Bankruptcy as such is considered to be the last among the probable options that one can consider when one is in debt. As such there are quite a few options like reverse mortgages, credit counseling or out of court settlements with the creditors that one can go for rather than declaring bankruptcy depending on one's particular situation and financial status.
The most common alternative to bankruptcy is a formal agreement between the debtor and the creditors supervised by a trustee who is a licensed Insolvency Practitioner.
This arrangement known as a Trust Deed in Scotland and as Individual Voluntary Arrangement (IVA) in England is somewhat similar to the Chapter 13 bankruptcy in the US involving fixed monthly payments to be made to the creditors over a pre determined period of time usually 3 to 5 years the lapse of which all existing debts would be written off.
The whole procedure is private and involves discussions to decide the monthly amount in such a way that everyone's interests are protected. After a proposal is submitted to the court a creditors meeting is held during which the proposal put forward by the trustee and the client is put to the vote and accepted in case of 75% creditors giving approval.
The most common alternative to bankruptcy is a formal agreement between the debtor and the creditors supervised by a trustee who is a licensed Insolvency Practitioner.
This arrangement known as a Trust Deed in Scotland and as Individual Voluntary Arrangement (IVA) in England is somewhat similar to the Chapter 13 bankruptcy in the US involving fixed monthly payments to be made to the creditors over a pre determined period of time usually 3 to 5 years the lapse of which all existing debts would be written off.
The whole procedure is private and involves discussions to decide the monthly amount in such a way that everyone's interests are protected. After a proposal is submitted to the court a creditors meeting is held during which the proposal put forward by the trustee and the client is put to the vote and accepted in case of 75% creditors giving approval.
