The core structural difference
An IVA is a contract between you and your creditors. You propose to pay a specified amount over 5-6 years, and creditors vote on whether to accept. If 75% by value of voting creditors agree, the deal is binding on all of them. It is administered by a licensed Insolvency Practitioner throughout.
Bankruptcy is a court-based process. You apply to the Insolvency Service through their online adjudicator (or a creditor petitions the court against you). Bankruptcy is imposed by order, not agreed by creditors. It is administered by the Official Receiver and, in some cases, a Trustee appointed to deal with assets.
Duration and end point
IVAs typically run 60 months (5 years), sometimes 72 (6 years). At the end, remaining debt included in the arrangement is written off, provided you have complied with the terms.
Bankruptcy is normally 12 months. After discharge, most debts are written off. However, income payment orders can require you to make payments from surplus income for up to 3 years, and asset realisation can continue beyond the 12 months.
Effect on assets
IVAs generally protect assets. Your home, car, work tools and personal belongings remain yours — the deal is based on your income, not on selling assets. Equity in a home may need to be released in year 5 (see the separate equity release FAQ) but this is not automatic and has clear tests.
In bankruptcy, the Official Receiver takes control of your assets. Property with equity can be sold. Vehicles above a modest value may need to be sold and replaced with something cheaper. Significant savings or investments are realised for creditors.
Effect on employment and directorships
IVAs do not automatically disqualify anyone from anything. Certain regulated professions require disclosure but there is no blanket ban.
Bankruptcy automatically disqualifies you from being a company director, running certain financial services roles, and holding some other positions. Some jobs have contractual clauses that terminate employment on bankruptcy.
Cost
IVAs have no upfront cost. IP fees come out of monthly contributions (typically £5,000-£10,000 over the life of the arrangement).
Bankruptcy in England and Wales costs £680 upfront (as of 2026): £130 adjudicator fee plus £550 deposit. This is paid to the Insolvency Service before the application is considered.
Public record and credit file
Both appear on the Individual Insolvency Register and stay on your credit file for six years from the start date.
The IVA record is removed from the Insolvency Register within three months of completion; the bankruptcy record is removed within three months of discharge (or when the process is complete, whichever is later).
When each fits better
IVAs tend to suit people with a stable income, some assets to protect (particularly a home with equity), and enough surplus to sustain 5-6 years of payments. They also suit people whose profession makes bankruptcy difficult.
Bankruptcy tends to suit people with unaffordable debts and few assets, particularly where any surplus income is nil or negligible. It clears debt faster but the tradeoff is the loss of assets and stricter restrictions during the 12 months.
A regulated debt help specialist would look at your income, assets, debt level, job, family circumstances and preferences before recommending either.