According to reports, the Government has agreed to create new arrangements to assist individuals who cannot pay their personal debts. Details of the scheme have yet to be released but are believed to be similar to the IVA scheme in the UK. IVA stands for individual voluntary arrangements.
Under the UK’s IVA scheme, an individual agrees to disclose their full level of indebtedness to all their creditors. An independent financial advisor makes a ruling on how much of the individual’s debts should be written off. This ruling is only binding however if creditors representing 75% of the total debts agree to it.
Key to this scheme is that these agreements do not involve the courts but remain legally binding. In avoiding the courts, the agreements are kept private and, if successful, avoid a person filing for bankruptcy.