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    "Read our... Quick guide to personal insolvency"

Personal insolvency:
Guide to personal insolvency

What does it mean to be insolvent?

A person is insolvent if he or she is unable to pay their debts when they become due.

Do I need insolvency advice?

The answer is YES, if any of these sound like you....

Stage 1: I'm struggling to keep up with the payments on my credit cards.

Stage 2: I've maxed out all my credit cards and I can't afford to repay them.

Stage 3: I'm scared to open letters from my bank or credit card companies.

Stage 4: I've received calls and/or letters from debt collection agencies.

Stage 5: I've had a County Court Judgement or decree made against me.

Stage 6: My creditors have petitioned for my bankruptcy.

Your first course of action should be to seek professional advice. The fact that you're here reading this is a good start. Whether you're at stage 1 or stage 6 we can still offer advice, but the earlier you contact us, the more options we will have.

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What are My Options?

In the absence of a change in your financial circumstances, there are only TWO legally binding formal insolvency options.

1. Agree an Individual Voluntary Arrangement (IVA).

2. Apply to go Bankrupt

1. Individual Voluntary Arrangements (IVAs):

What is an Individual voluntary arrangement (IVA)?

An Individual Voluntary Arrangement (IVA) is an alternative to personal bankruptcy in the form of a legally binding agreement between the individual and his/her creditors. The agreement will allow the debtor to make monthly payments in order to pay back their debt, or usually a portion of it over a set period of time (usually 5 years). Only an authorised Insolvency Practitioner can propose and act as nominee or supervisor of an IVA.

Do I need to meet with my Nominee?

A face to face meeting is preferable to formalise the IVA proposal. However, depending on the circumstances, attitude of the debtor and complexity of the case we may be able to offer virtual meetings if you prefer.

What debts can go into an IVA?

An IVA will only deal with unsecured debts, such as bank loans, credit cards, store cards and overdrafts. If an IVA is agreed by 75% or more (in value) of the creditors, the remaining unsecured creditors are bound to accept the terms of the agreement.

What about secured debts, my home?

Secured debt will remain outside of an IVA. If a secured asset. i.e. your home has more than enough equity to repay the unsecured creditors, they would most likely expect full or near full repayment over the term of the IVA to make the proposal attractive. Once an IVA is approved and if you comply to the terms, creditors will be prevented from taking legal actions to make you sell.

Do I need to pay for an IVA?

There is a cost to setting up an IVA, which is determined by the value and number of creditors. The fees are drawn from the IVA contributions; therefore, the creditors pay the fee out of the money that has been repaid.

Will my credit rating be affected?

An IVA will affect your credit rating for 6 years. This will begin from the start date of the IVA.

Will I lose my bank account if I enter an IVA?

Possibly, policy varies from bank to bank. If you have any outstanding credit agreements with the bank that provides the account, such as an overdraft, a credit card or a loan, those would need to be included in your IVA. As a result, they would often close your existing account and could offer you a 'more basic' account. If you have no outstanding credit agreement with your bank, they would not be formally informed about your IVA.

We have a dedicated team who can answer any other questions you may have. They'll talk you through the pros and cons based on your personal circumstances so you can make an informed decision.


0800 288 4088

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2. Bankruptcy

What is Bankruptcy?

Bankruptcy is a court-based insolvency procedure that writes off an individual's debts if they can't afford to repay them.

Will I be allowed to go bankrupt?

When you make a bankruptcy application, it has to be approved by the Insolvency Service's Adjudicator, who will look to determine that you are insolvent and that you reside in the UK. If this is the case that your bankruptcy will be approved, and the official receiver will be appointed to take control of your financial matters.

Will bankruptcy affect my job?

There are some jobs from which you a prohibited as a bankrupt. You cannot be a Member of Parliament or be the director of a company. For some professions - solicitors, accountants, financial advisers and other financial services, you may be prohibited by your professional body from practising whilst bankrupt. If you are in the police, need a security check or your employment contract states so, you must inform your employer if you go bankrupt.

A lot of people worry unnecessarily that their job could be at risk through bankruptcy. Unless you work in one of the areas mentioned above it is extremely unlikely that you will have any employment problems.

What happens to my mortgage and my house?

Your mortgage and any secured loans will be included in your bankruptcy. If you have vacated the property or been evicted by the lender, any shortfall after the property is sold will be a debt that is wiped out by your bankruptcy. If you continue paying your mortgage and secured loans your lenders will not repossess the property. If the property has equity, the official receiver will want to sell the property to repay debts. The OR has three years to decide what to do with your property. If there is no equity at the end of this time, the house will usually be returned to you.

What happens to my savings, possessions and any assets?

You will be required to list all your assets worth more than £500 on your bankruptcy application. These assets are usually sold to repay your creditors and sometimes the official receiver will return some of the funds to cover your living costs if you have no significant income.

You will lose any savings and investments (except your pension) even if they are very small, such as £25 in premium bonds.

The official receiver will not be interest in taking:

Tools of your trade, clothes, bedding, furniture, household equipment and other belongings that are necessary for your basic family needs (unless they are of unusual value). Your partner's item and your children's toys do not have to be listed and are not at risk.

As a rule, you should not give away or sell assets for less than they are worth before you go bankrupt. The official receiver can go back and overturn transactions up to 5 years in the past. If you have already done this unintentionally you should list the sale/gift on your bankruptcy application.

How long does Bankruptcy last?

Bankruptcy normally lasts for one year. After this time, you'll be 'discharged' from your bankruptcy regardless of how much is still owed. Your debts will then be completely cleared.

How do I apply for bankruptcy?

This can now only be done online at the portal. It costs £680 and you'll need to provide information about your income, outgoings and debts.

If you're in England or Wales apply here:

The process is different if you're in Scotland or Northern Ireland.


Northern Ireland:

We have a dedicated team who can answer any other questions you may have. They'll talk you through the pros and cons based on your personal circumstances so you can make an informed decision.


0800 288 4088

Call for FREE confidential advice now....

Contact Us

We have offices nationwide

Head Office - Norwich  London  Cambridge  Bristol

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  •  01603 883 443
  • 64-66 Westwick Street,
          Norwich, NR2 4SZ.

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