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IVAs were introduced to provide individuals with an alternative to bankruptcy. The types of debts dealt with by IVAs can include personal loans and credit-card balances. An IVA is a legally binding contract between a debtor and their creditors.

Alternatively a debtor can bankrupt himself by filling in the relevant forms at a county court. The debtor's assets are then sold and the money is distributed - after the insolvency practitioner's costs - to creditors. Assets that are exempt include tools of trade, pensions, ordinary household contents and possessions, including a car.

It's important to consider all of the implications when you are deciding whether or not bankruptcy makes sense. Because the Individual Voluntary Arrangement was introduced by the government specifically as an alternative to bankruptcy, it is often the best option.

In most cases, bankruptcy ends after one year or less, when the slate is wiped clean. One of the biggest setbacks with bankruptcy is that you may lose your assets - including your house. The IVA process is different, you may have to remortgage but you should be able to keep the property.

Bankruptcy is also a public matter but an IVA is a more private option. While your IVA will be published on the Insolvency Service website, it will not be published in any newspapers.

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15y ago

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