Bankruptcy is a serious decision that will negatively impact your credit rating for years to come. For this reason, it is important to consider all options before making that choice. In many cases, bankruptcy alternatives exist that allow the consumer to get themselves out of debt without resorting to actually filing bankruptcy.
Options available depend upon the consumer’s location. In the UK, debtors may opt for a service such as an IVA (Individual Voluntary Agreement). An IVA is a proposal, prepared by a professional insolvency practitioner, and submitted for consideration to all of your debtors. If 75% of your creditors accept the proposal, all of them must legally abide by it.
For those who are struggling and unable to meet their monthly financial obligations, an IVA can be a lifeline. Typically 75% of outstanding debt may be written off, interest charges will become frozen, and a payment plan will allow the debtor to repay the newly-agreed-upon balances with a single affordable monthly payment over a period of about five years. In the meantime, all the harassing telephone calls and other contacts will cease, allowing life to return to a more normal tone while the consumer recovers his financial standing and eventually emerges debt-free.