完全不同rence Between IVA and Bankruptcy

IVA vs Bankruptcy

IVA and bankruptcy are solutions for unmanageable debts. Due to financial crisis and hard economic times, more and more people in UK are under severe debt burden. Reckless spending through credit cards and other financial irregularities land people in a financial soup and they are unable to pay back their creditors. In times like these, it is better to do some serious thinking and chart out an action plan that suits your circumstances. For people who have a loan that exceeds 15000 pounds, there are two methods of coming out of this unmanageable situation. One is Individual Voluntary Arrangement (IVA), and the other is Bankruptcy, which is all too well known. Of late, IVA has become very popular. Let us see what it means.

IVA stands for an agreement that you reach with your creditors on the advice of an IVA counsel. This is a legal process established by the government as per Insolvency Act 1986. You agree to pay a monthly sum of money agreed upon by the creditors for a period of normally five years. The proceeds of this payment go to the creditors. If you pay regularly till the completion of the five year period, your debt is written off.

Bankruptcy on the other hand is a legal procedure where, to get immunity from your creditors, you file a case in the court of law. Your assets, including your home and car, are sold out and the sale proceeds are used to pay back your creditors. Any outstanding amount, if it still remains is deemed to be written off.

Depending upon your circumstances, you are free to choose between an IVA and a bankruptcy. However, there are major differences between the two which are enumerated below.

完全不同rence between IVA and Bankruptcy • In bankruptcy, debtor’s assets are sold and the proceeds are used to clear the loan, while in IVA, no assets are sold and the debtor agrees to make small monthly payments into an account from where money goes to creditors. • Bankruptcy gets settled in less than a year, while IVA settles in 5 years. • Debtor keeps his home and other assets in IVA whereas his home and car are the first to go in bankruptcy • IVA is less of a social stigma than bankruptcy. However both remain in your credit history for a period of 6 years and until then, it is difficult to secure a new loan. • Bankruptcy writes off all loans, while IVA can write off up to 75% of debt. • You can get a bank current account in IVA, while it is impossible with bankruptcy. • There are lengthy court proceedings with bankruptcy, whereas IVA avoids court procedures. • IVA is not suitable for those unemployed, while bankruptcy is considered even for jobless. • Bankruptcy is more expensive to set into motion than IVA. • If thinking of a career, it is better to go for IVA than bankruptcy. • It is easier to get a mortgage in IVA, whereas it is not possible with bankruptcy.