Bankruptcy Alternatives

Alternatives To Bankruptcy:
Examine The Other Options

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Other Pages Related To Bankruptcy:

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How To File Bankruptcy
Bankruptcy Questions
Bankruptcy Rules and Law
Administration Orders
Can Bankruptcy Stop Foreclosure/Repossession?

Bankruptcy is a drastic step with long lasting consequences, so you should not consider it without being sure that you have looked carefully at the alternatives. If you read the main Bankruptcy page and the Bankruptcy Questions page, you will see that there are implications resulting from being declared bankrupt that need careful consideration. It is worth looking at some of the alternatives to bankruptcy, which may get you out of debt without the serious consequences of bankruptcy.

Main Alternatives To Bankruptcy:

US Alternative: Debt Settlement

US residents have the option of debt settlement to deal with really serious debt problems. This is generally used by people whose situation is too severe for a debt management plan. It involves using a specialist company to negotiate for large amounts of your debts to be written off in exchange for quick repayment of the balance.

The time the process takes can vary depending on the creditors involved, but it is an effective way to get rid of debt without the negative effects that bankruptcy has.

UK Alternative: Individual Voluntary Arrangements (IVAs)

Read the Page on UK IVAs to see whether this might be a suitable alternative to bankruptcy. IVAs are a type of formal agreement with your creditors about how you will pay them back. You make affordable payments towards your debts for a fixed period, after which your remaining debts are written off and you are debt free.

Using Individual Voluntary Arrangements can take a bit longer to resolve your situation than bankruptcy, but you do avoid the stigma, publicity and other consequences that bankruptcy brings with it.

Administration Orders

If your total debts are not more than £5,000 and one or more of your creditors has obtained a court judgement against you, the court may make an Administration Order. This is an arrangement whereby your creditors are paid by your making regular payments to the court. There is no up front fee, but the court do take a percentage of your payments towards their costs.

While this does seem a preferable alternative to bankruptcy, if you do not keep up your payments the Administration Order could be cancelled and you could find yourself subject to the same conditions as someone who is bankrupt.

Bankruptcy Alternatives - Conclusions

There are various alternatives to bankruptcy, but the most appropriate option depends very much on your personal circumstances. If you are still unsure you should take independent financial advice, or ask about bankruptcy alternatives at an independent organisation such as the Citizens Advice Bureau.

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