There are many things that could have led to a person having so much debt that they couldn't pay it back with their current income. People could consider bankruptcy as an option because their finances are so bad that they have no way out. One option for someone who is having trouble paying their bills is to file for bankruptcy. If you can't sleep because of money problems, your creditors are bothering you, you've sold most of your property, and you're about to drown in debt, your last and only option is to file for bankruptcy.
Bankruptcy would seem to be the only way for a person to get out of all their money problems. Bankruptcy does give a person a chance to start over and wipe the slate clean as far as their debts go, but it also has long-term and far-reaching effects. A bankruptcy will stay on your credit report for at least 10 years, and because all bankruptcy proceedings have to be published in the London Gazette, everyone would know about your bad luck with money.
Before filing for bankruptcy to solve a financial problem, a debtor should look closely at the individual voluntary arrangement option. For this alternative to bankruptcy, you would need the help of a licenced insolvency practitioner, who is usually a lawyer or an accountant who knows how to deal with money and debt problems. The insolvency practitioner will work with the debtor to come up with an agreement or proposed payment plan. This will be sent to the creditors.
When asked, the court will give a "interim order." This order will make it impossible for a creditor to file for bankruptcy against the debtor without the court's permission. In an individual voluntary arrangement petition, an insolvency practitioner plays a very important role. The insolvency practitioner will meet with the debtor's creditors to talk about the terms of the individual voluntary arrangement on behalf of the debtor.
The insolvency practitioner will set up a meeting between the person who owes money and the people who owe money to them. It is very important that all of the creditors be at this meeting. Aside from talking and negotiating, a vote will be held on whether or not to accept the proposal. The terms of the proposal won't have any effect on creditors who weren't there and couldn't vote. After the proposal is accepted, it will still be up to the insolvency practitioner to keep an eye on the debtor and make sure that all monthly payments are made.
In an IVA, the person who owes money gets to decide what to do with his assets. He could sell all of his properties or keep some of them. In bankruptcy, however, the appointed trustee is in charge of selling off all of the debtor's assets.
People could avoid bankruptcy or an individual voluntary arrangement if they were more responsible with their money. A lot of people get into debt not because they don't make enough money, but because they spend money without thinking.
