Something that concerns many individuals looking to get out of debt is how long their debt agreement will remain on their credit report.
When it comes to Personal Insolvency Agreements, it is important to know that bankruptcy falls into this category. Bankruptcy is a form of personal insolvency. Also falling into this category are Part X and Part IX Agreements. Because they are considered Personal Insolvency Agreements and they are listed on the National Personal Solvency Index forever, you will find that these agreements are listed on your credit report for a period of 7 years, just like a bankruptcy is.
Before trying to get out of debt with a Personal Insolvency Agreement, it is usually a good idea to exhaust other methods as well because the credit repercussions are not as severe.
But why does anyone choose to go with a Personal Insolvency Agreement to get out of debt when bankruptcy can clear them of their debt without having to repay it? Insolvency agreements consist of your creditors voting and a majority agreeing upon your proposal, which means you still have to repay the debt.
Well, bankruptcy has much more severe consequences with it. For example, you cannot have assets that exceed a certain amount. If you do, those assets will be taken away in order to satisfy the amount of the debt. There is also the fact that you cannot hold a prominent position within a company. You may not even be able to handle money within a business. If your existing job involves handling cash, you may not be able to continue that job. If you come into an inheritance, you could lose some of it. You may even have an issue with travelling outside of the country. You could have your passport revoked if you are bankrupt.
All of the consequences of bankruptcy may seem rather harsh, but the government has provided ways in which individuals can get out of debt without bankruptcy. These are the preferred methods. Although Personal Insolvency Agreements stay on your credit report for seven years like a bankruptcy does, they do not take away many of your freedoms, such as your ability to have an inheritance or travel outside of the country if you need to.
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