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Bankruptcy Alternative
Before you actually apply for bankruptcy, there are a few bankruptcy alternatives that you might want to consider. Below are listed a few of these bankruptcy alternatives.
Family arrangement : This is essentially an informal agreement where by you can write to each of your creditors asking if you can reach a compromise regarding your repayments. However, since this is an informal arrangement, the disadvantage is that your creditors can later ignore it and ask you to pay up in full.
Individual Voluntary Arrangement (IVA):
This is a more formal version of the above arrangement. You can reach an agreement with your creditors, overseen by an insolvency practitioner. In this case, any agreement between you and your creditors will be legally binding on them.
Administration orders : This may work for you if your debts do not amount to more than £5,000. Administration is an arrangement between you and the courts, whereby you pay the court to pay towards the amounts you owe your creditors. It applies when your creditors have obtained a court judgment against you. The insolvency practitioners who work with you will charge a certain fee, so make sure you are aware before you engage their services. Ideally, you should set up an IVA before you actually go bankrupt. You will not be require to pay the usual fees charged to a bankrupt, however, so overall the IVA may be cheaper. You will also avoid the restrictions that would normally apply to a bankrupt.
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