Self-employed IVA or Bankruptcy?

Bankruptcy and self-employed IVAs are both debt solutions that will write off a proportion of your debts, but it is not as simple as just picking one or the other.

Both of these solutions have some major differences, and it’s important to consider each option carefully to choose the one that’s right for you.

A self-employed IVA will allow you to keep trading. Your assets will be protected, and you could be debt free in just 5 years. Bankruptcy usually only lasts 1 year – although if you can afford to make monthly payments, you may be required to do so for up to 3 years.

Bankruptcy may be a quicker debt solution than a self-employed IVA, but you will normally have to sell your home (if you have one) and all your other assets of value – and you won’t be able to continue trading.

Bankruptcy is also a more public option, as it will be advertised in the London Gazette and potentially your local newspaper too.

To find the best option for your particular circumstances, it is recommended that you call PayPlan for a FREE debt assessment.

Our friendly debt advisers will carefully go through your finances with you, and talk you through all your options.

Call us FREE on 0800 280 2816 or complete and submit a call back request form.

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Self-employed IVA versus Bankruptcy

Self-employed IVA Bankruptcy
Duration Usually 5 years Usually 1 year – but it could be extended to 3 years if you have a monthly surplus available
Fees/costs Fees and charges are paid out of your agreed monthly IVA payments Upfront cost of £680 to apply for Bankruptcy
Assets Usually Protected You may have to sell your home, car and other assets
Effect on your business You can continue trading You may not be able to continue trading
Interest & charges Guaranteed to be frozen Guaranteed to be frozen
Creditor contact Your creditors can’t take any further legal action Your creditors can’t take any further legal action
Credit rating Shows on your credit file for 6 years from the date your IVA is accepted, or until your IVA ends – whichever is the later Shows on your credit file for a maximum of 6 years
Debt write-off? Yes – at the end of your arrangement, your remaining debts are written off Yes – on being declared bankrupt, your debts are written off
Public register? Yes – IVAs are listed on a public register Yes – Bankruptcies are listed on a public register. They are also advertised in the London Gazette, and may be mentioned in your local newspaper too
Equity release? Yes – if you have equity in your property, you are likely to have to try to release some of the equity and pay it into your IVA Yes – if you have equity in your property, you will have to release the equity. In many cases, this means selling the property
Windfalls? Yes – any windfalls must be paid into your IVA Yes – any windfalls must be paid into your Bankruptcy
Employment? Unlikely to affect your job, unless it is a condition of employment Unlikely to affect your job, unless it is a condition of employment. You may be legally banned from holding certain positions, such as Company Director and Charity Trustee
Temporary solution? It is not easy to exit an IVA You can only exit Bankruptcy in very limited circumstances

Get help with your decision

Both self-employed IVAs & Bankruptcy have benefits, and both can involve a large amount of debt write-off.

Bankruptcy is available to anyone, but to qualify for a self-employed IVA you must owe at least £7,000 in unsecured debts, and be able to afford a monthly payment to your creditors.

Bankruptcy is normally seen as a last resort, so before deciding on which option to go for, you should  consult a debt adviser to see what other options may be available to you. 

PayPlan offer FREE debt advice. We have over 20 years’ experience helping customers find the best solution to their debt problems.

If you’re considering Bankruptcy, get in touch with us, as there might be a better solution available.

You can call us FREE on 0800 280 2816 or request a call back using the ‘Get advice now’ button below. 


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