Bankruptcy
It is actually very rare for a lender to commence bankruptcy proceedings because it is an expensive procedure and lenders take the view that they normally recover far less from the bankruptcy procedure. If you owe tax or VAT to HMRC they are more likely to use the bankruptcy procedure than any other creditor, particularly if the debt is substantial
Attachment of Earnings
Following a CCJ a lender can apply to the Court to have a monthly deduction made from your earnings. You will be required to declare to the Court what your earnings and outgoings are and may have to attend Court if you disagree with the monthly amount that the lender is seeking to obtain.
Bailiffs
Court bailiffs have the power to seize your personal property up to the level of the debt and their costs, which can be substantial. Bailiffs are often used by local authorities to recover unpaid council tax but are less frequently used by high street lenders.
Charging Orders
If you are a property owner this is a relatively common procedure that lenders will use, particularly for larger debts. If a charging order is taken out against your property in theory it can allow the lender to apply for the sale of the property and be repaid from the sale proceeds.
In practice, this doesn’t happen very often but because of the threat of it you will almost certainly have to agree a monthly repayment with the lender and keep to it. If you want to sell a property on which there is a charging order you will need the consent of the lender before the sale can take place and unless the lender will be repaid in full from the sale proceeds they may well not give consent. For homeowners with little or no equity, a charging order may prevent you from moving house.
If creditors agree to an IVA then all of these legal procedures are stopped in their tracks. It is important to note, however, that if a creditor obtains a charging order against your property an IVA cannot reverse this but it can stop a charging order being obtained in the first place.