I will help minimise the impact insolvency may have on your financial affairs
There are times when, as an individual, the pressure of debt can make you feel that it is impossible to solve your financial problems. However, believe it or not there will always be a solution, although you may not like that solution. Our advice is always aimed at ensuring a fair outcome both for you as an individual and for your creditors.
Bankruptcy can be a straightforward way of dealing with your personal financial problems, but it should only be considered as a last resort when you have exhausted all other options and decided this is the best way to sort out your debts.
There are two routes into the formal legal process:
- Debtor’s petition – when you apply on-line to make yourself bankrupt rather than having it forced on you; or
- Creditor’s petition – when you owe over £5,000 to someone who then takes you to Court.
If the Court or bankruptcy adjudicator decides that you are insolvent, you will be declared bankrupt and the Official Receiver will immediately be appointed to deal with your bankruptcy. He is also known as your “trustee in bankruptcy”. Their job is to turn your assets into cash and pay off your creditors; this could mean selling your home, but it is not inevitable. An insolvency practitioner could be appointed as trustee in place of the Official Receiver at a later stage.
Until you are “discharged” from the bankruptcy – usually within 12 months – you are not allowed to do various things, the main ones being:
- obtain credit of more than a total of £500 without declaring that you are bankrupt;
- be a director of a limited company; or
- be involved in the promotion, formation or management of a limited company.
There are other restrictions, but these are the main ones.
I have many years of experience in dealing with personal insolvency matters and will be happy to advise you if bankruptcy is the most appropriate for your circumstances.
This operates in a similar way to bankruptcy. To be eligible for this you must:
- be unable to pay your debts;
- have total debts of less than £30,000;
- have savings or other valuable items of less than £2,000;
- have total assets of less than £2,000;
- don’t have enough money left at the end of the month to make your debt repayments;
- you’ve lived or worked in England or Wales in the last 3 years;
- not have a current bankruptcy, interim order or IVA in place; and
- you’ve not had a DRO in the last 6 years.
There are other criteria, but these are the main ones. You make an online application (for which there is a small fee), and if it is approved, your debts are frozen and you do not need to make any payments towards them.
You do have credit and other restrictions imposed on you (similar to bankruptcy) but these are lifted after 12 months. A debt relief order is a very good solution if you have relatively simple financial affairs but simply can’t pay back your debts. At the end of the 12 months, the balance of your debts that are unpaid are written off so you don’t have to pay them.
I have many years of experience in dealing with personal insolvency matters and will be happy to advise you if a debt relief order is the most appropriate for your circumstances.
This is rare now and has largely been replaced by a debt relief order. This is a court order that freezes your outstanding debts. You then simply make a monthly payment to the Court that you can afford and the Court distributes that money to your creditors.
In order to be eligible to apply to the Court for an Administration Order you must:
- have at least one County or High Court Judgment issued against you;
- owe money to least 2 creditors;
- be able to make regular monthly payments into Court; and
- your total debts must be less than £5,000.
You continue paying the Court until all the debts have been paid. The Court adds costs of 10% so (for example) debts of £5,000 can be paid off for a total amount of £5,500 – a lot cheaper than paying interest charges.