Individual Voluntary Arrangement Bankruptcy

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Individual Voluntary Arrangement And Bankruptcy

An individual voluntary arrangement, or IVA, is a formal agreement that was set up originally to provide UK businesses with an alternative to filing for bankruptcy. That was about twenty five years ago and it has proven so successful that it is now a commonly used solution for dealing with very serious consumer debt situations that may otherwise have resulted in bankruptcy.

Bankruptcy is a very serious step and involves the complete loss of control over all of your assets (including your home, insurance policies and any pensions you have). As well as everything you have falling under the control of your Bankruptcy Trustee, you are not allowed to set up any kind of business in any name other than that in which you became bankrupt and if you are self employed your business will almost certainly be closed. You cannot apply for more than £250 worth of credit and the fact of your bankruptcy will remain on your credit rating for a period of six years.

One of the main reasons people have for wishing to avoid bankruptcy is the stigma that comes with it. The fact that you are bankrupt has to be posted in newspapers, so it is impossible to keep secret. Some of the main advantages of an individual voluntary arrangement over bankruptcy are that other people do not have to know as you do not need to declare it publicly and you get to have more say in the disposal of assets and which ones are included in the agreement. This means that you are far less likely to lose your home with an individual voluntary arrangement that you are with bankruptcy. You can also carry on running a business if you have one.

Individual Voluntary Arrangement – Bankruptcy Alternative

An individual voluntary arrangement is a legally binding agreement that allows you to make regular payments towards your debt for a period of usually five years, after which you become free from debt and any debts not fully repaid are written off. You creditors then have no legal recourse to pursuing you for any unpaid debt.

It is a less drastic step than bankruptcy, though it is still a serious step to take. It is usually the only real alternative to bankruptcy for situations where the amount of your debt and the income you have mean that you just cannot afford to repay what you owe. Your situation would be such that you would not be eligible for a debt management plan, as that would depend on having enough income to make reasonable payments towards your debts.

An individual voluntary arrangement is not available to anyone who wants it on request. Your situation does have to be very serious, which would normally mean that your only alternative would be to declare bankruptcy. To be eligible you would need to have unsecured debts to at least two or three different creditors for at least £15,000.

Benefits Of An Individual Voluntary Arrangement Over Bankruptcy

Setting up an individual voluntary arrangement is usually cheaper than filing bankruptcy.

You retain more control over your assets and are much less likely to lose your home.

You can carry on trading if you own a business, whereas you would almost certainly have to close it and make all staff redundant in bankruptcy.

There is less stigma with an IVA and your situation would not have to be published in the press.

You can keep a bank account provided you do not want credit.

You are not barred from certain roles of professions as a bankrupt would be.

Individual Voluntary Arrangement Bankruptcy - Conclusions

The most important thing is to take proper advice before filing for bankruptcy, as it is a very serious step with long term consequences. You are fortunate in the UK to have a good alternative in the IVA and the most sensible step is to approach several good debt help organisations that will be able to assess your situation and tell you whether you are eligible for an IVA and whether it would be better for you or not.

Approaching a debt management company is easy, but you do need to take care to apply only to reputable ones, as people with serious debt problems can ill afford to be given poor advice or taken advantage of by less than reputable companies. Apply online to a few good companies and they will each contact you to go through your situation in detail. When they have assessed your circumstances they will get back to you with advice and perhaps a proposal for dealing with your debts. You are committed to nothing and should compare a few proposals before deciding what is best for you.

You can find a list of reputable IVA Specialists on the main IVA page of this website.

Alternatively, you can apply for debt help now using the form below. This will go to one of our most highly recommended debt help companies, who will then contact you very quickly.

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