IVA still a useful alternative to bankruptcy
on: November 28, 2008, 6:07 am
Release Author: Freeman
Release Summary: Responding to statistics from the Ministry of
Justice showing a marked rise in bankruptcy petitions, Insolvency
Practitioners Freeman Jones have commented that IVAs remain a
very useful alternative that can avoid many of the negative consequences
associated with bankruptcy.
Release Body: Responding to new statistics showing a rise in the
number of people in debt applying for bankruptcy, Insolvency Practitioners
Freeman Jones have highlighted the importance
of addressing debt problems early, especially with a recession
looming, and have pointed to the IVA (Individual Voluntary Arrangement)
as a useful alternative to bankruptcy that could lessen the blow
statistics, compiled by the Ministry of Justice, showed a total
of 13,653 petitions for bankruptcy in the three months between
July and September – 7% more compared with the same time
last year, and a 1% increase on the previous quarter.
the same time, creditors themselves filed 5,499 bankruptcy petitions
against borrowers – 2% less than the previous quarter, but
10% more than July-September 2007.
an earlier report, the Insolvency Service reported a 3.3% rise
in individuals taking up IVAs in the third quarter of 2008, although
the number had actually fallen by 3.1% compared with the same
period last year.
spokesperson for Freeman Jones commented:
“Bankruptcy can be the best way out of debt for some people,
but in many cases an IVA is a preferable alternative, as it can
avoid a lot of the negative consequences associated with bankruptcy.
bankruptcy, an IVA almost always allows borrowers to keep hold
of their home - although they will be expected to release some
of the equity in their home in the fourth year - and it does not
carry the publicity or social stigma that bankruptcy does. It also
does not prevent people from running a business or taking other
positions, like bankruptcy does.
are some people who feel that bankruptcy is a more appropriate
way out of insolvency than an IVA,”
continued the spokesperson. “That’s mainly because
bankruptcy is over more quickly – normally after a year
– and it typically results in less of the overall debt being
paid off by the borrower.
the restrictions placed upon borrowers by bankruptcy can sometimes
outweigh the benefits, and although an IVA lasts for longer, it
will do less damage to the borrower’s future prospects in
the long run.
the Freeman Jones spokesperson was quick to acknowledge that bankruptcy
can sometimes be the better option. “Since an IVA requires
regular monthly payments for a number of years, people with a
low or unpredictable income may find that bankruptcy better suits
“Likewise, if the borrower does not have much in the
way of assets, and their circumstances are unlikely to improve,
then bankruptcy may be their best choice.
can often be difficult for people in debt to decide whether bankruptcy
or an IVA is the best option – and as always, we advise
anyone facing debt problems to seek expert debt advice.”
Details: Pennington House
South Langworthy Road
0845 056 6480