IVA Vs Bankruptcy

Bankruptcy

You don't know how you have got here, but yet here you are. Somehow, you have managed to accrue some personal debt & you are not sure exactly how to go about dealing with it. This issue is more common than you might think, & you definitely are not alone in facing such a situation. of the most prominent options when faced with these circumstances are to declare ones self bankrupt, or to take up an Individual Voluntary Arrangement (IVA).


Perhaps the main advantage of bankruptcy is the length of the arrangement. Bankruptcy will usually last only a year, whereas IVAs can last several years. Bankruptcy will also make sure that 100% of the debt is lifted, whereas an IVA normally leads to only 75% of the debt being written off.

Bankruptcy is such a scary term, but the reality can actually be different. Bankruptcy is an instant procedure - you need to file a petition at your local county court for bankruptcy, after which your file is placed in the hands of an Official Receiver or an Individual Trustee in bankruptcy - in other words a licensed insolvency practitioner. The trustee will take control of all of your assets & so this is often the best choice for those who don't have plenty of! They will also freeze your bank accounts & it is fundamentally the debtor's responsibility to secure as much from your personal estate to benefit the creditors.

Your bankruptcy will however be featured in your local paper, so that someone that you owe money to, can see that you have been declared bankrupt.

Individual Voluntary Arrangement (IVA)

IVAs by their nature are individual & the terms may vary. Normally they run for 60months (five years) at the finish of which all of your unsecured debts are written off. Sometimes they are shorter than this, & the structure of the payments can vary . The norm is for a single every month payment to the supervisor of the IVA, who then distributes this equally between creditors.

Individual Voluntary Arrangements do not have the same negative connotations that bankruptcy does, & unlike bankruptcy you won't appear in the local press. You will also maintain full control over your own assets & your credit standing won't suffer to the same extent.

The normal procedure is for an arrangement whereby the interest on debt is frozen & up to 75% of the debt is written off. This is dependent on your being able to show that you have a steady income.