Stigma associated with IVA and Bankruptcy

Summary: This article discusses the perceived stigma associated with Individual Voluntary Arrangements (IVAs) and Bankruptcy, as well as who is informed and where they are reported.

Individual Voluntary Agreements (IVAs) have generally been considered as a preferred alternative to Bankruptcy, often because of the stigma associated with Bankruptcy itself and the fact that an IVA can be unassuming. However it is still important to consider who is informed of the IVA and who can gain access to the information.

Stigma of Bankruptcy

While bankruptcy is no longer required to be reported in the local paper, it will still be noted in the London Gazette as well as being recorded in the Insolvency Register, which is a publically accessible document. Furthermore, as some professions will not employ anyone that has been made bankrupt, it can affect future job prospects. While employers are not directly notified, it is important anyone facing bankruptcy check their contract and be honest with their employer, especially if routine credit checks are carried out (which can certainly occur in some professions).

Stigma of IVAs

Unlike bankruptcy, an IVA will not be reported in the London Gazette nor the local paper. It will, however, appear in the publically accessible Insolvency Register, and it will also be recorded on the individual's credit record. However it is highly unlikely that this information will reach family and friends.

Private agreement

There is no need to tell anyone about an IVA as it is a private arrangement between the debtor and the creditor. It may still have an impact on some professions, so it is always worth referring to the contract of employment, but it generally will not have the same implications as bankruptcy. Furthermore, all parties involved in the IVA, the Insolvency Practitioner and the creditors, are bound by the Data Protection act, and will therefore not be able to disclose any information relating to the IVA.

Because of the requirement to log an IVA in the Insolvency Register, and as it is also recorded on the credit record, it is always possible that someone searching for the information will find it. But for individuals who prefer not to disclose information relating to their personal finances may find that an IVA is far less likely to become public knowledge than bankruptcy.