An individual's bankruptcy may be instigated by either themselves or their creditors. There are serious repercussions which include the individual's assets vesting in their Trustee in Bankruptcy. The assets (apart from some statutory exceptions such as pensions, low value residential property and vehicles) will be sold by the Trustee in order to distribute monies to the creditors.
In addition to this there are certain restrictions prior to the individual's "discharge" from bankruptcy which include being prohibited from being able to obtain credit of over £500, or carrying on the same business as previously without disclosing the bankruptcy or acting as a company director. These restrictions will be lifted after the 1 year discharge period. However, the assets will continue to vest in the Trustee post discharge.
An IVA is an alternative to bankruptcy. Basically it is a contract between you and your creditors and it is administered by an Insolvency Practitioner.
The terms of your proposal to creditors may be very flexible, but creditors will reasonably expect their prospects of recovering money to be at least as good as in a bankruptcy.
Under an IVA the individual's assets remain their own and they are themselves, by and large, unencumbered by the restrictions of bankruptcy.
Typically an IVA proposal will involve monthly contributions over a 3-5 year period, sale of a substantial asset, contributions from a third party, or a combination of these.
An IVA must be realistic in its composition and requires a true commitment on the part of the individual concerned together with a supportive group of creditors.
It is on some occasions possible to negotiate repayment holidays, waiving of interest or capital on consumer debt. The likelihood of this will be entirely dependent on personal circumstances.
Our initial advice is provided by way of an introductory telephone call and a one hour meeting with one of our Insolvency Practitioners during which we can advise individuals as to the best option given their own personal circumstances. In the event that you require such advice please contact Lawrence King on 01865 261100 in the first instance.
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