Wednesday 2nd of September 2009
Individual voluntary arrangements (IVAs) are an alternative to going bankrupt, which can benefit both the creditor and the person in debt, a claim suggests.
According to TheSite.org, which is run by YouthNet UK, an IVA could ensure that creditors do not harass people in debt and prevents them from petitioning for a bankruptcy order, a route many Britons will want to avoid.
The website advises people that setting up an IVA can give them more say in how their assets are dealt with, which could be a particular concern for younger Britons who have recently purchased a new home or car and are worried about losing them.
"Because you will not have to pay some of the fees and expenses which are charged in a bankruptcy, the overall costs are likely to be less," the online resource continues.
The majority of individuals declared bankrupt are under the age of 30, the website previously noted.
By Kimberley Parsons
- House price rise 'may not indicate recovery'
- Equity release 'needs to be increased'
- Need for IVA help could increase as expert predicts reduction in lending
- Government announces 'breathing space' for those needing IVA help
- Lack of subprime lending creating need for IVA help, expert suggests
- Unsecured debt repayments 'impact upon the most vulnerable'
September 3rd, 2009 at 12:53 pm
Don`t necessarily agree with this.
if a debtor has negative equity in his property, he could declare himself bankrupt, buy out the Trustee`s interest in the property for a £1 (and pay the legal costs of the transfer); especially in the current climate with depressed property values. The debts would be written off after discharge - could be as little as six months if no assets and a basic administration.
As compared to an IVA (whre for instance the debtor would probably have to pay circa £300 pcm for five years in order to compromsie the debts) plus some equity release in year 5 - a ticking timebomb and which leaves the debtor exposed to appreciating values over the 5 year period.A cost of £18K + equity (with a threat of premature failure etc)
In this instance £700-£800 for a debtor`s bankruptcy petition may be money well spent!!!
Majority of 30`s or under will have only just got onto property ladder so the equity shares may not be that great.
This all depends of course on impartial advice from the IP and ensuring they have offered all the options and the debtor can make an informed decision. In some instances IP`s are chasing the fees and may therefore sell the IVA when it is`nt necessarily the right product.
September 4th, 2009 at 9:42 am
I do not agree with this either, yes with bankruptcy you have to pay upfront for the court fee of £510 which could be reduced if you are on benefits or low income. But with an IVA the fee’s for nominee and supervisory fee’s are usually in the thousands and are paid over the years throughout the 5 year IVA period. Concerning cars and houses, if the house is recently purchased, the way the market is at the moment it is likely that there will be no equity in the property and so there is no beneficial interest from the official receiver, if the car is under a figure of around 2k and is used for work purposes usually they would be able to keep this aswell. So i agree with Keith (previous poster) on this one.