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Bankruptcy is characterized by a state where everyone continuously struggles to maintain a standard of living whereby being in debt and hence financially ruined.
The western world faces this problem more than the underdeveloped world because the concept and utilization of credit is more common in the highly developed western world than in the underdeveloped countries.
Managing your debt is perhaps one of the most difficult tasks, especially when you have property at stake.
Due to the recent economic crisis, many countries have launched different debt management plans to help the people deal with their debts.
IVA is one such debt management plan launched and supported by the government in UK to help people get rid of their debt at affordable rates and possibly prevent repossession of their property.
IVA (Individual voluntary plan) is a debt management plan where the creditors agree to settle the debt with their debtors at affordable rates.
The IVA plan generally involves a careful assessment of the applicant's financial conditions, incomes, and expenditures, and then draws a draft plan for the repayment of the debt.
This draft plan is presented to the creditors and upon the approval of this plan by the creditors in an open meeting the debtor is allowed to pay off the debt at affordable rates in 60 months.
The affordable payment is decided by balance of the income less expenditures.
The creditors have the right to reject the plan and if more than 25% of the creditors reject the plan, the IVA is disapproved.
This plan is generally very beneficial for the debtor because in this the debtor gets a chance to repay the debt and save his property from repossession.
Creditors might also be attracted by this plan because in many cases they would not be able to recover any amount of debt from the debtor, and in such a case they get the opportunity to recover some amount of the debt and thus they might also approve of this debt management plan.
It is also possible to get reduction in interest rates, and the thus the overall debt is also reduced thereby giving the debtor a chance to repay the debt and regain control over his life.
Generally, this management plan is suitable for people with multiple debts as it will help them get rid of all those debts at reasonable monthly installments.
Other than IVA, there are many other debt management plans such as Debt consolidation loan which is granted to people who generally have multiple debts.
This is actually a loan obtained to pay back multiple loans in large instalments, and then the debtor has only one creditor to deal with and the repayment of this single loan is then done in reasonable monthly installments.
This may also help you in reducing interest rates by repaying multiple loans and thereby merge them into one single loan.
As there is only one loan, the interest would only be applied on this loan, and thus you would have to pay lesser amount over all interest.
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