Hi all, is there anyone that can clarify the difference between taking out an IVA and going Bankrupt?
My other half took out an IVA almost 5 years ago. It is nearly complete and what a releif it will be to have an extra £300 a month.
However, our car went for MOT last week, and although I never anticipate the outcome, we were deeply shocked at how bad it’s fail was. With this, we have decided not to bother with it anymore and try to get a smaller, more economical one. Doesn’t need to be flash, and we were looking at a figure of around £500.
As we are basically skint until I can get back into work, we decided, out of interest, to see what the bank could offer. We have seperate accounts and my missus filled in an online loan form, which was, as expected, declined.
No problem there, but a letter came through on Friday from the bank stating why it had been turned down and the reason, from Experian, was bankruptcy!!
My understanding of the situation is that you can either go bankrupt and owe nothing, or have an IVA and use a debt management agency to pay your debts off, but not both.
Any ideas?? I know its in the wrong section, but this one gets most viewing I would suspect.
Ta peeps.
You need to go on moneysavingexpert.com, they have a forum with all the answers you’ll need on there!
Both IVA & Bankruptcy are a kind of insolvency & both affect your credit rating for 6 years (I think) which is why you have been turned down on the loan.
As said, get to MSE for some advice.
Me & my partner looked into this. From what i gather an iva & bankruptcy are not that different in all honestly. We had to do something yrs ago as we were struggling with debts etc etc. We spoke about both but decided an iva would be better as that allows you to have a bank account & also you dont end up with the bailiffs around. If you go bankrupt you still have to pay a certain amount over time & the bailiffs come round & take your belongings too. We thought this would be worse so went with iva but found out we were still down as bankrupt on our credit file. £270 per month for 5 yrs & thank god its all over.
Thanks folks, I’ll have a look at MSE.
I honestly thought that an IVA was the “alternative” to bankruptcy. Never mind its nearly done. We do have another car, but when I am working we really need two as my other half has to do home visits as part of her job. Mine is SORN at the minute anyway as I still don’t have my licence back. Not so much a problem, more an inconvenience plus it’s not going to be much fun for her when I go back to silly o’clock starts, 
.
I went bankrupt in nov 08, very easy to do but cost me £500 ,not something i am proud of but had to do after loosing a good job, had no baliffs come round in fact did not even see the judge when went to court,just sat in a side room.Regarding bank accounts you can get them ,i even have a buissness account with credit cards,overdraft etc.I was paying out nearly £900 a month but now just pay £150 and thats for 3 years.
The difference between IVA and Bankruptcy is small, with Bankruptcy you lose all your Assets to cover debts i.e they can force the sale of your home and your share is used to pay creditors with an IVA you simply agree to repay X amount over 5 years or so, but it will still affect a credit rating but you keep your assets such as house and car etc.
With a Bankruptcy they can only “Confiscate” (Easiest way to explain it) the maximum amount you owe, so if you owed say £30k and the house sold leaving a profit of £70k after the mortgage was paid off you would get £30k your wife £5k and all debts cleared but still recorded in your rating. If your assets didnt cover the debts they are written off AFTER 6 years, people think they no longer have to pay up, but if they come into money they must pay what they owe within 6 years.
Once debts are paid off you are issued a discharge notice which the banks use as the start of your 6 year rating improvement period
IVA if you miss payments they can treat you as a bankrupt
Again, thanks for the replies.
It isn’t really that big an issue now, it was just puzzling. It’s a shame that the minimum loan amount from the bank was £1000 but saying that, what ever would have been left was going straight back to them anyway.
She’ll just have to use my guzzlier galant for a bit instead of her fairly economical astra diesel.
Iva is a town in South Carolina and Bankruptcy isn’t. I hope this helps.