ARE THERE ALTERNATIVES TO BANKRUPTCY?
Though many people petition for bankruptcy
to deal with their debts, just as many shy
away from bankruptcy and consider other solutions
to straightening out their debt problem.
There are a number of different strategies
for handling debt. For starters, contact your
creditor(s), ask for their cooperation, and
try to work out different payment arrangements
or options. For example, if you are snowed
by credit card debt, get in touch with the
company, explain the situation, and ask to
temporarily reduce your minimum monthly payments,
waive late charges, and extend the payment
period – with smaller payments at “no” interest.
A second recommendation is to turn to the
Citizens Advice Bureau, a nationwide non-profit
organisation that will work with you and your
creditors to devise a more manageable repayment
plan suited to your finances.
A third might be to sell any of your assets
that have a resale value and apply the proceeds
to your debt. Any balance due can be negotiated
with the creditor.
Of course, the solution may be to enter into
an Individual Voluntary Arrangement (“IVA”).
This is a process very similar in terms to
the CVA outlined above. This is a procedure
sanctioned by the Courts whereby an IP is
appointed to supervise an arrangement with
your creditors. This arrangement could be
one which could last for anything up to five
years. It may make provision such that only
a percentage of the debt is eventually paid
or that the debt is repaid albeit over a much
longer period. The IVA procedure is discussed
in more detail below.
Finally, another solution is to consolidate
all outstanding debts into a single loan (often
through credit card balance transfers and
home equity loans). This approach relieves
you of being saddled with debt from multiple
creditors, since you will be making payments
only to one lender. |
