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For debt consolidation
information purposes, the main differences between bankruptcy and an
IVA is that a bankrupt is discharged after three years but may have
to lose everything including his cufflinks and the roof over his
head, whereas the IVA requires at least some of the money owed to be
paid back, and the debtor generally suffers no great material or
social discomfort, the IVA being paid off in full at the end of a
five year term.
Debt consolidation information is
available on the way that an IVA is conducted, which is always by a
qualified insolvency practitioner (as opposed to a salesman who
simply gets the debtor to sign a loan document and then takes the
commission). The IVA is a legal agreement between the debtor and his
or her creditors. The terms must be strictly adhered to, which is
why the insolvency practitioner has to look closely at the income
and expenditure of the client.
At the start of the IVA up to
seventy percent of the total debt is written off completely. After
that the debts are divided equally between the creditors and added
up to an amalgamated lump sum to be payable every month. This
usually needs to be at least £180 and the client needs to have an
income to meet this as well as other normal expenses. The insolvency
practitioner will use the debt consolidation information to work all
this out. After this plan has been put in place it is a legally
binding agreement.
From that point none of the
creditors is allowed to threaten the debtor again. In fact, no
contact between the creditor and debtor is allowed at all. After
five years (six years in Scotland) and assuming that the agreed sum
has been paid regularly and on time every month, the debt is assumed
to have been settled and the client or debtor starts off with a
clean slate.
The
best debt consolidation information is to be obtained from a
professional insolvency practitioner firm; they should be able to
negotiate with your creditors so as to give you the best possible
deal (that is, to reduce the overall debt at the start of the plan
by the highest possible amount). After the agreed term you will be
back on your feet again with no damage done, no increased debt due
to taking out yet another loan, and with the roof still over your
head.
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