What is an IVA?

IVA Alternatives

Avoiding the Stigma of Bankruptcy

The stigma associated with bankruptcy has diminished over the last 20 years. Before 1986 an individual was bankrupt for seven years and had to apply (in open court) for his/her discharge. Then on 29 December 1986 discharge became automatic (meaning no need to apply to the court) after three years. The time period was further reduced to twelve months on 1 April 2004, though a longer time period may apply in certain circumstances. Since then, the bankruptcy figures have rocketed upwards. And the more bankrupts there are, the less stigma there is.

A CONSOLIDATION LOAN enables you to roll all your outstanding credit card debts into a single loan with a preferential interest rate. No public notification is required, though it could be noted on credit check files.

RE-MORTGAGING YOUR HOME is another option if you have enough equity in your home to cover the debts that you owe. No public notification is required, though it could be noted on credit check files. Your home may be at risk if you are unable to meet repayments. We would recommend that you consult an Independent Financial Advisor before taking this step.

A DEBT MANAGEMENT PLAN enables to you repay all of your credit card debts, but over a longer time period and is likely to incur additional interest charges. This does not prevent action by creditors so County Court Judgments, charging orders or even bankruptcy petitions could follow.

An INDIVIDUAL VOLUNTARY ARRANGEMENT (IVA) is a binding agreement between you and your creditors in which you agree to make manageable payments every month, usually for a period of five years, after which you will be debt free. If you own your home, you will need to pay a percentage of the equity (calculated at today's values) into the arrangement. IVAs must be requested from the Department of Trade and Industry, so your entry could be found in DTI records. An IVA affects an individual's credit rating. Click here to find out more about how credit rating agencies deal with IVAs.

Filing for BANKRUPTCY means all your creditors are informed by a notice published in your local newspaper as well as a publication called the London Gazette.