Bankruptcy or IVA?
Could an Individual Voluntary Agreement be right for you?
Bankruptcy can be a long and rigorous process, so it is important to determine which is the best method for solving your debts. You may even realise that bankruptcy is the best option even if you are not forced to file for it. An Individual Voluntary Agreement is often the best and most common alternative, especially as it is a method that was introduced by the government specifically to offer an alternative to bankruptcy. Read further to discover the advantages and disadvantages of bankruptcy in contrast to an Individual Voluntary Agreement.
Loss of assets
When filing for bankruptcy you usually have to sell your property, such as your house or flat, along with any other significant assets, such as your car. However, if they are not claimed after 3 years, you may retain possession of them. With an IVA you do not usually have to sell your property, and it is likely you will be able to retain them.
Level of control
The outcome of bankruptcy depends on the discretion of the magistrate on the day of the bankruptcy hearing and is determined by the evidence given by the Official Receiver. With an IVA, on the other hand, negotiations are handled by someone working on your behalf. Your control is subject to what is reasonable and what makes sense to you and your creditors.
Credit status
With bankruptcy you will not have a credit status and it will be near impossible to obtain a mortgage or any credit such as a loan or card. However, if you successfully complete an IVA, you can start building a good credit rating again if you are able to demonstrate the ability to complete a 5 year repayment program.
Stigma of bankruptcy
Many people will know if you become bankrupt through local newspapers or be informed if you are liable to them, whereas with an IVA the agreement is private with your creditors.
Effect of bankruptcy on your career
There are numerous restrictions to your career if you become bankrupt. For example, owning a business or employers may simply choose to not accept you as. An IVA, on the other hand, will not have an impact on your career.
Privacy
Although bankruptcy provides a relative peace of mind in terms of a clean start, after a year your creditors are allowed to fully investigate your affairs.
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An introduction to IVAs
The hardest part of realising that you are in debt and cannot go on in your current financial state is admitting that there is a problem. Individual Voluntary Arrangements (IVAs) are a potential solution.
Declaring yourself bankrupt
When an individual realises that they are about to go, or perhaps have already gone, bankrupt it can be hard to know where to go or what to do.
Insolvency - does it solve anything?
It may at first seem to someone who is perhaps less experienced in debt collapse and business failure that bankruptcy and insolvency are the same thing.