We accept Paypal paymentsIVA to Bankruptcy
The concept of the Individual Voluntary Arrangement or IVA was introduced in the last recession with a view to allowing insolvent small businesses to continue trading. At a later date they were also used to protect major assets such as the family home, assuming there was still equity in that home. IVAs were therefore initially intended as business solutions – they can be expensive protection devices which allow people to retain control of assets provided the terms of an agreement are maintained. It follows, therefore, that if you do not have an asset to protect and your case does not fail on moral grounds or because of an employment restriction then, an IVA may or may not the correct solution. Under current legislation, those with no equity in their homes, in most cases, do not lose their homes in bankruptcy.
This all changed in the early 2000s when some Insolvency Practitioners began the mass marketing of IVAs as an alternative to bankruptcy. Although obliged to mention bankruptcy as part of their presentation, the general public’s fear of the word ‘bankruptcy’ and general ignorance and stigma of the subject meant that there was a large increase in the number of individuals who were entering into IVAs. The fact that they had no assets was not an issue whereas in fact this should have been.
An Insolvency Practitioner should, in every case, investigates the circumstances of every client and then examine all the options before deciding which solution is in the client’s best interests. In some cases former clients have had no contact at all with an actual Insolvency Practitioner and are, in some cases, offered no alternative to the suggestion that an IVA may be the right debt solution for them. In most cases, individuals with no assets or equity to protect are often far better served under a bankruptcy order. Under a modern Bankruptcy:
- Bailiffs are no longer allowed to enter premises and remove furniture or personal effects.
- Bank accounts are allowed. In fact, there are now several Banks who can provide basic current accounts for un discharged bankrupts.
- You are discharged after 12 months. In some cases, you may apply for discharge after 6 months
- Vehicles may be retained provided they are not too expensive. The guideline is £1500.
- All unsecured debt, including Council Tax, Utility Bills, money owing to the Inland Revenue,Credit Cards, Loans, Overdrafts, Catalogues and Store Cards.
Insolvency Practitioners have a duty of care to offer something called ‘best advice’ to their clients. It is not acceptable to simply ask the client if they wish to go bankrupt and take their answer at face value without clearly explaining what it entails. Failing to do so is inappropriate as the client is unable to make an informed decision.
You may have already stopped paying your IVA or you may be considering if the IVA was in fact the right debt solution for you. Some clients suggest they are struggling to meet their IVA repayments and in some cases it has become apparent to them quite early on in their IVA that it was not set up on a manageable basis especially if the debt level was under £25,000.00 or, if their circumstances change they struggle to meet their IVA payments and not all IVA companies will agree to review the repayments. You may at this point in time be considering if you received the best advice from your IVA company or if you were given the full facts at the time you went into your IVA. Whatever your circumstances you can discuss your situation with a licensed advisor.
