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Fundamentally they are both designed as tools to help resolve difficult financial situations. Outside of that they are critically different.
Bankruptcy is an application to the court to be discharged or rid of your debts. That comes with a price however. The price paid is both a substantial amount of up-front court fees that will need to be paid, loss of control of your assets, and the reality that you will have been made bankrupt, a situation that can significantly impact your future credit file, ability to get credit and some jobs.
IVA, or Individual Voluntary Arrangement, on the other hand is an incredibly effective way to eliminate debt problems, without the pain and stigma of bankruptcy. The IVA allows debtors to come to a binding agreement with their creditors, reduce the total amount owed, make affordable monthly payments, maintain control of homes and other property, and does not impact job status.
All that being said, bankruptcy is an appropriate solution in situations were the debtor could not afford to make reasonable reduced monthly payments. Sometimes bankruptcy is the best tool to use and should not be discounted simply because it is bankruptcy.
If you are unsure about which path or option to use, get free and anonymous advice from the senior advisors at the not-for-profit group, Myvesta UK
