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Is Bankruptcy The Right Solution?

I’ve heard a lot of talk recently about whether bankruptcy is the best solution to dire financial situations. It’s a big decision for anyone to take and not one that should be considered flippantly.  Bankruptcy will effectively “wipe the slate clean” and allow you to start anew.

There are other options to bankruptcy including IVAs (Individual Voluntary Arrangements). Last week I had an opportunity to watch daytime television and was astounded at the number of companies offering IVA solutions to debt problems. My main concern with this mass media marketing is how much will an individual end up paying to the administrator of the IVA. How much of the fees paid are actually paying for advertising and marketing rather than helping an individual make the right decision about their financial future?

Bankruptcy and IVAs both have pros and cons. There are two main deciding factors that an individual needs to consider. Firstly, “How long am I prepared to remain in this financial arrangement?” and secondly, “Will all my creditors accept an offer if I propose an IVA?”. A typical bankruptcy arrangement will last for around 12 months. An IVA can last up to five years. Both affect an individual’s credit rating during the period and will also remain as a note on their credit history for up to six years following the completion of the bankruptcy or IVA.

Both options will incur fees. I recently wrote about the new costs to declaring yourself bankrupt which can add up to in excess of £600 in up front charges. The costs of an IVA are dependent on who administers the IVA - many can be quite excessive which is why I am concerned with the number of advertisers on daytime television.

If you’ve found yourself in a position where you need to consider either bankruptcy or an IVA, don’t hesitate to contact one of our advisors here at StMatthew. We can help you find the right debt management solution to suit your needs.


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