IVA v Bankruptcy – Which is Better
Anyone who finds themselves in dire financial straits will sometimes ponder which approach is in their best interests, an Individual Voluntary Arrangement or IVA or going with bankruptcy. While each approach has certain advantages, the fact is that taking the IVA route is often the most prudent move. Here are some of the reasons why.
A debt IVA is a formal arrangement that is established between the consumer and his or her creditors that allows for the settlement of outstanding debt, using a series of repayments that are within the means of the debtor. The terms of the IVA may vary, with either full repayment of the total owed or certain creditors settling for a lesser amount. Generally, the plan calls for repayment within sixty months or less. If the debtor consistently makes the payments on time, the debt is considered settled in full and this is reflected on their credit report.
One key factor that sets the IVA apart from bankruptcy is this repayment of debt. With some forms of bankruptcy, the court will completely wipe the debt clean, although it may require that some assets be sold in order to settle certain types of debt. That is not the case with an Individual Voluntary Arrangement. The debtor keeps all of his or her property with the debt IVA..
Along with the differences between the IVA and filing for bankruptcy, it is important to note that both are processes that must be approved by a court and are legally binding. This means both approaches are different from a simple debt management plan, which is not governed by a court of law. As such, both have the full protection and the enforcement of the courts, whereas the debt management plan does not.
Just as the bankruptcy advice notes that failure to comply with the directives of the court will open the door for creditors to pursue the debtor once more, the same is true with an Individual Voluntary Arrangement. Both are legally binding arrangements that call for the full co-operation of the debtor in whatever capacity the court decides is prudent in a given situation. For this reason, debtors should weigh the pros and cons of each strategy with care, ultimately choosing the one that is right for their individual circumstances.
The Debt Advice Group has been created to help people in serious debt get good, honest, impartial advice. It is an organisation having iva specialist providing debt help and bankruptcy advice.
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