Iva- A Legitimate Alternative To Bankruptcy

The UK is facing a debt crisis highlighted by the fact that around 45,000 people filed for bankruptcy in 2005

Most people seek to avoid bankruptcy at all costs This is because of the stigmas and disqualifications associated with going bankrupt The government recently introduced a legitimate alternative to bankruptcy in the form of an IVA

The rise in the number of people seeking to set up IVAs suggests that it is widely viewed as a good alternative to bankruptcy Indeed, of the 70,000 insolvencies in 2005, one third were IVAs

An IVA allows people in serious debt to come to a formal debt re-payment arrangement with their creditors rather than having to face bankruptcy

IVAs are suitable for people with debts over £15,000 who can afford to pay at least £200 a month
If a creditor agrees to accept the IVA proposed by the debtor then:

• Interest on the loan is frozen
• Legal proceedings are stopped
• The overall debt is reduced

The reason why an IVA is often a good alternative to bankruptcy is that it benefits both the debtor and the creditor

From a creditor’s perspective, an IVA is a good alternative to bankruptcy because there are no fees or legal proceeding involved with an IVA, unlike with bankruptcy
Furthermore, an IVA offers a greater repayment of the debt than would otherwise be achieved if the debtor were made bankrupt
From the debtor’s point of view, an IVA is a good alternative to bankruptcy because it does not have any stigmas of disqualifications associated with it

If a debtor keeps up with his or her IVA re-payments he or she will be deemed to be debt free within five years Other advantages of an IVA that make it a good alternative to bankruptcy include:

• Monthly re-payments are based on what the debtor can actually afford to pay
• In most cases, a debtor can keep his/her car with an IVA
• With an IVA as much as 80% of the debt is written off completely

As a result, an IVA is an excellent alternative to bankruptcy and because IVAs are supported by the government the alternative is a legitimated and regulated one

Clear Start, the National Consumer Debt Advice Service offers free IVA advice: Alternative to Bankruptcy

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