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The Legal Alternatives To Bankruptcy

By Edward Woodwards

If you are considering declaring bankruptcy, or you think that this is the only feasible course of action for you, you should think again. There are legal alternatives to bankruptcy that you should carefully consider.

You can apply to a county court for an administrative order. If the court grants you an administrative order, your creditors will be stopped from taking any legal action against you or threatening with legal action. With an administrative order, you will be making monthly payments directly to the court. The court staff will divide the payments and pay off your debts in the proportions of the money you owe them. An administrative order will stop your creditors from applying any further charges or interest to your debt. You can apply for an administrative order, if you have;

* At least two debts * Debt amount that totals to less than 5,000 * At least one high court or county court order against you.

You will need to complete the N92 form to apply for an administrative order. Once your debts are cleared, you can apply for a certificate of satisfaction from the court. You have to diligently make the due payments to the court or the administrative order can be revoked by the court.

The county court judge may decide to make a composition order as part of the administrative order. This will only be possible if the judge feels that you cannot repay your accumulated debts in full. In this, a portion of your debts will be written off. A composition order will only be made if the judge feels that you will not be able to repay your debts in the normal period, which is three years. One or more of your creditors can oppose a composition order. A composition order is made if the applicant is an elderly person, ill, single parent or a disabled person.

You can also apply for Individual Voluntary Arrangements (IVA). If you get a written notice, asking you to arrange an acceptable repayment schedule within 21 days and if you have a source of income and can repay your debts over time, you can apply for an IVA. To apply for an IVA, you will need to get the services of an insolvency practitioner. If you do not know one, you can ask a debt advisor to recommend one.

An Individual Voluntary Arrangement is a legal binding agreement between you and your creditors. The insolvency practitioner reaches an agreement, which is acceptable to you and your creditors. Seventy-five percent of your creditors must accept the proposed terms and the remaining twenty-five percent will have to abide by it. If you owe ten thousand pounds, out of which you owe one creditor five thousand pounds, he will make up fifty percent of your debts. Your creditors will carefully consider the terms proposed. If they feel they stand to gain more than if you had applied for bankruptcy, they will be more willing to accept the IVA agreement.

In an IVA, you may not lose your home, but if your debts are very large, some of the creditors may become part owners of your home. This will only happen in extreme circumstances. You have to consider all the legal alternatives carefully before you opt for applying for bankruptcy.

You can take a professional’s iva help and get advice to solve debt problems.

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Article Citation
MLA Style Citation:
Woodwards, Edward "The Legal Alternatives To Bankruptcy." The Legal Alternatives To Bankruptcy. 3 Jul. 2010. 30 Sep 2014 <>.

APA Style Citation:
Woodwards, E (2010, July 3). The Legal Alternatives To Bankruptcy. Retrieved September 30, 2014, from

Chicago Style Citation:
Woodwards, Edward "The Legal Alternatives To Bankruptcy"

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