The changes in UK legislature have made the option of declaring bankruptcy more lucrative to the people
. The bankrupt person is discharged from the bankruptcy status in a very short span of time. Automatically, a person is discharged from the bankruptcy status after a year, though most of the applicants remove the bankruptcy status within six to nine months.
Bankruptcy is the last option for a person weighed down by debts that he or she cannot pay back. This is mainly applicable to a person who doesnt have any regular income to pay back his or her debts. There are also other options available, to tackle the financial crisis due to debt. IVA is one such option. This option allows the applicant to retain his or her assets and make reduced, affordable repayment to the creditors for a specified period. After the living cost of the applicant is evaluated by the government, it arranges the rest of the income to be distributed to the creditors. The time period of IVA is generally five years. After this period, the remaining debt is written off and this is legally binding. However, a person without a minimum regular income is not suited to apply for IVA.
The other popular option besides bankruptcy is the DMP or Debt Management Plan. A DMP for a person is set up by private financial consulting Organizations. It is an informal way of settling the debts. This set up allows the applicant to make reduced payment. The payment is fixed keeping on mind what the person can afford. This system lasts until the debit is cleared or the income of the concerned person rises. DMP is not legally binding and the success of it depends on the acumen of the financial consulting Organizations. DMP is also not a viable option if the applicant doesnt have any regular income.
A sound debts advice is prescribed prior to declaring bankruptcy. A financial consultant is the best judge to provide tailor made solution to a persons financial problem. If bankruptcy is most suited to a persons need then the consultant can provide proper bankruptcy help. Trying to charter the waters of attaining bankruptcy without required guidance and help jeopardize the financial recovery and obtaining the bankruptcy itself.