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IVA or Bankruptcy: Everything You Need to Know

31 January 2019 - Posted by TalkAboutDebt

Wondering what the difference between going bankrupt and getting an IVA is? This article explains whether you should choose an IVA or bankruptcy.

 

Declaring bankruptcy while going through an IVA

 

You cannot declare yourself bankrupt if the IVA has not failed. You will have to wait until the IVA has officially failed before you are able to commence with bankruptcy. If you personally decided to go bankrupt following a failed IVA you would be responsible for the costs of bankruptcy. However, a creditor has the right to take you bankrupt if you default on your IVA and as such in this instance they would be liable for the costs of taking you bankrupt.

 

What happens if I fail an IVA?

 

If your IVA fails i.e. you no longer make the agreed monthly payments, then the next stage is the declare bankruptcy. Before going bankrupt we suggest you talk to your Insolvency Practitioner and ask them to propose a variation in your arrangement and reduce the repayments to a level that you can afford. If they agree, great if not, bankruptcy would be the only way forward. Also, if you can’t afford your IVA repayments and stop paying your IVA payments then bankruptcy proceedings would also be the likely result.

 

Will an IVA affect my property?

 

An IVA will not affect you owning a property. However, should the property go up in value over the 5 years of your IVA term, you may be asked to remortgage to release a lump sum to pay creditors. For more details on IVA’s, please read our article on getting an IVA.

 

Changes in circumstances

 

If you plan to move abroad or experience any other changes, it may be beneficial to initially make the Insolvency Practitioner administering your IVA aware of your circumstances.

 

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