and priority payments before your IVA payment


  • You must pay your Bankruptcy fee of £680 in full before your application is considered
  • There’s no minimum or maximum debt level for Bankruptcy, but is suitable for those with high debt levels and little likelihood to repay

Can I declare Bankruptcy whilst on an IVA?

In short, the answer is no – you can not simply change your mind and opt for Bankruptcy if you are already involved in an IVA, but there are some exceptions to consider.

It’s possible to ‘fail’ your IVA because you have not been making payments, or you have breached any terms of the agreement – in this case your creditors may apply for you to be made Bankrupt themselves.

There are certain circumstances where you may be released from your IVA at your request, such as:

  • You are struggling to keep up with your IVA payments
  • There is something else affecting your ability to maintain the IVA such as illness or another big change in circumstance

In these cases, any requests to be released from your IVA must be sent to your Insolvency Practitioner who will contact your creditors. It will be up to them to consider your request and accept it or not.

debt advice question

What next?

If you are struggling with debts, then don’t hesitate to reach out for a helping hand. For many, Bankruptcy is considered a last resort so it’s good to discuss all your available options before deciding.

We specialise in IVAs, so if you would like to go ahead with this particular solution, we can also help you apply for an IVA.

If you are looking for debt solutions and you are in Scotland, you may want to consider Trust Deeds and Sequestration.