A Bankruptcy Lawyer’s Blog

Personal Bankruptcy and IVAs – The Issues Explained

The recent series of interest rate hikes from the Bank of England have affected many consumers’ financial plans. Many homeowners have been forced to deal with increased mortgage repayments on top of other bills and expenses.

Unfortunately though, this rate increase hasn’t yet slowed the housing market down and the Bank of England may be forced into more action. Significant numbers of people are already feeling the financial pinch and many more could be pushed towards insolvency if interest rate rises were to continue.

Those hit with the very worst financial situations may find themselves considering personal bankruptcy, which no longer carries the social stigma that it once did. It’s not uncommon these days for people to be discharged after just twelve months of being declared bankrupt, and being able to rebuild their lives once more. Be in no doubt though, personal bankruptcy is a huge, traumatic procedure that will almost always involve the significant loss of assets.

An alternative to personal bankruptcy is an Individual Voluntary Agreement (IVA). A vast amount of information on IVAs can be found across the internet. Many financial analysts have predicted that the IVA will overtake personal bankruptcy as the number one tool for servicing insolvency in 2007. An IVA can undoubtedly help people who can afford to make monthly payments and who have a strong desire to hold on to their property and/or business.

Throughout the press and principally from the financial institutions there is a great deal of hostility towards IVAs. The main reason for the bad feeling comes mainly from banks that are unhappy at having to write off massive amounts of debt to consumers. Many financial organisations support this argument and claim that debt management companies are simply trying to profit from consumer’s financial misfortune.

There are instances where banks are now beginning to reject IVAs out of hand and make a stand against consumers who they believe are spending irresponsibly and are simply unwilling to face the consequences.

With the IVA facing such a backlash many people in serious financial situations are left with no alternative to personal bankruptcy.

However, if you are facing a future of financial uncertainty or are experiencing money issues you should not allow yourself to get too worried. 2007 has been tipped to produce record numbers of insolvencies and there are many tens of thousands of people in similar situations.

Research you options thoroughly on the internet and take time to speak with independent financial advisors about your specific financial situation. You should be able to get free advice from your local Citizens Advice Bureau. There are many debt solutions available and many of them are not nearly as serious as personal bankruptcy or an IVA. The key is to take time to thoroughly research the choices available to you so you can make the best decisions.