Finding Alternatives to Bankruptcy

Finding alternatives to bankruptcy

Bankruptcy is a serious matter. If you are made bankrupt you will have to give up, with limited exceptions, any possessions of value and your interest in your home (the part of its value that you own). Bankruptcy will also impose certain restrictions on you and will almost certainly involve the closure of any business you run - though you can start to trade again, subject to restrictions.

You do not have to become bankrupt just because you are in debt - there are bankruptcy alternatives. Download a free ebook on avoiding bankruptcy here.

Bankruptcy - Bankruptcy is an option that often has to be considered when an individual cannot pay their debts as they fall due. A first time bankrupt with debts will generally receive their discharge one year after the date of the bankruptcy order (there is the possibility that in some cases the bankruptcy discharge period will be less than one year). Although bankruptcy has a bad stigma and is publicly advertised, it should always be considered when dealing with individual insolvency cases. Please note that if your are ever faced with the prospect of bankruptcy you should look at alternatives as soon as possible such as the Individual Voluntary Arrangement procedure (IVA).

IVA - An IVA is an alternative to bankruptcy called an "Individual Voluntary Arrangement" (IVA). This is a formal arrangement through the county court to pay an agreed amount off your debts over a shorter period. This usually means paying a high monthly installment over 3 to 5 years. The rest of the debts are written off. Some IVAs are set up on the basis of using a lump sum to make offers to the creditors rather than make monthly payments. Some IVA plans are a mixture of both. To apply for an IVA please click HERE

Debt Managent to avoid bankruptcy

Debt Management - With debt management, you agree to pay a regular amount each month to a debt management company. This company then negotiates new repayments with people you owe money to, usually at lower repayments but over a longer period. The key thing is to be sure that you can afford the new repayment levels so that you don't just add to your problems. When considering debt management, you should also be aware that unlike an IVA (Individual Voluntary Arrangement), it is not a legally binding agreement. To apply for an Debt Management Plan please click HERE

Informal Arrangements - Informal arrangements are suitable if: you have very little money to repay your

debts; or you are having debt problems but are likely to be able to make the normal repayments again in a few months; or you cannot afford the full monthly repayments but can afford a smaller regular amount each month. The first step in an informal arrangement is to work out how much you can afford to pay your creditors each month after you have paid essential living costs. You should write to each creditor explaining the situation. Ask them to accept the lower payment until your situation improves and you can make the full repayments.

With the right debt advice you can avoid bankruptcy. The first piece of debt advice that will be given to you would to pay off your debts as soon as possible to maintain and improve your credit score. It is important that you make regular monthly payments to your creditors. For advice on all the debt solutions available in the UK please call The UK Insolvency Helpline Debt Help Service in 0800 074 6918 or apply online at www.insolvencyhelpline.co.uk