You may be wondering which debt solution is better – bankruptcy, or an IVA (Individual Voluntary Arrangement).

Well, the truth is, neither debt solution is ‘better’ than the other. They are both designed to do the same thing – help people get out of debt – but they do it in different ways.

The real question you should be asking is: Which one is better for me?

Which one is better for me – bankruptcy or an IVA?

To find out which debt solution is ‘better’ for you, you should contact a professional debt adviser. They will need to ask you a number of questions to establish which solution suits your situation better. For example:

1.    Are you employed?

2.    If so, is your job secure?

3.    How much unsecured debt do you have?

4.    Are you nearing retirement age?

5.    Do you own any property?

In most cases:

•    Someone with a low/unreliable income and large debts may be better off looking into bankruptcy, whereas
•    Someone with a reliable income and substantial assets may be better off looking into an IVA.

IVA vs. bankruptcy – why are they compared?

IVAs and bankruptcies are often compared… but why?

•    Both are a kind of insolvency.

•    They both allow you to write off debt.

However,

•    They both reduce your ability to borrow while they’re underway.

•    They will both affect your credit rating for six years, which could affect the cost and/or availability of credit for this time.

Could bankruptcy be the most suitable solution for me?

Depending on your situation, bankruptcy could be the most suitable way for you to clear your debts -  ask yourself some simple questions:

1.    Are my finances unlikely to improve in the near future?

2.    Do I have a low/unreliable disposable income?

3.    Am I a tenant with no valuable assets?

If you can answer ‘yes’ to the questions listed above, bankruptcy could be right for you. However, even if you can answer yes to these questions, you should always speak to a professional debt adviser.

Could an IVA be the most suitable solution for my debts?

If you have answered ‘no’ to the questions listed above, you may find that an IVA is the most suitable solution to your debts – but only if:

1.    You are struggling with an unmanageable level of unsecured debt.

2.    You can’t afford your monthly repayments.

3.    You could commit to making regular reduced payments.