Know Some Vital Truths About Bankruptcy!

By Author: Sadhana Dhanyal
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Being in debts can be a worrisome situation for anyone. This holds especially true if you have debts that outnumber your assets. It is a dangerous situation to be in. But the condition cannot get worse as you have numerous alternatives to choose from.

You could choose from debt consolidation, IVAs and bankruptcy. Let us examine each alternative one by one. Debt consolidation is something that can come to the help of those who have accumulated too many debts. If you have accumulated too many debts, you can resort to debt consolidation. This can help you consolidate multiple debts into one single loan. It can consolidate high paying debts into one single loan.

This has greatly helped many borrowers get rid of multiple loans. What debt consolidation does is that it helps borrowers consolidate multiple high paying debts into one single loan. It can bring down the higher paying loans considerably lower at a lower interest rate.

The next alternative to multiple loan problems is opting for Individual Voluntary Arrangements. IVAs, as they are popularly known as are an ideal way to reduce the burden of debts. ...
... An IVA is a legal agreement between the person in debt, all creditors to whom money is owed (banks, credit cards etc) and a Licensed Insolvency Practitioner. Basically, it is a legal process by which your unsecured creditors cannot pursue you for payment of your debts outside the agreement.

Moreover, in an Individual Voluntary Arrangement, you agree to pay a single, reduced, affordable, monthly payment, for a period between 3 and 5 years. After this period the unpaid part of the debt is written off by the creditors. This is considered to be a better alternative than filing for bankruptcy.

Chapter 13 Bankruptcy!

When a person files for bankruptcy under Chapter 13 of the Bankruptcy code, they intend to repay some or all the debts in their name, in better terms, i.e., lower or no interest. This process involves restructuring debts which allows the debtor to use whatever income they may have in future to pay off the creditors. This is very different from Chapter 7 of Bankruptcy wherein liquidation of assets is involved.

You can file for Chapter 13 of Bankruptcy if you are a debtor who has a regular income, and thus can afford to request for such adjustments or reductions. In this Chapter of Bankruptcy, debtors are allowed to keep all of their property, the court approves a new interest free plan for repayment. Herein, a written plan is created giving details of all the transactions that will occur, and the duration for the same.

Sadhana Dhanyal,content developer. For more information: Debt Management Loan


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