An IVA is a commitment to pay an amount of money which is usually a percentage of the debt, and to pay that either in a lump sum (single payment IVA) or to pay it regularly over a period of time, usually five years.
Bankruptcy on the other hand is not a commitment to pay anything and all debts (apart from a few debts such as maintenance payments, court fines, and student loans) are wiped out. Bankruptcy draws a line under repayments except for those exempt ones I mentioned.
Many people enter into an IVA thinking that they can keep up the payments but very often they struggle to do so, default on the repayments, the IVA fails and the next step is bankruptcy anyway. Hence, a large number of IVAs fail and the person goes bankrupt anyway.
There is not as much social stigma in entering into an IVA as Bankruptcy although either of them will effectively trash a credit rating.
Whether a person enters into an IVA or Bankruptcy depend on what assets they have what income they have currently and are likely to have in the future.
Here is a page from Step Change, the debt management charity.
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