Bankruptcy is something that is entered in to when a person cannot pay his or her debts. It means all the debts are written off. Sounds good right? Well it’s not that simple and there are many consequences. Individual Voluntary Arrangements were introduced under the Insolvency Act in 1986. They are considered an alternative form of bankruptcy but the consequences may not be as detrimental. They do, however, come with their own issues.

One of the biggest consequences of bankruptcy is the loss of control it brings. If you declare yourself bankrupt you will lose control of all of your assets. You will also be unable to get any credit over £250.

Individual Voluntary Arrangements (or IVAs as they are known) are an alternative to bankruptcy. Unlike bankruptcy IVAs are not made public. The agreement is made privately between the person in debt and those that they owe. Also, a person who has entered into an IVA is able to keep their job if they head up a company. However if you do enter into an IVA then you will lose control of your finances in that you must follow a strict budget and you are unable to get credit.

Both bankruptcy and IVAs are serious financial commitments and neither should be entered into lightly. If you are in debt then you should contact a debt counselor. He or she will be able to tell you whether either an IVA or declaring yourself bankrupt are the right options for you but they should never be seen as the easy way out. However if they are the only options then they can be beneficial so should not be overlooked due to social stigma.

IVA’s (Individual Voluntary Arrangements), are an increasingly popular way for those with financial difficulties to solve their debt worries.

Just because you have filed for bankruptcy, you should not give up on your dreams of owning your own home. There are mortgage companies that will give you a home loan after bankruptcy. These lenders specialize in bankruptcy home loans and work with people in most any financial situation. Most bankruptcy home loan companies require that you have a minimum of 500 on your credit score. If you fall in this category, these lenders will work hard to customize a home loan that will work for your individual needs.

* If you are seeking a home loan after bankruptcy, you should know you will only be eligible for 80% financing. This means that you must come up with the remaining 20% and it will be used as your down payment.

* You should know that your debt to income ration will need to fall within the 45-50% range when you are seeking a bankruptcy home loan.

* Lastly, you should know that the interest rate on your loan will be higher than a typical mortgage.  However, do not let this stop you from purchasing a home. As time passes and your credit rating improves, you can refinance your home for a lower interest rate.

Everyone dreams of owning their own home, just because you have been declared bankrupt in the past there is no reason to stop dreaming.Your past mistakes should not affect the living situation of your children for the next eight years. There are now many mortgage lenders who are reaching out and offering individuals who have filed bankruptcy a way to purchase their own home. No one wants to see a family of four living in a cramped, two-bedroom apartment. Do not feel that that your bankruptcy has backed you into a corner and that you have no other option but to rent. That is no longer true, you can turn that rent money into an investment for your future.

Bankruptcy or economic failure is an officially declared term defining the failure or impairment of organizations or individuals to pay off their debts. The legal formalities approve creditors to file a bankruptcy petition against debtors in an effort to recover the debt.
In several cases, debtors start bankruptcy formalities called voluntary bankruptcy filed by the bankrupt organizations or bankrupt individuals.
In the Older Testament of Hebrew Scriptures and the Bible, Moses Laws advised that one Jubilee Year or Holy Year need to take place every half century, after the elimination of all debts among Jews and after the release of all debt-slaves.
Bankruptcy in the United States:
In the United States, bankruptcy is a subject placed under the Federal Jurisdiction by the United States Constitution (Article 1, Section 8, Clause 4), which permits the legislative body to ordain standardized laws on the topic of bankruptcies across the United States.
Its execution is however, seen in ruling law. The appropriate legislative acts are integrated within the Bankruptcy Code, sited at Title 11 of the United States Code. The state law overdraws these acts in several places, where federal law either fails to act or specifically remits the state law.
Usually, lawyers file economic failure cases in the United States Bankruptcy Court, which is an association of the U.S. District Courts. Numerous insolvency cases, specifically in terms of validity of exemptions and claims mainly depend on State law. Therefore, State law plays a vital role in various insolvency cases. In addition, it is many times impossible to simplify insolvency law across various states of America.
Chapters:
There are six types of insolvencies under the Bankruptcy Code in the Unite States:
Chapter 7: This is a type of basic liquidation for businesses and individuals
Chapter 9: Civil economic failure
Chapter 11: Reorganization or rehabilitation, used mainly by corporate debtors, but is sometimes also used by individuals with huge assets and debts
Chapter 12: Rehabilitation chapter for fishermen and family farmers
Chapter 13: It is a rehabilitation chapter with a payment plan for people having normal income source
Chapter 15: It is an economic failure chapter for subsidiary and other global cases.
The most regular types of personal economic failure filings in the U.S. are Chapter 13 and Chapter 7. A national report revealed that around 65% of all U.S. consumer filings appear under Chapter 7. Organizations and other business classes file under Chapter 11 or Chapter 7.
Common Insolvency Chapters in the United States:
Chapter 7
Chapter 7 claims for deals with consumer economic failure. Here, people lack adequate funds to pay off their creditors. It then gives such debtors certain time to solve this problem and to help them pacify their creditors. Here, the entire property of a debtor goes into the custody of bankruptcy trustee. The trustee ensues to transform the property into cash and after liquidating the entire property into cash, the trustee then distributes funds to creditors to clear all debts.
Chapter 13
In various insolvency cases, creditors try to push debtors to pay them. This type of recovery may include harassment through phone calls or through personal visits. Chapter 13 insolvency code is the best way for debtors to avoid such harassment. This chapter allows a court to keep an eye on the progress of debt payment by a debtor and on recovering activities of creditors.
Chapter 11
Here, debtors regain control and ownership of their assets and are called ‘debtor in possession’ (DIP). Creditors and debtors work with the Bankruptcy Court to negotiate on the debt amount. If a negotiated plan is confirmed, then debtor continues to operate and pay the debts under conditions agreed in that confirmed plan.

