HELPING YOU THROUGH
As an individual having financial issues, we are sure we have a solution to suit your needs. So what are your options?
Sometimes Bankruptcy may be the best solution when faced with the burden of overwhelming debt. In order to make that decision, you need to carefully consider what other options are available and what the likely impact will be going forward. Many clients come to us with common misconceptions about Bankruptcy and part of our job is to dispel these myths and make sure you understand the facts. In recent years there have been a number of changes to the process and Bankruptcy is now a simpler and far less intimidating option.
Bankruptcy wipes the slate clean giving you a fresh start and opportunity to reorganise your financial commitments but the implications must be thoroughly understood. When a Bankruptcy Order is made your affairs are put in the hands of the Official Receiver or other Trustee in Bankruptcy, whose job is to determine any assets or excess income you may have and whether any funds can be realised, to repay your Creditors. There are legal restrictions on what can be taken from you and a Bankruptcy Order only applies to an individual not a couple so your spouse will not lose their assets.
Once the decision has been made, we will assist you to prepare your Petition and Statement of Affairs guiding you through the process, offering knowledgeable support in relation to bank accounts, pensions, investments and other assets, particularly the matrimonial home. Knowing the facts helps our clients prepare for the Bankruptcy process in addition to planning the future and rebuilding their credit status. Bankruptcy Orders usually last for one year.
There is always light at the end of the tunnel, and we can help you to plan a positive route out of your debt problems no matter how insurmountable they may seem. During what can be a stressful time, we are only ever a phone call away with friendly, practical advice.
IVA (Individual Voluntary Arrangement)
Careful consideration must be given to the merit of going the IVA route, it is not the quick fix solution as proffered by a number of people and often prolongs the agony and puts the Debtor into a far worse position than they were before.
The Insolvency Act of 1986 (amended by the Insolvency Act 2000 and the Enterprise Act 2002) introduced a new procedure whereby a Debtor could come to an arrangement with his/her Creditors to pay his/her debts in full or in part over time [usually 5 years], as an alternative to Bankruptcy. This arrangement is known as an Individual Voluntary Arrangement (IVA) and may be entered into either before or after a Bankruptcy Order has been made.
A proposal is drafted and served on a Nominee (an Insolvency Practitioner), which is then sent to all Creditors in respect of settlement of your debt. The proposal is based upon your assets, together with your income and expenditure. Most proposals now have a clause covering default of payments stating that the Supervisor will then present a Bankruptcy Petition. Also, a proposal may contain a clause in respect of any assets and monies that could be realised at the end of the term of the proposal. The sting in the tail is the requirement to realise equity against the matrimonial home in year 4/5 of the arrangement. Creditors vote to accept, accept with modifications, or decline the proposal. 75% of your Creditors in monetary terms need to approve your IVA for it to be successful.
Once the proposal is accepted you, the Debtor, will pay the agreed contributions to the Supervisor (normally on a monthly basis). If you fail to pay the agreed funds, the Supervisor may circulate to Creditors a “certificate of non-compliance” which states that the Debtor has defaulted, and the arrangement is at an end. These amounts are subject to periodic review with upward only increases.
IVAs have a serious impact on your credit rating, and can affect you for up to 11 years! Six years from the date of the approval, and then if you complete the IVA period the certificate of satisfaction stays on your credit file for a further six years.
This is not regulated by any Court or supervisory body. This is simply a proposal that we put to your Creditors on your behalf to repay, either in full or partially, over a period of time. Once we have the agreement from all Creditors you will make the monthly payments directly to Creditors yourself.
Full & Final Settlement
An alternative is for a full & final settlement agreement to be negotiated. In most circumstances the funds available to make the payment(s) are obtained from a third party such as a family member or similar. You will need to provide details of your income and expenditure, along with details of any realisable assets in order for the proposal to be produced and sent to your Creditors. Once the proposal is accepted by ALL Creditors immediate settlement can be made and you can “get on with your life”.