Comparison IVA v Bankruptcy

Advice Free from Bretts Business Recovery Free from Bretts Business Recovery
Bank Account Frozen initially and likely to lose if overdrawn May be retained provided the bank is not a creditor in the IVA
Credit Cannot incur credit for period of bankruptcy Cannot incur credit for period of IVA
Credit File Marked for 6 years Marked for 6 years
Creditor approval required? No Yes (requisite majority)
Creditor Communication Creditors will deal with Official Receiver and you should have no further communication with them. Creditors will deal with the Insolvency Practitioner (IP) and you should have no further communication with them.
Debts Unsecured debt (with a few exceptions) will be written off Unsecured debt will be “settled” in full and final settlement.  Balance will be written off
Default/Non Compliance You may be subjected to a Bankruptcy Restriction Order or your automatic discharge from bankruptcy may be suspended The terms of the Arrangement may stipulate that the IP has to petition for your bankruptcy if any breach is not rectified or a revised proposal put to creditors.
Directorship Cannot be a director of a limited company, nor involved in the formation, promotion or management Can be a director of a limited company (subject to Table A articles)
Duration Usually 12 months but may be extended As agreed with creditors and may be up to 5 years
Employment Could be at risk for certain professions and could affect chances of gaining employment Should not affect present employment but might affect chances of gaining employment depending upon your profession
Fees £680 online application although exemptions may apply Drawn from funds paid into the IVA.  Fees will vary according to each individual circumstances. Usually capped at 15% of realisations.
Home At risk if equity available.  May retain if in negative equity. If equity available this may need to be included in the IVA but you will have time to sell voluntarily and will control the process. If excluded from the IVA then creditors shall need to be compensated.
Income Any surplus income may be claimed for the bankruptcy estate for up to three years surplus income shall need to be made available for the duration of the IVA
Legal Action of Insecured Creditors Stayed once Petition presented to Court Stayed once approval to IVA obtained or if an interim order obtained from Court
Legal Obligations To surrender to the proceedings, attend upon the official receiver and provide all information requested.  Inform of any change in circumstances. An IVA is a legally binding contract between you and your creditors.  You must adhere to the terms of the IVA Proposal.
Motor Vehicle At risk unless you can evidence that it is required for the purposes of work and not of excessive value Allowed to keep if moderately priced
Privacy Registered on the Insolvency Service Website Registered on the Insolvency Service Website
Professional Qualifications Will be lost for professionals such as accountants and solicitors May be retained
Windfalls/ Inheritances May be claimed if you become entitled to before or during the bankruptcy Will be claimed under the terms of the Arrangement