The alternatives to bankruptcy

Advice and Guidance on the Alternative Options to

Consumers living in the post-credit crunch world are coming to realize that filing for bankruptcy is not quite as damaging as is generally believed.Chapter 13 filings allow debtors to pay off their loans over an extended period of time, leaving them with a more attractive credit score over the long term. The filing remains on the credit report for seven years, during which the lender can begin rebuilding a cleaner history with a blank slate to begin from. Chapter 7 bankruptcy is an extreme solution that leaves debtors without the need to repay debt. To balance out the advantages, this kind of bankruptcy leaves a black mark on credit reports for ten years, but it is not impossible to reconstruct an attractively low score given time and effort. While bankruptcy does not leave debtors with a fatal financial prognosis for life, it is still advisable to consider options that are less damning.

Some debtors rely on the fact that they are judgment proof by not responding to their unpaid bills in any way. Those whose fixed assets don`t carry enough value to warrant seizure by lenders sometimes fall under the Judgment Debt Recovery Act, which is an order preventing lenders from forcing repayment of the debt. The cons of this option are twofold. Debt places a heavy emotional load on people and the stress attached is usually quickly negated by any proactive action. Choosing to use the umbrella of the Judgment Recovery Act does not come with permanent security. As soon as finances improve, the debtor will be required to pay the debt. The most strategic and positive way to use the Act is by structuring separate accounts according to priority and paying them off in a tactically sound way that minimizes principle interest and motivates further repayment. Ignoring a financial problem is seldom useful, particularly when it leaves the consumer overburdened by the anxiety attached to leaving the debt problem to stagnate.

Administration Orders

Administration orders offer debtors the emotional, practical and financial support of a controlled repayment plan. Those who are facing aggressive creditors can lighten the load by obtaining an admin order that prevents creditors from taking action to recoup the debt. To further support this solution, the county court accepts monthly repayment funds and distributes them to creditors on your behalf. The impact of gaining a sense of accountability should not be underestimated. The fight against debt is heavily weighed by the motivation and stress levels of the debtor. A sense of responsibility toward the court helps you to focus your energy on simpler repayment goals. Because creditors cannot take legal action to recoup debts from someone who has an administration order, this option is often called a mini bankruptcy, yet it does demand a sense of responsibility of lenders. If monthly payments are missed, the order will be removed, leaving you exposed to judgments and seizures.

Individual Voluntary Arrangements

IVAs are used to legally structure more manageable repayment plans. They are legally binding and can be a useful response for those facing a repayment demand. This option is used specifically to avoid bankruptcy filing and allows debtors to repay some of their debts over a set period of time. Once that term is over, creditors write off any debt that has not yet been paid.IVAs generally have to be structured rapidly since they are usually used to prevent creditors from beginning bankruptcy proceedings. Despite the fact that they are usually arranged in a hurry, they are open to flexibility and are best tailored to the individual`s unique repayment needs.  Bankruptcy Advice Service  can help to negotiate an interim order and to structure negotiations according to a repayment plan that suits both the creditor and debtor best. Repayments made under IVAs are supervised, which offers a high level of accountability to motivate consistent payments. They also give debtors the freedom to manage their fixed assets according to their own preferences.


About Kris Miller

For the past 20 years, my clients have relied on me as a PREtirement and living trust expert. I’ve become known as The Money Maestro, Credentials for Kris Miller, ChFEBS, CSA, LDA Certified Senior Advisor and Estate Planning Specialist for more than 20 years Charted Federal Employee Benefit Specialist Licensed Legal Document Assistant (Paralegal in California) Licensed to offer life insurance and long-term care insurance (State of California and Tennessee) Owner of Trusts Unlimited and The Living Trust Institute, a legal and financial document preparation service Member, Society of Senior Advisors Member, National Speakers Association Experienced speaker offering keynotes, seminars, and workshops on retirement and estate planning throughout the United States Nominated as 2010 Woman of the Year and best Customer Service by the Hemet, California, Chamber of Commerce Nominee and winner in three categories in the National American Country Music Awards and Inspirational Country Music Awards for songwriting (2008, 2009, 2010) Nominated Inspirational Music’s Songwriter of the Year
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