Bankruptcy in the UK is on the increase. The most recent figures from the DTI show that in the third quarter of 2005 personal bankruptcies rose by 32% and as many as 12,256 people were declared bankrupt. One of the reasons for this rise is that a growing number of people with serious debt problems see bankruptcy as an easy way out following the Enterprise Act of 2002 that made it possible for a bankrupt to be discharged after less than a year. However, anyone who thinks bankruptcy is easy is mistaken unless their definition of easy covers the prospect of lost assets, the return of hired and leased goods, press notices of the bankruptcy and severe restrictions placed on the bankrupt. These restrictions make it impossible to get credit of 250 or more without letting the lender know you are bankrupt. Also you cannot start, manage, promote or become a director of a company without the courts consent or informing everyone with whom you do business of your situation. However, those in the unfortunate situation of chronic debt will be happy to discover that there is an alternative that could save them much of the heartache inherent of bankruptcy: the IVA. IVA is short for Individual Voluntary Arrangement. An IVA can be arranged by an insolvency practitioner for people with unsecured debts of 15,000 or more. A creditors meeting is organised where the people to whom you owe money agree the terms of your IVA. If a majority of 75% vote in favour then the IVA can go ahead. An IVA can wipe off a significant proportion of your debt instantly often as much as 60%. For the remaining debt, a payment programme is worked out according to how much you can afford and you can be debt-free within five years. And of course this all happens without the restrictions and asset-loss associated with bankruptcy. Chronic debt is a bad situation no matter how you look at it, but an IVA is often the least painful way out. |
