Voluntary Bankruptcy Solutions?

Feb 17th, 2014 | By | Category: Debt

Individual voluntary agreements, otherwise called IVAs, are a process in the United Kingdom that an individual may qualify for if they’re deeply in debt but want to avoid bankruptcy. An IVA is an agreement that is agreed upon between the creditors and the individual. The amount will vary greatly and is dependent upon the borrower’s own situation. Creditors aren’t required to concur with the amount in an individual voluntary agreement but they commonly choose to do so because IVSs provide a better return for creditors than bankruptcy would. There are many advantages and disadvantages attached to these agreements and it is important to understand them before committing to it.

One benefit is that a person’s financial situation can remain confidential. Bankruptcy announcements are often broadcast in the paper but this isn’t so for IVAs. Although creditors may still consider you a risk, as it does appear on your credit report, the agreement is entirely between you and the creditor. Another positive aspect of IVAs is the amount of time they’re effective. While bankruptcy runs out after one year, an IVA policy may cover as many as five years! The cost of a bankruptcy is likewise much more costly than that of an IVA.


An IVA also holds many more benefits than other debt management systems when it recalls the protection that it provides. Once a creditor has accepted to a set amount, they cannot withdraw from the agreement. This cannot always be carried out in other debt management processes. Once a creditor has accepted to the IVA, they’re bound to that agreement and cannot decide not to partake in it at any point. An individual voluntary agreement will show up on a credit report only as a file for bankruptcy would however, they do show a desire to repay the debt whereas with bankruptcy, a borrower has been argued that they’re not paying the debt back.

Individual voluntary agreements can also work better in business than bankruptcy. Should a partner in a company file for bankruptcy, they would generally need to dissolve the partnership of the business and they would also be necessary to tell any suppliers that they have filed for bankruptcy.

When it comes to voluntary bankruptcy there are two options. You can file for chapter 13 bankruptcy or you can file for chapter 7 bankruptcy. These are your options so you should know what you’re doing before you file for bankruptcy.

When you file for Chapter 13 Bankruptcy, the court approves a repayment plan that enables you to use your future income to pay back a default during a three-to-five-year period, rather than surrender any property. You will have to satisfy a number of the secured loans and the remaining debts before they’ll be discharged. After you have made all the payments pursuant to the plan, you receive a discharge of your debts. When you file for Chapter 7 Bankruptcy.

Depending on your situation and your debts will vary according to whether you file for chapter 13 bankruptcy or for chapter 7 bankruptcy. Either one can be very useful when you’re thus far in debt that any other option won’t help.

If a borrower should apply for credit and a creditor looks at their credit report, the IVA will show on the credit report, as mentioned above. However, this won’t automatically dismiss the borrower as a good loan candidate. This wouldn’t be the case with bankruptcy as bankruptcy is deemed to be the worst financial situation and no lenders will take on bankruptcy cases.

However, the main advantage to IVAs is that the borrower still has complete control over their home. This isn’t the case in bankruptcy and usually the home will be drawn from the borrower and sold to meet the borrower’s debts.


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