Sarah Ferguson and others in severe debt can consider an IVA!
Not long ago the Duchess of York, Sarah Ferguson, was in the global news for a mistake she made in negotiating access to her ex-husband, Prince Andrew, for 27,000 pounds in cash.
It was later revealed that she was strapped for funds and might need to consider bankruptcy. However, she like others in her situation could consider a less drastic option known as Individual Voluntary Arrangement (IVA) to deal with debt.
Bankruptcy involves a court order and wipes the slate clean, clearing all obligations of debt within a year’s time. The debtor is faced with restrictions after the bankruptcy order. The IVA can take up to five years to clear debt but there is no court order involved.
IVA’s are becoming more common with the economy leaving so many in financial hardships. Should interest rates rise there are millions that will find it difficult to afford their mortgage without falling behind on other debt. Last year there were almost 75,000 bankruptcy orders issued and 47,640 IVAs.
The latest economic forecast by Andrew Lilico, chief economist with Property Exchange, is that the standard base interest rate will be going up to 8 per cent by 2012. While this may or may not happen, the release of his expectations for the economy, which also included a double dip recession in early 2011, has pushed many to start facing that it may be a long while before things in the economy get better.
Many will face financial hardships in the days ahead, and it is important for those in severe debt, even Sarah Ferguson, to realize that there is an option like an IVA as an alternative to bankruptcy.
Paul Morrissey is a classic case of someone in the public eye entering into an iva. Rather than go bankrupt, Paul took the option of an iva to ensure that his creditors got some money back. For many it is a less drastic and perhaps more ethical choice.