IVAs · 4 min read
IVA vs bankruptcy: which is right for you?
Bankruptcy is quicker and has a fixed £680 fee, but puts your home and assets at risk. An IVA usually protects your home but lasts five or six years and has fees. A clear comparison of costs, length, home, job and credit file.
- Fact-checked
- Against official sources
- Last updated
- Next review due
- April 2027
- Applies to
- England and Wales
- Sources
- 3 listed on this page
Independent guidance, not a government service. This page is general information about the law in England and Wales, not financial or legal advice. Debt solutions have fees, risks and consequences. For free, impartial advice, contact MoneyHelper or a debt charity.
The short answer
Bankruptcy is quicker – you’re usually discharged after 12 months – and costs £680, but your assets, including your share of your home, can be sold, and some jobs are affected. An IVA usually lets you keep your home and has fewer restrictions, but lasts five to six years, has fees and can fail. Both stop bailiffs for included debts and both affect your credit rating for six years.
Side-by-side comparison
| IVA | Bankruptcy | |
|---|---|---|
| How it starts | Proposal approved by 75% of voting creditors (by value) | You apply online, or a creditor petitions |
| Cost | Fees taken from your payments | £680 application fee |
| Length | Usually 5–6 years | Usually discharged after 12 months; income payments can last 3 years |
| Monthly payments | Yes, throughout | Only if you have spare income (income payments) |
| Your home | Usually kept; may need to release equity | Your share may be sold or bought by family |
| Car | Usually kept if reasonable | Can keep a reasonable car you need; valuable cars may be sold |
| Job | Fewer restrictions, but some professions affected | Some jobs barred; can’t be a company director without permission |
| Credit file | 6 years | 6 years |
| Public record | Individual Insolvency Register; not usually advertised in the Gazette | Individual Insolvency Register and the Gazette |
| Stops bailiffs | Yes, for included debts once approved | Yes, for included debts |
| Risk of failure | Can fail if you miss payments | Not applicable, but restrictions can be extended for misconduct |
When bankruptcy may be better
- You can’t afford regular payments for five or six years.
- You don’t own a home or valuable assets.
- Your job isn’t affected by bankruptcy.
- You want to deal with your debts quickly.
If your debts are £50,000 or less and you have very low income and few assets, a free Debt Relief Order may be better than both. Read DRO vs bankruptcy.
When an IVA may be better
- You’re a homeowner with equity you want to protect. See IVAs and your home.
- Your job or professional status could be affected by bankruptcy.
- You have a regular income and can commit to payments.
- You want to avoid the restrictions that come with bankruptcy.
Can repay in full, just slowly
Payment arrangements or a debt management plan
Need time to get advice
Breathing Space (60 days' protection)
Low income, few assets, debts up to £50,000
Debt Relief Order (free)
Regular spare income, want to protect your home
Individual Voluntary Arrangement (fees apply)
Can't repay in a reasonable time, DRO not possible
Bankruptcy (£680 fee)
Not sure?
Free advice from MoneyHelper, or speak to an FCA-authorised adviser
Simplified illustration only. The right option depends on your full circumstances. Every formal solution affects your credit rating. Not advice.
What happens to bailiffs?
Both an approved IVA and a bankruptcy order stop creditors included from using bailiffs to collect those debts. Some debts, such as magistrates’ court fines, aren’t covered by either. Read can an IVA stop bailiffs? and how to go bankrupt.
Frequently asked questions
Is bankruptcy worse than an IVA?
Neither is simply “worse”. Bankruptcy has bigger effects on your assets and some jobs, but is shorter and cheaper. An IVA is longer and has fees, but usually protects your home.
Can I go bankrupt if my IVA fails?
Yes. If an IVA fails, the supervisor or a creditor may petition for your bankruptcy, or you may choose to apply yourself.
Which is cheaper?
Bankruptcy has a fixed £680 fee. IVA fees are usually higher in total but are spread across your payments.
Sources
- GOV.UK, Applying to become bankrupt
- GOV.UK, Individual Voluntary Arrangements
- Insolvency Service, Individual insolvency statistics, December 2025
How we wrote this article
- Research: written from primary sources such as legislation.gov.uk, GOV.UK and the Insolvency Service, then fact-checked by a second member of our team. The sources are listed above.
- Checked: last checked on . Next review due April 2027, or sooner if the rules change.
- Scope: applies to England and Wales. If you live in Scotland or Northern Ireland, read our Scotland and Northern Ireland guide. It is general information, not personal advice.
- Independence: we are not a government website or service, and we are not connected to any council, court or enforcement company.
- Money: we may receive a fee if we introduce you to a debt advice firm. This doesn't change what we write. How we're paid.
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