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It’s hardly surprising that many people are in financial difficulty. Credit card companies and loan providers inundate us with adverts and offers for further credit. Once this credit is taken it only requires an unexpected lifestyle change (which results in loss of income) for debt to spiral out of control. Before you know it you are in financial difficulty and don’t know where to turn. The important thing to remember is that you are not alone. Financial problems are now a part of everyday life.
Our advice is to seek help as soon as your problems become apparent. It is often easier to find a solution earlier on, before any interest and charges are beyond your control. |
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We are able to advise on individual circumstances and, in many situations, we can help you try to resolve the problems. We can’t guarantee that this will be easy, but we do know that once you have faced your problems and a solution has been found, you will feel as though a weight has been lifted from your shoulders. |
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There are two main alternatives available for individuals. Depending on the amount of the debt and the availability of assets, we may be able to advise and assist you to prepare an Individual Voluntary Arrangement, alternatively, we can give you advice on bankruptcy and its effects. If this route is chosen, we can help you to file a debtor’s petition.
Some basic information on these formal procedures is given below. |
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Individual Voluntary Arrangements |
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This process enables an individual to offer his/her creditors a financial proposal in settlement of their debts. This proposal sets out the terms and conditions under which the debts are to be repaid, once accepted by a substantial majority of creditors (ie at least three quarters of them) it is a legally binding agreement. Although the proposal can be very flexible, creditors do expect the prospects of recovering money to be at least equal to that of bankruptcy, they will also expect sanctions if you fail to deliver.
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If viable, this option avoids the stigma and costs of bankruptcy, there is also no requirement for an individual voluntary arrangement to be advertised. The process is not easy and requires strong commitment from the individual but if successful they result in a better outcome for all involved. The first step is to prepare the proposal, this is often done with the help of a nominee, such as Gerald Davis of Heathcote & Coleman. Once prepared, the nominee drafts a report on the proposals made, these documents are submitted to the local County Court with an application for an Interim Order – once granted this puts a hold on all financial proceedings. A creditors meeting is then held and providing the creditors vote in favour the proposal is put in place and overseen by a supervisor. |
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Bankruptcy |
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Bankruptcy frees you from overwhelming debts in order that you may make a fresh start (subject to some restrictions) and ensures that your assets are shared out fairly amongst your creditors.
Bankruptcy proceedings are started by either a creditor (who is owed more than £750), an individual (debtor) or the supervisor of a failed voluntary arrangement. A Bankruptcy Petition is filed in court, following which a Bankruptcy Order is made. This is then advertised in the London Gazette and a local / national newspaper. |
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An Official Receiver is appointed to administer the bankruptcy and protect the debtor’s assets, he may also investigate the debtor’s financial affairs prior to bankruptcy. Depending on the assets available an Insolvency Practitioner (IP) may be appointed as trustee, he is then responsible for disposing of the assets and making payment to the creditors. Normally, a person is bankrupt for a period of 12 months.
As a bankrupt you are unable to obtain credit for a sum greater than £250, without informing the provider that you are an undischarged bankrupt. You may not act as a director and engage in a business in any name other than that which you were declared bankrupt, without disclosing the facts to anyone who enters into business with you.
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