When you are looking to find a way out of debt, the first thing you think of might be bankruptcy. While bankruptcy might be the best option for some people, it is certainly not the best option for everyone. Fortunately, there are also other options. One of those options is an individual voluntary agreement, which is also known misplay as an IVA. Over the next few paragraphs, we will conduct a brief review of these two alternatives, weighing the pros and cons of each. In the end, you will be able to make a fully informed choice regarding which route would be best given your particular set of circumstances.
What Bankruptcy Is
In order to understand these two options better, they need to be clearly defined. Bankruptcy is a way to legally reduce or eliminate your debt. Regardless of which particular type of bankruptcy is declared, most people are still left having to pay back something. That is because even the type of bankruptcy which applies to people with little or no vulnerable assets does not discharge educational or tax debts. As for the other main type of bankruptcy, while it does protect assets which may otherwise be vulnerable, it does not eliminate debts entirely the way that the other type does.
What an IVA Is
An IVA, or Individual Voluntary Agreement, is exactly what it sounds like it is. It is an agreement between an individual and his or her creditors regarding how a debt will be paid back. The usual length of time allowed for the repayment for these debts in an IVA is three years. The amount of the payments themselves is determined after consideration of the individual’s income. Another component of an IVA is that the individual’s creditors agree to reduce the amounts of the overall debts themselves. As you can see, there are advantages for both parties in this type of agreement.
The Pros and Cons of Each
The decision regarding which option to pursue will most likely depend largely on how much (if any) of your debts you can afford to repay. If after a reduction of your debts you could afford to pay them back over time, then an IVA is likely to be the best option for you. It will have a significantly less adverse impact on your credit report than bankruptcy. On the other hand, the advantage of bankruptcy is that under it, you will have to repay far less money than you would have to repay under the terms of an IVA. Also, you will still be able to get credit after a bankruptcy, but the terms will not be nearly as favorable.
Where to go From Here
The best place to go from here is to the phone, and the best person to call is a bankruptcy lawyer. He or she will be able to answer all of your questions, evaluating your particular situation and offering advice about what would be your best option given your circumstances. In the end, there is always hope. With patience and discipline, you can rebuild your financial life on solid footing.