Bankruptcy IVA And Advice In UK

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An IVA is suitable when someone is unable to pay off their debts but does not want to file for bankruptcy. It can be an attractive option to all parties including the creditors as often it presents for them a better result than under bankruptcy.

What is Bankruptcy?

Bankruptcy is an option that often has to be considered when an individual cannot pay their debts as they fall due. A first time bankrupt with debts will generally receive their discharge one year after the date of the bankruptcy order (there is the possibility that in some cases the bankruptcy discharge period will be less than one year).

Although bankruptcy has a bad stigma and is publicly advertised, it should always be considered when dealing with individual insolvency cases.

Please note that if your are ever faced with the prospect of bankruptcy you should look at alternatives as soon as possible such as the Individual Voluntary Arrangement procedure (IVA).

Basic Advantage of IVA (Individual Voluntary Arrangement procedure):

If you are earning a good salary then the trustee may ask you for some money each month. This is called an income payments order.
If you inherit money whist you are under a bankruptcy order you may have to pay your debts back.
The bankruptcy period will be one year under current bankruptcy legislation.
A bankruptcy Order will not affect any car finance or hire purchase contracts.
If you have bankruptcy order on you credit file this will effect your ability to get credit for up to 6 years.
Bankruptcy can be very distressing especially if you have been involved in gambling or reckless spending patterns.
The debtor has a pension policy, it is vitally important that he seeks professional advice of either an IP or a bankruptcy lawyer prior to petitioning for his own bankruptcy.
The can literally get rid of all your debts immediately upon the bankruptcy order being made.
The trustee may not take any 'after acquired' assets from you, that is, after the bankruptcy order is made.
For the creditors, bankruptcy allows a full investigation of the debtor's affairs to be carried out.
For the person involved, bankruptcy provides relative peace of mind and possible automatic discharge after one year (or less in some cases).

There are certain criteria however that are required for an IVA to have a good chance of success. It is recommended that a debtor speaks to a Clear Start IVA Advisor to get a better understanding of what these are. The following are some simple guidelines for what can work:

Minimum unsecured debt of around £15,000 -20,000.
Stable monthly income.
Minimum monthly payments of £250-300. (no maximum)

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