Are you facing financial insolvency? Filing for bankruptcy is not the best option to take unless there are no other alternatives available. The first thing to do is to evaluate the possible consequences that may arise if you will file financial failure. Considering bankruptcy involves a lot of things to consider including the procedure, terms and conditions as well as the criteria. The jurisdiction depends on the court that specializes bankruptcy. Likewise, you should also study the costs involved.
Using alternatives for bankruptcy can help you in getting out from your debt. But, make sure to select the option that suits best to your financial condition.
This is an order from the county court that allows you to pay your monthly dues to the court instead of paying straight to different creditors. The money you pay will be divided in proportion to each creditor that you owed. The good thing about this alternative is that your creditor will not be able to take further actions without the court’s permission. Likewise, the accumulation of charges or interest is also stop, thus you need not worry that your debt will increase.
Individual Voluntary Arrangements
Another alternative that you can take is the Individual Voluntary Arrangements of the IVA. It is a legal binding agreement taken amid you and the creditors. The agreement is usually within five years and after that grace period all the outstanding debt will be written off. If the creditor had served you statutory demand for payment, you should act immediately before your creditor forced you to bankruptcy. You should consider Individual Voluntary Arrangements especially if you have adequate fund to repay your creditors each month.
If you will apply for IVA, you need to consult a professional insolvency practitioner. An insolvency professional will help in preparing for the IVA proposal. In the same manner, considering IVA can only be possible if the creditors will agree.
Debt Relief Orders
A debt relief order or DRO is another option to consider if you have assets to keep, but little income. This shows that you are unable to pay your debts in a reasonable time. This alternative for bankruptcy is applicable for the following conditions:
- If the unsecured debts are lower than 15,000
- If the disposable monthly income is lower than 50
- The assets and savings are lower than 300
- If you do not own a home
Once you use DRO, your creditors will not be able collect payments and your debts will be written off after a year. Likewise, you are not allowed to pay directly to your creditors that are included in the DRO. However, you will be liable to pay for court fines, student loans and child supports because these are not included in the order’s list.
These alternatives can help you in resolving your debts instead of filing bankruptcy. Keep in mind that it is not the only option to take to save your business for bankruptcy at the same time saving your credibility and reputation.
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