Lasting Power Of Attorney
Lasting power of attorney is the name given to the legal process that transfers control of somebody's affairs to another individual. This extends to their property, finances and other assets. If an individual is in debt, they can often use debt solution programmes that involve giving over power of attorney to a court official. This person will then be in charge of arranging the individual's finances more efficiently and formulating a way in which to pay back any debts that are owed to lenders.
If you go down the route of declaring bankruptcy, you will need to hand your lasting power of attorney of your bank accounts and your assets over to a representative of the courts, referred to as a trustee. This person will then oversee the sale of your most expensive assets in order to contribute towards paying off your debts. The money made from the sales will to go directly to your lenders.
If you go down the path of an Individual Voluntary Arrangement, you will not be required to give up the lasting power of attorney.
The reason for this is that with an individual voluntary arrangement you are not legally compelled to sell on any of your assets to pay off your debts and therefore do not need someone to ensure that you do so.
What is an IVA?
An IVA is a form of debt management that allows you to come to an agreement with your lenders that allows you to extend the term of your loan and also lower the repayments. To set up this kind of arrangement you need to get in touch with an insolvency practitioner. Whilst this type of arrangement can be attractive, there are many risks associated with it that you should take into consideration before you sign up to one.
For more information on this, see our guide on Individual Voluntary Arrangements.