Bankruptcy Or IVA?

Posted by Sony Dewan | 7:46 AM | | 0 comments »

If you have tried an ordinary debt management plan, which is a voluntary agreement between you and your creditors and not a legally binding one, and found it didn't work, you may be left with a choice between bankruptcy and an IVA.

Bankruptcy

Too many people hold the foolish belief that filing for bankruptcy will wipe out their debts, what they don't realise is that some debts such as child maintenance, income tax and council tax, are not dischargeable debts. Most people have no idea of the impact that filing for bankruptcy can have on your life. In order to reduce the number of people who filed for bankruptcy on unsecured debts below a certain level, the government introduced the IVA or individual voluntary arrangement for people who had multiple debts of at least fifteen thousand pounds.


IVA


An IVA is a government alternative to filing for bankruptcy. The arrangement does place more responsibility on the individual to repay their debts, but it also means they will be debt free in five years, with a lot less of the problems faced by someone who has been declared bankrupt. Because an IVA is an individual and private arrangement, the details of your financial position are not made public, as they would be if you filed for bankruptcy.
If you have been told to seek IVA advice then you will need an insolvency practitioner to draw up the agreement, contact your creditors, and take your monthly repayments. When you own your own home and you file for bankruptcy, then your house can be sold by the court appointed trustee to pay your debts, this does not happen with an individual voluntary agreement.
People who file for bankruptcy are not allowed to hold a bank account until their bankruptcy is discharged, neither are they allowed to hold a post as a company director for a certain number of years. A bankruptcy filing will usually remain on your credit file, even after you have been discharged. You will find it extremely difficult, if not impossible to get a mortgage, a credit card or a loan if you are a discharged bankrupt. While an individual voluntary arrangement will affect your credit record, it will not be nearly as damaging as bankruptcy, and you should be able to continue having a bank account while the arrangement is in force.

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