In the worst cases of coping with your debts, there are several ways to help you get through with it. It is sometimes unavoidable for a certain individual or group of individuals to reach time when they become incapable of paying their debts.
Rather that proclaim bankruptcy, a voluntary arrangement shows to be the best and the most appropriate way to resolve such a situation. Voluntary arrangements come in two forms- individual and company. But both agreements form a legal binding between the borrowers and the lenders until all debts are settled.
There are times for people to reach a certain moment where they become literally incapable of paying their debts and even just the interest that has been running for several hundred pounds. In these cases, there are two options that a person can consider- bankruptcy and voluntary arrangement. But in most cases, individual voluntary arrangements seem to be the most appropriate solution for this kind of cases. But what is an individual voluntary arrangement in the first place?
Voluntary arrangements are considered as legal arrangements between the borrower and the creditors. However, there are certain qualifications for an individual to become fit for an individual voluntary arrangement. This type of agreements is used only for huge debts. This is also only applicable for unsecured debts.
This means that mortgage loans are not viable for an individual voluntary arrangement as mortgages are secured debts. Another particular requirement to qualify for this kind of agreement is that a person should have at least a total of 15,000 pounds of unsecured debt and that you must be able to pay at least 200 pounds a month until the debts are settled.
Individual Voluntary Arrangements also legally binds the borrowers and the creditors for at least five years. Compared to bankruptcy, it only takes a year.
Whenever you have a salary increase within the period of the agreement, you are obliged to cover the additional fees for settling your debt. There are times that your creditors have legal rights of repossessing your property in case you fail to meet your payments. However, this only happens when the agreement does not specifically state otherwise.
For companies that face severe debt problems, they can apply for a company voluntary arrangement. This is often the resort of a lot of companies as the perfect alternative to liquidations. Voluntary arrangements are basically supervised by a Licensed Insolvency Practitioner.
The basic purpose of a voluntary arrangement is for the debtor to achieve a compromise with his lenders. This is a much better option than to experience all the disadvantages and consequences of bankruptcy.
It is through the help of a voluntary arrangement that a business may survive beyond bankruptcy. This kind of option does not necessarily mean the end for the business of an individual or a company.
A voluntary arrangement is a type of insolvency legislation and comes along with fixed charge receivership, administrative receivership, liquidation and phoenixism, company administration, and scheme of arrangement.