If you are looking at formal insolvency, individual voluntary arrangement (IVA) and bankruptcy are the two choices that you have. While both may sound similar on paper, there are considerable differences. Understanding both in detail and seeking professional advice is an absolute must. Below are some of the aspects worth knowing.
How does IVA and bankruptcy affect your career, home and car?
Individual voluntary arrangement may work better in certain cases, but that doesn’t take away the fact that bankruptcy also works for some individuals. In terms of your home, IVA doesn’t necessarily require or force you sell your home, but you may have to re-mortgage the house to repay your debt. In case that sounds like a feasible plan, another 12 months will be added to IVA procedure. In case of bankruptcy, you may have to sell your home, if equity is tied up in your house. Bankruptcy does affect your home, or it may it most cases. As for your car, like other assets, bankruptcy may require you to sell the car, depending on the value and situation.
Bankruptcy also may have a bad impact on your career compared to IVA. If you are in financial, accounting, real estate and retail sector, you may not be allowed to handle finances of your clients. You cannot act as a director of a company in case of bankruptcy, which isn’t a compulsion in IVA.
Reviewing the good and bad of IVA
- IVA offers better protection for your assets
- You may not need to sell your house
- It doesn’t really affect your career as bankruptcy
- IVA is also considered to be a better choice for individuals who own their business
- IVA takes more time, which means you can still work on your credit status after its over.
- You have to ensure the long process that IVA is all about
- You will still end up in the insolvency register
- IVA tends to be costly in comparison
Understanding the effects of individual voluntary arrangement is important, and you can find more details here.
Reviewing the good and bad about bankruptcy
Often, bankruptcy is not a choice for individuals and it may offer them relief from accumulated debt, although the word itself doesn’t sound very positive. Bankruptcy might be necessary in some situations-
- It is the only option in your situation
- You don’t have a lot of assets
- The order can be completed in just 12 months
- Creditors will not bother you beyond the order
On the flip side
- You may have a hard time working in certain sectors.
- Bankruptcy has more adverse effect than IVA on your career
To get an idea of how bankruptcy will affect your career and assets, check here for details on the procedure.