National Debtline Alternatives tro Bankruptcy

http://www.nationaldebtline.co.uk/

Alternatives to bankruptcy

Individual voluntary arrangements

An individual voluntary arrangement (IVA) is a formal arrangement to repay your creditors part of what you owe and can be a way of avoiding bankruptcy. You need to be able to raise a lump sum to pay the creditors or to make regular payments from your income to your creditors.
To arrange one you need to find an insolvency practitioner prepared to work for you. The insolvency practitioner prepares a proposal to put forward to your creditors. If the creditors who are owed 75% in value of your debts, who choose to vote, agree to accept the proposal then the IVA is put in place.

Information

An IVA will usually last for three to five years. If the arrangement is not kept to, the insolvency practitioner or your creditors can apply for a bankruptcy order to be made instead.

Insolvency practitioners’ fees can be expensive and they will usually want some payment in advance. It is worth asking them for an initial free meeting to discuss whether an IVA is appropriate.

Information

If you are interested in setting up an IVA, phone us for advice. We may be able to refer you on to an insolvency practitioner from a list of providers that have agreed to follow special guidelines (called the ‘IVA protocol’) from the Insolvency Service. We will be able to discuss an IVA with you, as well as advising you on what other options you may have for dealing with your debts.

Warning

Be careful of companies who offer to put you in touch with an insolvency practitioner for an up-front fee. You can contact an insolvency practitioner yourself without paying a fee to a third party.

Fact sheet

We have a fact sheet on ‘Individual voluntary arrangements’ which may be of assistance to you. Phone us for a copy.

Fast track individual voluntary arrangements (FTVA)

Even if you have been made bankrupt it is still possible to have a special form of IVA called a fast track individual voluntary arrangement (FTVA). If you get a FTVA it means your bankruptcy order can be reversed (or annulled). You have to put forward a payment proposal to your creditors through your official receiver that would mean they will be paid more than they would under your bankruptcy.
The official receiver runs the FTVA for you if it is set up. The FTVA is cheaper then an ordinary IVA as there are set fees and costs. If it fails then your creditors could try to make you bankrupt again.

Warning

You need to carefully weigh up the advantages and disadvantages of asking for an FTVA. Phone us for advice.

Debt relief orders

A debt relief order (DRO) is a new way of dealing with your debts. A DRO may be able to help you if you do not own your home, have assets worth less than £300 in total, and have less than £50 a month spare income to pay your creditors. Your total debts must be under £15,000.
If your DRO application is successful then most of your creditors will be unable to take action to recover your debts for 12 months. The debts are then written off after the 12 months are up.

Fact sheet

We have a fact sheet on ‘Debt relief orders’ which may be of assistance to you. Phone us for a copy.

Informal arrangements and debt management plans

If bankruptcy or an IVA are not suitable options you may be able to make informal arrangements with your creditors. Our self-help pack ‘Dealing with your debts’ goes through how to negotiate with your creditors. If you have not had a copy of our pack, phone us for advice.
If you would like an organisation to act on your behalf to negotiate affordable payments you might want to consider a free debt management plan (DMP). This is a repayment schedule for unsecured debts.

Fact sheet

We have a fact sheet on ‘Debt management plans’ which explains more about this. Phone us for a copy.

My Money Steps

My Money Steps is a secure and confidential online debt advice service that is available from the National Debtline website www.nationaldebtline.co.uk. If you would like to use My Money Steps you will need to enter some details about your circumstances, including your income and expenditure. My Money Steps can help you to work out a budget and give you personalised advice about what options you might want to consider to help you deal with your debts.