Individual Voluntary Arrangements- A New Alternative to Bankruptcy
This May, the Department of Trade and
Industry in the UK found that there were 10,091 bankruptcies
in the first quarter of 2005. This represents an increase
of 24.5% on the corresponding quarter of last year.
Bankruptcy can leave an individual feeling
ashamed, depressed and out of control. Furthermore,
for many the stigma of bankruptcy can be too much
to bear.
However, there may be an alternative
to going bankrupt which can also help people in serious
debt to make a fresh start.
The Insolvency Act of 1986 introduced
The Individual Voluntary Arrangement
(also known as an IVA) as an alternative to bankruptcy.
The idea behind the introduction of
the Individual Voluntary Arrangement was to enable
people facing financial difficulties to come to a
formal agreement with their creditors rather than
having to face bankruptcy. If an IVA is agreed between
the debtor and creditor:
-
Interest on the loan is frozen
-
Legal proceedings are stopped
-
The overall debt is reduced
An Individual Voluntary Arrangement
is generally seen as a more favorable option than
bankruptcy from both the debtors and creditors perspective.
This is because there are no fees or legal proceeding
involved with an IVA, unlike with bankruptcy. Furthermore,
from the creditors point of view, an Individual Voluntary
Arrangement offers a greater repayment of the debt
than would otherwise be achieved if the debtor were
made bankrupt.
IVAs represent an exciting new opportunity
to those facing serious debt to both avoid bankruptcy
and to make a fresh start.
Mike Curry is the head of Clear Start-
a free national support service for those facing serious
debt. Clear Start offers independent advice on debt
management and individual voluntary arrangements.
For more information please visit Clear
Star t.org
