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UK Bankruptcy and IVA comparison

Bankruptcy should only be considered as a last resort. It is a lose-lose situation for you and your creditors. You might be forced into bankruptcy only if your creditors consider that it is the only prospect of recovering what you own them. In this article, we hope to show why an IVA is preferable to bankruptcy.

UK Bankruptcy

 

  • Bankruptcy is always advertised.
    Bankruptcy applications are advertised in the London Gazette and the local paper where you live.
  • Notification is made to everyone financially connected.
    Your bank, building society, creditors, landlord, etc. will be informed immediately.
  • Bankrupts cannot usually run a business.
    Normally, any business you own will be closed immediately.
  • Future assets will be lost.
  • All accounts will be closed.
    Anything that is being purchased by lease or hire purchase, such as your car, will be immediately returned to its owner.
  • Previous bankrupts.
    People that have been bankrupt before should be very careful about being made bankrupt again, as the minimum period of bankruptcy is 5 years, and could continue for up to 15 years before being discharged.
  • Professional & Business Status.
    This can have detrimental effects on one’s career. Membership of many associations and societies will also be lost.
  • Interview by an Official Receiver.
    You'll be questioned as to how or why you fell into difficulties. If your behavior was considered to be rash or hazardous, you may be subject to a Bankruptcy Restriction Order.

 

Individual Voluntary Arrangement.

 

  • No publicity.
    An IVA is not advertised. There is not the stigma or publicity that normally accompanies bankruptcy.
  • Privacy.
    Landlords and employers will not be notified, unless they are a creditor.
  • Does not affect professional or employment status.
    Under certain circumstances, you can still be a company director or practice professional roles involving finance.
  • You have more control over your assets.
    Some assets can be excluded from your proposal. Your advisor will discuss this with you.
  • All contact from creditors should stop completely.
    We'll handle all correspondence while your IVA proposal is being prepared. After which the IVA is legally binding. The creditors should not contact you again. If they do, we will deal with the situation ourselves.
  • Less costs for creditors.
    Administration costs are normally lower than Bankruptcy, enabling higher dividend payments for creditors.
  • Not all creditors need to agree.
    Creditors who vote against the IVA are still bound by it as long as the required majority (75% by value of the debt) of the creditors who have voted agree to it.
  • No need to attend court.
    You will not be required to go to court for the IVA. Just be available to answer questions on the phone at the time the creditors meeting.
  • Legal Protection.
    Court proceedings can't be brought against you in respect of any of the debts bound by the Individual Voluntary Arrangement.

 

“Loans are subject to status and available to UK residents aged 18 and over”

“Think carefully before securing other debts against your home.
Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it"

Call us on 0844 800 4564 for Confidential Advice.

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