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Personal Insolvency Becomes a Debt Relief Lifeguard

September 5, 2009 | Finance

Bankruptcy is normally the easiest way out to save yourself from being ravaged by creditors to settle your debt. But now it seems that people are turning to another measure of debt relief called personal insolvency. A person would avoid the unlikely scenario of being branded as bankrupt despite being employed under the agreement, a common practice that is being done in the UK. Over there, it is best known as IVA or Individual Voluntary Agreement.

Considering the hardships of being able to land a suitable income, it seems that this option is appealing. But the question is, would there be such a financial life vest available in other countries? For sure the UK and the U.S. have some sort of financial relief that will save the face of most people from being ruled a bankrupt individual. But the fact of the matter is on whether all countries have something similar.

Being branded bankrupt is not really a pretty sight. It can save you the burden of endless legal orders and of course being followed by creditors. And while all that seems to be a relief, remember that bankruptcy means that all your assets (current and fixed) will be used to pay off debts even if they are insufficient. In short, starting fresh has its own share of shortcomings and these are not something that you can smile about if you resort to bankruptcy.

So it seems that an Individual Voluntary Agreement is a better of the two. But what is it really all about? IVA is similar to issuing a fixed sum by check or through a written agreement to pay your creditors monthly for a span of 5 years. Once signed, your creditors agree to write off your debt. After 5 years, you can be debt free.

From that alone, it seems that an IVA is a better option. It will take a dent in your monthly income but after 60 months, your financial obligations are emptied. Of course there will be credit checks to determine how much you can actually pay. Who knows what could happen after 60 months? Maybe the economy will finally pick up and once again allow you to lead the normal life you had before all these financial mess started?

A lot of things can happen to brighten your financial status. But right now, the truth of the matter is that you have to act and settle the financial issues at hand. It is by no means going to be a bumpy ride as far as trying to get over the financial brick. But everything has to start somewhere. There are choices and one of them has to be done now to erase the stigma of your unlikely financial hole.