Individual Voluntary Arrangement Bankruptcy
For those of us with serious debts life can become a struggle and be extremely stressful. There are many reasons debt can spiral out of control and falling behind on payments to creditors can happen to anyone when times are hard and pay checks barely put food on the table. There are options out there that can help relieve burden of debt. Individual Voluntary Arrangement bankruptcy is one of the options
Individual Voluntary Arrangements
An Individual Voluntary Arrangement bankruptcy alternative or IVA is a legally binding arrangement between yourself and your creditors. It works by you coming up with a reduced monthly sum more affordable than your current repayment which is then offered to the creditors who hold your debt. An IVA is set up and payments are made through the IVA usually over a five year period, after the IVA term has ended any remaining unsecured debt is automatically written off. It is required that you hold debts of £15,000 or more to three or more creditors, have a regular income and can afford to repay at least £200 per month. If these terms are in line with your debts then you should be eligible. As an IVA is a legally binding contract you must seek a licensed practitioner to set up and manage the Individual Voluntary Arrangement bankruptcy for you. Your representative deals with your creditors, meaning no need for you to have any contact with them.
Bankruptcy
Bankruptcy can abolish all of your debts immediately, giving you the chance for a fresh start debt free. People usually have to consider bankruptcy when they have no way of paying back their debts. It works by filing a bankruptcy order to the courts along with the necessary fees, this can be done by the debtor or by the creditor which is owed money, for them to do this it is required that they are owed a minimum of £750. Once it has gone through your assets are shared evenly between all creditors owed.
Being declared bankrupt brings about a lot of negatives both financially and in potential career paths.
- You lose control of your assets; these are handed over to the receivers.
- There are certain job positions you may not hold including, becoming a Member of Parliament, practice as an Accountant or Lawyer, company Director and member of any local authority
- Credit is affected for many years after the annulment making it impossible to obtain credit.
- You must inform everyone concerned before you try to trade in any business
- It may happen that you are publicly examined in front of a court.
Individual Voluntary Arrangement bankruptcy and bankruptcy do differ and the help of a good debt management company can help you decide the best course of action to suit your needs. IVA`s are looked upon more favourably than bankruptcy in the eyes of potential creditors. It should be said that due to the nature of bankruptcy it should always be a last resort.