IVA service is started by the insolvency act 1986 as an alternate option to bankruptcy. This is a legally binding agreement and the debtors make proposal for the creditors to solve the debt problem.

After the contract is signed it becomes the duty of the company to help you to be out of debt. There are companies who ask you to opt for IVA even if you do not need it. As these contracts stays for few years it is important to select the company carefully. You must choose the company which specialises in this and is experienced enough to handle any situation.

The advices you are offered should be impartial. Debtors and the creditor’s perspectives should be given equal importance. The company must have valid license and aware of the regulations. Advisors and insolvency practitioners of the company should be experienced.

After you sign contract, you are given an insolvency practitioner. This practitioner negotiates with your creditors on your behalf. There are many plans from which the practitioner chooses any one which suits you the best. All this is done on the basis of your debts. Debt consolidation, lump sum payment and monthly payment are some of the option. It generally takes 5 years to clear all the debts. In most cases 75% of the total debt is cut off and the rest is paid in 5 years. Some take consolidation loans and repay all the previous debts. This helps the debtor to pay single payments to a single lender.

To avail the IVA services your minimum debts should be £15000. The minimum number of lenders required for this is 3-4 lenders. You should be able to repay 30% of your debts.

You can search for IVA companies through internet. A good research can get you the best option. It is necessary to look for licensed, experienced and honest practitioners.

Many people are facing the possibility of filing for bankruptcy. Sadly, many people who are in this position have been given bad or poorly explained credit advice and are wondering if there are any other alternatives to going down the bankruptcy road. There are options available to keep your good name and pay your debts.
Should I avoid Bankruptcy?
To begin with, filing for bankruptcy is a personal decision and one that can only be made by the individual in debt. Although only the individual can make this decision, there are people or companies out there that will discuss options and help debtors come to an educated decision whether to file for bankruptcy or to avoid it. A non-profit organization is the best avenue. Beware of companies charging outrageous fees for their services, as often they are only interested in making money from those in dire financial straits.
Often creditors harass those who are facing financial ruin to make their payments, this is because that is the only weapon they have. These threats can further add to a debtor’s confusion and stress. There are some simple things to keep in mind about debtors and who you should be paying first and who can wait. Make a priority list of the debts you should be concentrating on. Depending on your situation, if you want to keep your home and main vehicle, than you should concentrate on these two debts over your credit card or medical bills.
There is a good reason for choosing to pay other bills over medical and credit card debts. In order to take property from a debtor in the form of assets or possessions, these creditors must first take a debtor to court before they can take their property or possessions. Debts such as fines, alimony, child support, income taxes and student loans on the other hand don’t need to go through this process. By filing for bankruptcy it is likely these debts will still remain.
Trying to get creditors to give you a break should not be the deciding factor in choosing to go down the bankruptcy road. Even though this approach may bring temporary relief from lawsuits and arguments with creditors, bankruptcy is only a short term solution. Once bankruptcy has been filed the person will be no better off than they were before. In hindsight, by avoiding bankruptcy, a person can sort out their affairs and come out a little better off than if they had chosen to file for bankruptcy.
Debt Management, How can I avoid Bankruptcy?
One of the first methods that should be used when trying to manage debt is to contact the people that you owe money to, for instance, financial institutions and credit card departments. Explain your current situation to them and see if an arrangement can be made to reduce your payments or waive late fees until you have caught up on payments.
If this fails, don’t be afraid to use the power of a good threat. Write letters to all of the creditors that money is owed to and tell them that you are likely to have to file for bankruptcy. Often the companies will try to work something out with their debtors or take less money than go to the trouble of taking debtors to court or having the debt completely wiped out during bankruptcy.
Is A Consumer Credit Counseling Service The Answer For You?
Another way to avoid bankruptcy and work on better debt management is to find a good Consumer Credit Counseling Service. This service will usually be a non-profit organization that will work with you and your creditors to find a solution or a better payment plan that will suit your finances.
Keep in mind the CCC is good for quieting your creditors, removing late fees, and lowering interest payments. If you have an old debt that hasn’t been collected on for a while, you might want to contact an aggressive debt consolidation company. They maybe able to negotiate as much as 60% off your original debt.
By consolidating your debts into one loan you can reduce the number of creditors and fees that you will be responsible for. Be aware of the consolidation loan policies on transferring money from other sources to the loan, as this can sometimes be costly. Often it is possible to borrow against your home to pay debts in this manner, although this can be risky at times as you may face loosing your home if you can’t make the payments.
The other option that you may be able to exercise is to sell off your assets that have value and pay that amount off on your debts. This may seem like a difficult option, although, if you are filing for bankruptcy, it is likely you could loose all of your assets anyway.
Bankruptcy is a process that is best avoided. If a debtor does decide to file for bankruptcy, it should be because they are left with no other option. The debtor should also be aware of the debts that cannot be wiped out by the bankruptcy process, even then a debtor seeks the help of a Credit Counseling Service before proceeding.