Individual voluntary agreement (IVA) and bankruptcy are legal agreements between you and your creditors. Both must be court-approved, and your creditors must adhere to them.
Both bankruptcy and IVA online have benefits and drawbacks. You should learn more about each option before deciding on the best one for you. This page will give you an overview of when an IVA may be preferable to bankruptcy.
If you owe money to EU citizens or businesses,
An IVA or bankruptcy may not cover any debts you owe to people or companies in the EU.
Your creditors may continue to contact you for money, such as by calling or sending you letters.
They could take you to court in the EU if you live there.
Even if they already have a judgment, EU creditors must sue in the UK rather than abroad in the EU. EU judgments entered or started before December 31, 2020, will be recognized by the UK.
If you live in the UK but own a home in the EU and have a mortgage with an EU lender, the lender may pursue you in court.
When should you use an Individual voluntary agreement?
In the following situations, an IVA may be preferable to bankruptcy:
- if you own a home or other valuables that you don’t want to lose
- start your own company
- If you are a police officer or work in the armed forces, you may lose your job if you go bankrupt.
- have or are thinking about getting a power of attorney for someone else
- have some extra money each month or a lump sum of money to make creditor payments
- wish to avoid any negative social consequences.
Also, read Two Wheeler Loan Interest Rates And Other Factors
Flexibility
An IVA is more adaptable than bankruptcy and can be tailored to your specific needs. It may be possible to keep assets such as a car or other personal belongings rather than using them to pay your creditors. Your insolvency professional will assist you in negotiating with your creditors to keep these debts out of the IVA.
Accounts in banks
If you have an IVA, you can continue to use your bank account. An IVA does not require notification to your bank. If you declare bankruptcy, your bank account will most likely be closed, and it will be difficult to open a new one.
Your creditor is attempting to bankrupt you.
You may be able to get an IVA to avoid bankruptcy if a creditor is threatening to make you bankrupt or has already started bankruptcy proceedings.
The dangers of an Individual voluntary agreement
It’s critical to understand the dangers of Individual voluntary agreement. An IVA may not be appropriate if your circumstances are likely to change in the near future. The IVA may fail if you are unable to make your payments. Your creditors will be able to take legal action against you if the IVA fails. They have the potential to bankrupt you.
An IVA may be rejected by your creditors. You’ll have to find another debt solution if this happens.
You will be in a worse financial position if you start an IVA and it does not work out because you will have to pay fees to your insolvency practitioner.
The advantages of bankruptcy
You may have to pay more to creditors under an Individual voluntary agreement than you would if you went bankrupt, and for a longer period of time.
You may benefit from bankruptcy if:
- You don’t have a house.
- You have no extra money to pay your creditors.
