Ivas â a Lifeline Against Bankruptcy

Overspending this Christmas will force 10,000 people to declare themselves insolvent, and in many cases they would normally be expected to further their woes by declaring bankruptcy as an extreme debt solution. Declaring bankruptcy is a very traumatic experience as it can cause more than financial problems, in some cases you may lose your job which is exactly the last thing youâ d want in that situation!

Fortunately a large number of the people who normally would have had to file for bankruptcy have an alternative that can limit the damage done in the form of Individual Voluntary Arrangements (IVAs). These are agreements made with your creditors that forgo bankruptcy and hold a number of advantages.

Firstly they are private agreements, meaning that it is not made public like bankruptcy, which can often mean that your details are published in local papers such as name, address and employment details. IVAs are organised by a supervisor and are kept between you and the creditors.

The supervisor for your case is also the point of contact for all your creditors, meaning that they canâ t hassle you anymore with distressing letters and phone calls. Once you agree on terms on how much and how often you make payments then you can make your first steps towards getting your debts cleared.

As debt solutions go it can help in other areas such as that with an IVA you are able to continue running a company, even being able to start a new company. You are also able to continue trading, all of which is prevented if you file for bankruptcy.

The costs involved in bankruptcy claims means that your creditors are more likely to accept an application for an IVA since they are more likely to get back more of the debt than if you were to file for bankruptcy. This obviously makes it the best debt management choice for both parties.

With regards to assets if you file for bankruptcy then you are likely to lose them, Individual Voluntary Agreements mean you can keep your assets such as equity in your property or endowment policies even if selling them would clear your debts.

So with IVAs you have at least a last resort against filing bankruptcy and can write off up to 75% of the debt you owe, as with all cases of debt problems you should seek guidance from an independent debt counselling service and possibly look into a number of possible debt solutions as soon as you feel youâ re unable to meet payments on debts. If you do this then you should get a clearer picture of how you can get yourself out of debt without having to resort to IVAs and bankruptcy.

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