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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3978
Experience:  Solicitors 2 years plus PQE
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What are the pros and cons of an IVA vs bankruptcy. More pointedly,

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What are the pros and cons of an IVA vs bankruptcy. More pointedly, in cases of insolvency, what is the difference to my credit rating between an IVA and declaring bankruptcy.
Thank you question and welcome.
My name is ***** ***** I will assist you.
The first point to note is that both an IVA and bankruptcy will affect your credit rating negatively. It may take up to 6 years to fully recover.
The clear advantage of an IVA - is that your creditors will eventually be repaid and you will not be barred whole from taking credit or have your affairs/assets taken over by a trustee in bankruptcy.
The advantage of bankruptcy is once the order is made, you will be released from bankruptcy after 1 year. Your slate will then be clean and you can begin to rebuild your credit profile. The obvious disadvantage is all your assets and affairs will be placed in the control of a trustee in bankruptcy year of your bankruptcy. You will have a limit on your living allowance, and you will be prohibited from being a company director during this period and potentially taking up future jobs that are regulated like a solicitor, financial trader or accountant.
Would you like to discuss any of these points?
Kind regards
Customer: replied 4 years ago.

I was under the impression that an IVA was informal and not officially recorded and therefore not affecting credit rating- presumably from your answer voluntary agreements would still affect my credit rating.

The wider question however is the pros and cons of one vs the other eg in terms of costs, time scales, stress levels or any other aspect.

My debts well exceed my assets (roughly 10p in the £ is all that can possibly be realised with very little disposable income) so there is no prospect of the creditors ever getting their money back.

Thank you.
I am afraid that is not entirely correct - as it is still an arrangement with your creditors it would be registered at Court and you would have to disclose to any credit institutions if asked.
Personally I would say that if the situation is really beyond recovery, you have no assets you want to protect or positions or jobs of trust that you need to take out, bankruptcy is the least stressful way word. You could have an IVA hanging over you .
Bankruptcy everything is taken out of your hands, the slate is wiped clean after a year, and you can start rebuilding your credit profile. It may be difficult starting out again but it is a fresh start.
With an IVA you also have to pay the administrators fees which can be crippling.
Neither is a decision to be take lightly unfortunately but Bankruptcy is the quickest way to a fresh start.
Kind regards
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