Ways to Avoid Bankruptcy
Bankruptcy isn’t the best option for everyone. If you have assets to protect, or an occupation that could be adversely affected then it is in your best interest to avoid bankruptcy and consider alternative solutions.
IVA / Individual Voluntary Arrangement
An IVA is often a suitable alternative if bankruptcy doesn’t suit you.
This involves making monthly payments over a 5 year period. Entering into an IVA is a legally binding arrangement and failure to maintain payments could result in bankruptcy proceedings brought against you.
An IVA is arranged by an Insolvency Practitioner (IP) and involves contacting all of your creditors to come to an agreement.
75% of your creditors are required to agree for the IVA to be approved.
An IVA may safeguard your property, whereas any equity in bankruptcy is at risk.
An informal arrangement is not a legally binding agreement. This would involve you speaking to your creditors to come to an arrangement to repay the debt.
DMP / Debt Management Plan
A Debt Management Plan is similar to an IVA, but differs in that it isn’t a form of insolvency. The payment plan can last far longer than an IVA, which depends entirely on the amount of debt you have.
In a DMP lower payments are negotiated with your creditors to make it easier to manage.