Personal Insolvency Tools

Personal insolvency tools and processes

If your personal budget does not stretch to paying your past debts as well as day-to-day expenses, there are a number of alternatives. Our insolvency professionals have many years' experience using a range of tools to help individuals and families rebuild their financial future.

To help you understand the options for tackling your insolvency problems, Atherton Bailey's offices across the southeast offer a free initial consultation during which we will listen to you and then propose:

• How you can help yourself without any professional involvement;
• Which of the personal insolvency tools are practical for your situation;
• How we can apply the tools to tackle your problems;
• The consequences for you and your family.

Personal insolvency tools

Bankruptcy

The most draconian measure of all, bankruptcy may still be right for you if you have minimal assets or surplus income and are suffering relentless creditor pressure. We can help you file for bankruptcy or advise you if a creditor petitions the Court to declare you bankrupt.

Bankruptcy lasts one year, but can be extended if you are considered culpable. During bankruptcy you cannot manage a company or incur new debts above £500. Any financial interest in your home passes to the Official Receiver who can force a sale. Assets other than ordinary domestic items and tools of trade can also be sold, including a car. You may also be required to contribute from your income for three years.

If you have been made bankrupt against your wishes, we can often help. The remedy may be an
annulment, although this can be complicated and expensive. Alternatively, we might help you propose an individual voluntary arrangement which automatically annuls the bankruptcy.

For more on bankruptcy see our case studies.

Individual voluntary arrangement

An individual voluntary arrangement (IVA) may be your best option if your debts are more than £25,000 and you have some surplus income. An IVA is a legally binding compromise between you and your creditors. IVAs are reasonably flexible, typically based on a five-year payment scheme and re-mortgaging your home. Alternatively, you can make a one-off settlement. IVAs allow you to keep control of your home and assets. They are particularly useful for:

• Business directors, sole-traders or partnerships who want to continue trading;
• Unsuccessful sole-trader or partnership businesses that need to be brought to a tidy end;
• Professionals for whom bankruptcy may be grounds for dismissal or disqualification;
• Homeowners for whom bankruptcy would jeopardise the home.

Unfortunately, IVAs are heavily promoted on TV and in the press by what are known in the trade as debt factories. These call centres process information using checklists which often fail to take account of all the circumstances. In contrast, for the same price, Atherton Bailey's qualified insolvency practitioners spend time with you to ensure you get proper independent advice. They will then tailor a realistic IVA proposal and negotiate with creditors on your behalf. If you struggle to keep to the terms, we will not simply fail your IVA. Instead we will work with you to try and find alternative solutions.

For more about individual voluntary arrangements see our case studies.

Debt management plan

Below about £25,000, the cost of setting up and managing an individual voluntary arrangement often exceeds the benefits. The alternative is a debt management plan (DMP). This is a non-statutory arrangement between you and your creditors where you pay off your debt in full over an extended period. While DMPs are heavily promoted in the media, you should be cautious where you seek help as many of these organisations are not independently regulated and agreements reached with creditors are not permanently binding.

For more about debt management plans see our case studies.

Debt relief order

If your debts are under £15,000, you may be eligible to take out a debt relief order. This is a statutory process relieving you of liability if you have no surplus income or assets.

Call us now

To arrange a free initial consultation and find out how you can start rebuilding your financial future call your your local Atherton Bailey office.