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IVA’s Explained
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stickystebee-16825If you ask the average man on street what an IVA is, he’ll likely say he’s heard of it, but then end up furrowing his brow in confusion, which is a common reaction. Many people are aware of something called an ‘IVA’ whether that’s from an advert or newspaper article, or daily life, but few are aware of the ins and outs of this financial term.First of all, IVA stands for Individual Voluntary Arrangement, and is basically an alternative for people who wish to avoid formal bankruptcy. An IVA for the most part is a process which only happens in the UK, and it was first introduced as a part of the insolvency act 1986, which set out amongst other things the governing of IVAs.What an IVA essentially does is set out a formal repayment plan for people who are in debt and facing bankruptcy, as an alternative to bankruptcy, and can be flexible in consideration of ones income and other such factors.There are many advantages to an IVA as opposed to beginning bankruptcy proceedings, the first of which is privacy. When an individual is declared bankrupt this information is published in their local newspaper and also in the London Gazette, a publication which has existed for centuries. However, debtors who are partaking in an IVA will have their details published on the online Personal Insolvency Register, much like those declared bankrupt.Another rather large advantage that an IVA offers over being declared bankrupt is the fact that debtors can both continue trading – those declared bankrupt are not allowed to act as the director of a company and must disclose the fact that they have been declared bankrupt when obtaining credit for self-employment reasons – and also obtain credit – those declared bankrupt are by definition restricted from obtaining credit, where those in an IVA are not.One disadvantage of an IVA however is the fact that an income based IVA can last up to 5 years, whereas a bankrupt individual can be discharged in under a year.
First of all,
IVA
stands for Individual Voluntary Arrangement, and is basically an alternative for people who wish to avoid formal bankruptcy. An
IVA
for the most part is a process which only happens in the UK, and it was first introduced as a part of the insolvency act 1986, which set out amongst other things the governing of IVAs.
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