Is an IVA the Same as Bankruptcy? Key Differences

Is an IVA the Same as Bankruptcy?

No. Both are formal insolvency procedures, but an IVA is an agreement with your creditors that usually lets you keep your home. Bankruptcy hands control of your assets to a trustee.

Last updated: November 2026

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Things to know about IVAs

An IVA is a formal insolvency procedure. It must be approved by your creditors, stays on your credit file for six years, fees are taken from your payments, and debts are only written off if you complete it. It isn’t right for everyone.

Read the key risks

Creditors must approve it. An IVA only goes ahead if creditors holding at least 75% of the debt that is voted agree. Your proposal can be rejected.
Credit file and public register. An IVA stays on your credit file for six years from the start date and is listed on the public Individual Insolvency Register while it runs. Getting credit will be harder.
Spending restrictions and annual reviews. You live on an agreed budget for the length of the IVA (usually 5–6 years). Your income and spending are reviewed each year, and your payment can go up.
Fees. Fees are taken from your monthly payments, so less of what you pay reaches your creditors. How IVA fees work.
Your home. Under the current IVA Protocol, your home isn’t included in the IVA and you won’t be asked to remortgage. If your share of the equity is £10,000 or more, the IVA usually lasts six years instead of five.
If it fails. If you can’t keep up payments the IVA may fail, you would owe the remaining debt again, and the supervisor may petition for your bankruptcy.
Write-off only on completion. Remaining qualifying unsecured debts are only written off if the IVA is completed successfully. Secured debts, court fines, child maintenance, student loans and some other debts can’t be included.
Other options may suit you better. A debt management plan, DRO or bankruptcy may be more suitable. IVAs are available in England, Wales and Northern Ireland only; different solutions apply in Scotland.

People often confuse IVAs and bankruptcy, partly because both are forms of personal insolvency. They work very differently.

The short answer

Both are formal insolvency and stay on your credit file for six years.
An IVA is a voluntary agreement you propose to creditors.
Bankruptcy is a legal process where a trustee can sell your assets.
An IVA usually lasts five or six years; bankruptcy usually ends after 12 months.
Bankruptcy has restrictions, such as on being a company director, that an IVA doesn’t.

Key differences

	IVA	Bankruptcy
How it starts	You propose it, creditors vote	You apply online, or a creditor petitions
Length	Usually 5 or 6 years	Discharge usually after 12 months
Your home	Not included under the current Protocol	May be sold if there’s equity
Payments	Monthly, based on affordability	Income payments for up to 3 years if you have spare income
Company director	Not legally barred	Barred without court permission
Upfront cost	No upfront fees; fees from payments	£680 application fee

Does an IVA mean I'm insolvent?

Yes. An IVA is a formal insolvency procedure, which means you’re unable to pay your debts as they fall due. See what is insolvency?

Which is right for me?

It depends on your income, assets and what matters most to you. Our full comparison is in is an IVA better than bankruptcy?

Common questions

Is an IVA worse than bankruptcy for my credit file?

Both stay on your file for six years. Some lenders view bankruptcy more severely.

Can an IVA turn into bankruptcy?

If an IVA fails, the supervisor may petition for your bankruptcy. See switching from an IVA to bankruptcy.

Is an IVA a form of bankruptcy?

No. It’s a separate procedure, though both are types of personal insolvency.

How IVA Advice Online can help

Every situation is different, and an IVA isn’t right for everyone. We can look at your income, spending and debts with you and set out the debt solutions you could qualify for, including options other than an IVA. To talk it through, get in touch.