Both are forms of insolvency, but they work very differently and suit different situations. Here is an honest, side-by-side comparison to help you weigh them up.
| Feature | IVA | Bankruptcy |
|---|---|---|
| What it is | A binding agreement to pay what you can afford, run by an Insolvency Practitioner. | A formal, court-based process that writes off most debts, run by the Official Receiver. |
| Upfront cost | No upfront fee. The practitioner's fees come out of your monthly payments. | An application fee of £680. |
| How long | Usually 5 to 6 years of payments. | Usually discharged after 12 months, though income payments can run up to 3 years. |
| Your home | Often protected, though you may need to release equity near the end. | Your share of your home can be sold to repay creditors. |
| Other assets | Usually kept, as set out in your proposal. | Valuable assets can be sold by the Official Receiver. |
| Monthly payments | Yes, a set amount you can afford. | Only if you have spare income, through an Income Payments Agreement. |
| Debt written off | Remaining included debt is written off if you complete it. | Most debts are written off on discharge. |
| Credit file | 6 years from the start. | 6 years from the date of the order. |
| Public register | Listed while it runs, removed about 3 months after it ends. | Listed, removed about 3 months after discharge. |
| Your job | Most jobs unaffected, a few professions have rules. | Can affect more roles, and acting as a company director. |
An IVA can make sense if you have a regular income, want to protect assets such as your home, and can commit to affordable monthly payments for several years. It is often chosen specifically to avoid bankruptcy.
Bankruptcy may be the better route if there is no realistic way to repay a meaningful amount, you have few assets to lose, or your debts are simply too large to deal with any other way. It is quicker, usually over in a year, but the consequences for any assets you do have can be more severe.
Neither is automatically better. The right answer depends entirely on your income, your assets and your circumstances, which is exactly the kind of thing a free debt adviser can talk through with you.
An advisor can compare an IVA, bankruptcy and the other routes with you, with no obligation to go ahead.
You never have to pay anyone to understand your options. These services are free, independent and will go through every route with you.