Bankruptcy vs. IVA

With the increasing number of people opting for professional debt advice and equally increasing number of bankruptcy filing, it is appropriate that as a consumer of the debt industry you learn the various available options in detail. Bankruptcy is a way of ending your debt crisis but is not always the only solution and other solutions that are less straining than bankruptcy can be considered as alternatives. This article is an explanation of another debt solution, IVA, its pros and cons and a comparative study against bankruptcy.
Bankruptcy is one’s way of ending debts due to the inability to pay them even after their due. It is an effective way to your debt problems but can be straining and leaves an impact on your future borrowing capacity and also your credit history. In certain cases, your inability to pay off debt might be temporary and you would not want to suffer the pitfalls of bankruptcy. In such cases, IVA or Individual Voluntary Agreement is a good option. In all conditions, always weigh the advantage and disadvantage of a solution and choose one that will fit your situation well.
Bankruptcy – Advantages & Disadvantages
1. Bankruptcy frees you from your debts immediately as soon as the order is made. The court takes over your debts and assets and sorts them out. This also ensures that you do not have any responsibility towards your debt and once bankruptcy if finalised, you are free to do whatever you want.
2. The trustee or the official receiver will seize all properties and assets possessed at the time of bankruptcy but will not acquire any that is purchased after bankruptcy.
3. The term for bankruptcy would be around 1 year from the time of declaration.
4. The whole process of filing bankruptcy is a very easy and simple process. Submission of the right documents and payment of filing fees is all it takes to declare bankruptcy.
5. As soon as bankruptcy is declared, the court will appoint an official receiver to take over all your debts and related responsibilities.
6. In case you are earning a good salary, the trustee will ask for you to make monthly payments towards your debt known as the income payments agreement and in case you do not accept for it and take it to court, the court passes the order for payment through an income payments order.
7. Any money that is inherited or that is won by means of lottery etc. during the bankruptcy term needs to be available for payment towards debt.
8. You would require owing at least £750 to be eligible for filing bankruptcy.
9. Bankruptcy does not write-off all loans and has no effect against mortgages or secured loans. It also does not affect your car finance or hire purchase contracts.
10. Bankruptcy affects your credit history badly and leaves a lasting effect for almost up to 6 years from the date of declaration.
11. Bankruptcy can affect your pension policy under circumstances and hence it is a wise decision that such people seek professional advice before declaring bankruptcy.
12. Your assets are normally seized with the court allowing you to retain a minimum of essential and reasonable priced assets.
13. The effects of bankruptcy can be worse if you have been involving in unfit conduct or behaviours.
14. There are various rules and regulations and failure of adherence might lead to criminal trial and prosecution.
IVA – Advantages & Disadvantages
1. The IVA lasts for about 5 years within with you can try to pay back as much of your debts.
2. This system of debt management helps you to interact and negotiate with your creditors.
3. Though negotiations are done with the creditor, the court protects the debtor from creditor action after the IVA filing.
4. The costs involved in IVA are lesser than that involved in bankruptcy and it also does not include any upfront and statuary costs that are normally prevent in a bankruptcy case.
5. Bankruptcy filed debtors can also look for IVA options.
6. The liability is removed in cases of joint pain.
These are the differences between the two debt solutions and each can vary in a particular way to suit specific needs. You can always look out for organizations or groups that provide expert advice on the debt solution before you take the big step.

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