personal insolvency advice

Personal Insolvency Alternatives

For many people considering personal insolvency there are a number of well founded financial alternatives available, each of which may allow the debtor to restructure unsecured debts without having to take the ultimate step of seeking bankruptcy protection.

For anyone with debt problems there are only two ways in which the debts can be restructured; either by borrowing money from a bank or against equity in a property, or by undertaking fundamental debts restructures. Assuming that it is no longer possible for the debtor to restructure debts by way of further borrowings then, short of applying for a personal bankruptcy, the debtor will need to avail himself of one of the following options. Which option is chosen depends to a large extent on the severity of the debt problem (how much debt is actually owed) and upon the debtors ability to repay the debt within a given timeframe.

Individual Voluntary Arrangement (IVA)

Any debtor owing more than £15,000 in unsecured debts has the opportunity to apply for an IVA. Assuming that the debtor qualifies then this is very likely to remove major debt problems without the stigma of personal insolvency or bankruptcy.

Personal is part of a Group which specialises in the preparation and completion of IVAs. We have many years legal and accounting experience in the field of personal insolvency and complete 1000’s of these arrangements each year. Many people have heard of IVA’s but do not fully understand just how a person with overwhelming debt problems can utilise this little known government legislation to permanently remove these debts. Subject to actually qualifying for an IVA and our obtaining creditor approval, you could take advantage of the following -:

  • One single monthly payment to cover all your debt repayments.
  • The monthly payment to be affordable without further borrowing.
  • An agreement fixed to a maximum of 60 month.
  • The agreement will stop further interest and charges.
  • An amount of your debt will usually be written off at the end of the IVA.
  • Bankruptcy is avoided and your home protected.

An IVA is a new agreement between you and all of your unsecured creditors to make a revised monthly payment in satisfaction of all your previous debt obligations for a period of 60 months. Approximately 10% of IVAs actually last less than the 60 month period. An IVA is totally private, unlike a bankruptcy where your name is announced in the local press, no one else need know about your financial situation.

Once the IVA is approved by creditors, you will have complete protection from your creditors taking further action against you for recovery of the debt, as long as you continue to make the IVA contract payments. Once you have made the final IVA payment, any debt not repaid is then cancelled and you will be able to walk away completely debt free.

It is vital that you fully understand exactly how an IVA works and your legal obligations should you decide to apply for this form of debt restructure. It is also of the utmost importance that you are fully aware of the different types of company operating in the debt marketplace. Only a Licensed Insolvency Practitioner can actually put together an IVA. There are many “middlemen” type companies in the UK who can advise on IVAs but are NOT allowed to complete them. Normally these middlemen offer “an introduction to an IVA” and will want some kind of upfront fee from you. The upfront fees are either directly mentioned (ie “you pay us £1000 and then we will introduce you to an Insolvency Practitioner” or more subtly , “just sign this Direct Debit for your IVA repayments now before you get your IVA approved and we can then start taking payments early”!!!) Whichever type of company you decide to handle your IVA DO NOT sign up to anything which means you paying over one penny before your IVA is fuly approved. Our Group of Insolvency Practitioners do not charge you a penny; any spare money you have each month until your IVA is approved should be equitably distributed between your unsecured creditors.

If you want more information on how an IVA can help you gain complete freedom from debt and consolidate your debt problems then please call us on 0800 043 50 43 or complete our enquiry form and let us advise you properly.

Debt Management

Debt Management is a highly flexible arrangement to help people with debt problems but this flexibility also means the creditors can change their mind in the future.

Debt Management is a generic term often used to cover the whole consumer debt industry. If you have debts and cannot manage them your self then you will need someone to operate a Debt Management Plan for you. There are many types of organisation in the UK offering various types of debt management offering. The debtor should always bear in mind that there is always a cost associated with dealing with any type of debt management Company.

You should always ask yourself the following questions :

  • Am I being charged any upfront fees? Normally the debt management company will seek to retain the first payment you make as part of its initial set up fee.
  • Does the Debt Management Company state it definitely will get interest and charges stopped? (not usually possible in the short term)
  • How long will it now take me to pay off my debts? The repayment term will actually increase in the short term as creditors add interest and charges to the debt.
  • What is the monthly debt management fee charged by the company? If you want your debts handled a third party company then you will pay a fee of approx 15% per month. The fee comes out of the monthly payment you make.

There are many circumstances where a debt management arrangement may be the most appropriate debt solution to a client’s debt problem. However if you have more than £15,000 debts then an Individual Voluntary Arrangement may be more suitable.

Even if you are currently in a Debt Management Plan it is still not be too late to act to get your debt problems resolved in a shorter timescale without any interest and charges being applied. Personal receives many calls each year from people in debt management plans who wish to swap over to an IVA.

If you are in any doubt as to which debt option best suits your particular circumstances then Personal is able to advise upon AND complete the most appropriate solution upon your behalf.

Contact us now on 0800 043 50 43 or complete the enquiry form for an immediate opinion. It could save you a lot of time and money.

Administration Orders

An Administration Order is a debt restructure which can only be approved by a formal Court order. The Court Order covers your outstanding debts in certain restricted circumstances only. Under an Administration Order you would make a single affordable monthly payment to the Court, who will administer the Order and distribute that money between your creditors until the debts are discharged.

For the duration of the Order no creditor, can take any action against you as you are now fully protected by the Court

Criteria for approval

Administration Orders only work in very restricted circumstances. You must have;

  • Less than £5,000 unsecured debts
  • Had at least one County Court Judgment against you
  • Owe the money to at least two different creditors

How to apply

You will need to obtain the relevant forms from your local County Court. Often your local Citizens Advice Bureau will be able to help you complete the form.

An Administration Order can only cover a single person, and where there are debts with a partner e.g. bank loans and Overdrafts, you will need to include the whole debt. If your partner is also within the criteria for an Administration Order then they must apply separately.

Urgent Enquiry Form

For free personal insolvency advice, without any obligation, complete our quick enquiry form. One of our professional advisors will contact you at a time convenient to you.

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