Does an IVA Have Any Kind Of Social Stigma?
There has always been a social stigma involved in declaring Bankruptcy. Amongst older people especially it is seen as the worst in financial failures. People assume that bankruptcy is a result of somebody not managing their money properly or making lots of unnecessary purchases and not really being very savvy financially. Most of the time this could be true, but sometimes it is not always the fault of the individual that they have ended up in such dire financial straits, but it could have been due to an emergency or something completely out of the individual’s hands.
A good bankruptcy alternative is to take out an IVA. This is an arrangement bound by law between a debtor and their creditors, and during this they repay a set amount for a certain agreed period of time, usually 5 years. They only repay what they can actually afford, and usually ends up being a lot less than the total amount that they owed. This still means that when the agreed time period is up, the creditors consider the debt paid fully.
But is there a social stigma attached to an IVA in the same way as bankruptcy?
To an extent, yes. It is still indicative of a financial failure in the eyes of many. And you probably wouldn’t feel comfortable seeking IVA advice from a group of friends in the pub, right? Essentially, it’s still a case of an individual being in more debt than he or she can handle. But on the other hand, unlike bankruptcies, IVAs are not reported in the local press. This is a huge weight off the shoulders of those involved and means that, other than you and your creditors, nobody even need know about it.
A lot of the social stigma is surrounding the perception that bankruptcy is “running away from your debts”. Bankruptcy means your debts will not get paid because you have no means with which to pay them. An IVA means that rather than getting swamped in the debt, the debtor pays back the maximum they can afford, and while less will be paid back they are still paying some.
Debt seems to be a bit of a taboo subject in general. An IVA has much less of a social stigma than bankruptcy, but as we know debt is a hard topic for us to talk about openly.
James Robinson is an expert in debt and iva advice
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