Bankruptcy or an IVA: Find a better option!

Consumer debts have become a grave issue in the face of UK economy. They are constantly defaulting and over burdening themselves with debt. People are frantically looking for a debt relief option to get out of debt. But surprisingly! They are unable to decide which would be a better option for their financial situation whether filing bankruptcy or an Individual Voluntary Arrangement (IVA). Through this article you will get the required information on both the programs.

Bankruptcy or an IVA

Bankruptcy or an IVA

What are the eligibility criteria for bankruptcy and an IVA?

  • If you are jobless and financially strapped then bankruptcy would be a better option. In order to file for bankruptcy you need to submit relevant documents and pay for the court charges. But remember, if you owe over £750 then you are considered to be eligible to file bankruptcy.
  • If you are considering an IVA then make sure that you have a stable income. IVA would be the right option for you if you want to avoid the hassle of bankruptcy.

Here are the main advantages and disadvantage of bankruptcy and its effect after filing:

  • With the approval of the bankruptcy filing your debts would be discharged immediately. Once the court grants your petition you would get liberated from the liability of debt
  • If you have a stable income then the court appointed trustee would design a repayment plan or you so that you pay back your creditors. This is known as income payment order. If you do not want to part with your asset then this plan would prove to be beneficial.
  • Before you file for a petition you need to go for a credit counseling session. That would help you to evaluate your financial condition and prevent you from further getting into debt.
  • You can open a new bank account after your bankruptcy is discharged but you have to undergo certain conditions. But before you apply for a new account reveal the fact that you are a bankrupt.
  • Filing bankruptcy can adversely affect your credit rating. Effect of this on your credit file would remain for six years that would create hindrance if you plan to take out a loan.
  • In case you have incurred debts through frauds, certain crimes and fines then filing bankruptcy won’t help to discharge your debt.
  • If you want to file bankruptcy again then you have file after 15 years from the date of your initial filing. If it has been five years since your recent filing then you are eligible to file a petition in the court. But you have a risk as the court may delay the discharge or dismiss the petition.

Here are the main advantages and disadvantage of an IVA and the after effects of an IVA:

  • Unlike bankruptcy you can protect your valuable assets while eliminating your debts.
  • Any individual can opt for an IVA if he has a stable income. And avoid the negative consequences of filing bankruptcy. You have five years time to pay back the owed amount that you can afford.
  • In this program you can even help to negotiate with your creditor to lower your outstanding balance.
  • On opting for IVA you get protection from the court against the creditor harassment.
  • Expenses of filing bankruptcy are higher than IVA program.
  • But if you fail to have a proper income then you are not eligible for an IVA.
  • The creditors may not agree with the proposed amount of the negotiator.
  • While you are in the IVA program you may be able to apply for an unsecured.
  • You credit report is blemished for six years.

This is a guest post by the Webmaster of Fileyourbankruptcy. Here he provides exclusive information on all types of bankruptcy.