IVA And Bankruptcy

The difference between bankruptcy and debt restructuring (IVA)

For many debtors, there are probably many questions about debt restructuring vs. bankruptcy services. Although both are common methods for dealing with debts, they are essentially different. In order to help to distinguish the difference between them, our company has compiled the following list, to help you to understand the important differences between the two services

Individual Volunteer Arrangement Bankruptcy
The important difference between bankruptcy and IVA is that the debtor needs to have a stable occupation and income before applying IVA. In this case, the debtor does not have a stable income or does not have the ability to pay the debt.
  Asset and debt information is required to provide for application The debtor needs to provide the court with information on the transfer of assets in recent years with a reasonable explanation
Depending on the circumstances, the debtor may have to explain the reason for applying the new loan Depending on the circumstances of the case, the debtor may need to bear the legal responsibility for the new loan made within six months
  Will not hold bankruptcy status Will hold bankruptcy status
No need to notify the employer and will not affect the debtor’s job If the debtor is engaged in sensitive occupations, such as disciplinary forces, financial industry, the employer must be notified, which will affect the current career
  Pay the debt amount according to the monthly repayment plan, and the remaining income can be used independently Only basic daily expenses can be kept, and all the remaining income is used to pay the debt amount
Need to arrange the debtor’s debt repayment through a nominee The life of the debtor will be monitored by the bankruptcy officer
  Can work in management positions Cannot work in management positions
Can continue to run a business Prohibit running a business
  Does not affect current professional licenses held Professional licenses held will be revoked, such as lawyer license or accounting license etc.
Most debtors can continue to hold existing properties The property in the debtor’s name will be sold to pay the debt
  The existing bank account can be retained without affecting the application of a new bank account Only allow to apply for a new bank account to receive wages
Does not affect insurance contributions No further insurance contributions are allowed
  In order to prevent the debtor from adding debts again, most banks or financial institutions will not accept new loan applications If the loan amount exceeds HKD 100 or more, the debtor must declare bankruptcy status
Does not affect the freedom of leaving and entering the country The debtor requires the approval of the bankruptcy officer in order to leave the country
  The debtor is allowed to travel on own expense The debtor is not allowed to travel on own expense
The debt repayment period depends on the amount of debt and the monthly repayment amount, usually three to seven years The debt repayment period is generally four years, but it can be extended to eight years. The performance of discipline during bankruptcy will affect the relevant period
  The nominee will conduct an annual review of the debtor’s income and financial status and submit relevant reports to the creditor Bankrupts need to fill in a statement on their income and expenditures and submit it to the bankruptcy officer
  There is no bankruptcy record, and it has little impact on personal credit rating Another important difference between bankruptcy and IVA is that bankruptcy will have a permanent bankruptcy record and the credit rating will have a huge impact.
Should you choose debt restructuring (IVA) or bankruptcy? Please feel free to consult our expert team directly.