Bankruptcy or Individual Voluntary Arrangement (IVA)
The IVA (also known as an Individual Voluntary Arrangement) was introduced by the Insolvency Act of 1986 as an alternative to bankruptcy.
In this section we’ll compare IVAs to bankruptcy to help you decide which option would work best for you.
IVAs Compared to Bankruptcy
No Social Stigma with an IVA
There is a social stigma associated with bankruptcy and it can not be kept private because it is advertised. The bankruptcy announcement is usually published in your local paper along with your name, address and occupation.
However, an IVA is a private agreement with your creditors. This means that no one else needs to be told about it. As a result there is never any publicity in the local papers about IVAs.
No Professional Disqualification with an IVA
If you are made bankrupt, then you are not allowed to be involved in promoting, forming or managing a company without the permission of the court.
However, if you set up an IVA your professional or employment status will not be affected. Furthermore, you can carry on running your own business and acting as a director even if you have an IVA.
Maintain Right to Hold Public Office with an IVA
If you file for bankruptcy then there are certain public offices that you are not allowed to hold. However, your right to hold public office is not affected if you set up an IVA.
Keep Your Assets with an IVA
If you are made bankrupt, then all of your assets will be vested in your trustee and they might have to be sold to repay your debts. However, with an IVA, you can keep your assets.
Other Benefits of Individual Voluntary Arrangements
- Up to 75% of your debt can be written off with an IVA.
- With an IVA, your monthly repayments are based on what you can afford.
- Your creditors cannot harass you whilst the IVA is in place.
- Once you have completed your IVA according to the specified terms then you are deemed to be debt free.
It’s hard to think straight when you’ve got a serious debt problem. You’re stressed, you can’t sleep, people constantly hound you for money and the temptation is to bury your head in the sand. What you need is honest, independent and cost-free advice on the best way of becoming debt-free.
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