If you are looking for an alternative to filing for bankruptcy, consider applying for an IVA. The Insolvency Act of 1986 requires borrowers to make formal payments to creditors through an insolvency practitioner when they propose an IVA. In the case of an IVA, the payments made to the secured creditors generally remain the same; only the unsecured creditors’ payments are changed.
A creditor’s meeting is held to decide on the IVA proposal. An IVA actually benefits the creditors more as they receive a higher return than they would have got if the debtor had filed for bankruptcy instead.
Because of the increase in the number of people suffering from financial difficulties in the UK, more financial institutions offer IVAs. Specialist organisations usually host websites where you are able to log in to check the terms and conditions of an IVA.
There are numerous advantages of applying for an IVA over filing for bankruptcy. These advantages include:
- In some cases, you may apply for an IVA even if you have already filed for bankruptcy. Your financial organisation will be able to tell you if you fall into this category
- An IVA is personal. No one has to know you have applied for an IVA, and it does not appear in the local newspaper
- In some cases, you can still qualify for credit after entering into an IVA
- An IVA is not as expensive as filing for bankruptcy
- When you have applied for an IVA, the harassing phone calls, emails and correspondence from creditors will cease. They will also no longer have the ability to take any enforcement action against you
- The biggest advantage of an IVA is that you are not required to give away any of your property to your creditors. Also, you may use the equity of your property. However, there is one condition. Your IVA supervisor can register in the land registry so that the property may not be sold or remortgage without his consent.