If your situation has gotten to the point where you need the advice of an Insolvency Practitioner, it’s vital that you get the information you need. A good IP will ensure that you understand your choices, as well as their possible consequences.

What concerns most people who find themselves insolvent and who are forced to enter into an Individual Voluntary Arrangement (IVA) or into a Debt Management Plan (DMP) or who on a voluntary or compulsory basis adopt the Bankruptcy solution, is the long term damage to their credit rating.  

Spending more than you earn

If you consistently earn more than you spend the difference is joy. If you usually spend more than you earn the difference is misery. The difference between what you earn and what you spend is called net disposable income or net Disposable Income. Earnings of course are what you get into your hand after tax and National Insurance contributions and other at source deductions such as pension contributions are excluded. Should you be lucky enough to have other unearned income, such as rental income from a lodger, you should add this onto your income to arrive at your total Disposable Income.

The Law Reform Commission (LRC) in Ireland set up an expert group to make recommendations for reform of Irish law relating to personal debt and it has now reported back. It strongly recommended legislation setting up a Debt Settlement System which would be characterised by the following general approach and considerations:

An expert group has just reported back to the Law Reform Commission (LRC) in Ireland with their recommendations for reform of Irish law relating to personal insolvency. While the bulk of the report deals with the problem of mortgage arrears, it also addresses personal debt i.e. unsecured non-mortgage personal debt.

Reducing Creditor Harassment

If you are not able to pay your financial obligations as they fall due or have fallen behind in your repayments to loan providers then you might already have begun to endure creditor harassment. It quite often begins with receiving harmless looking reminder letters delivered in your post after which it escalates to delivery of slightly more aggressive letters, with large bold lettering of the phrase ‘OVERDUE’ normally coloured red.

Just because you have a substantial level of unsecured personal debts doesn’t necessarily mean that you are insolvent. For a start you may have a good income and sufficient disposable income to easily make the contractual payments on your loan agreements. Alternatively, while you may have low income and little or no disposable income, if you have saleable assets such as a house in which there is substantial equity, you may not have a problem. Provided you are willing to sell your property or to re-mortgage it to release equity, your financial problems can be addressed.

Weathering the Financial Winter Ahead in Ireland and the UK

The winter of 2011 lies ahead and if the last two winters are anything to go by then it’s hard to be optimistic this year. If we don’t learn from the past, it is said that we are doomed to repeat it so let us see what we should do this coming winter.

The term ‘Beneficial Interest’ is used to describe the equity in or value of a property which is held by the owner or part owner of that property. Usually (but not always) a husband and wife (or indeed cohabiting persons) will each own 50% of equity in or value of the marital home. 

Household Budgeting to Beat Debt

In these straitened times it is dangerous to ignore debt. Just like any personal, domestic, social, relationship, marital or business problem, the first and best thing to do is to face up to the issue.

A joint debt is created when two or more people borrow money from the same lender at the same time under a joint contract. Most joint debts are taken out by just two people such as a married couple, a co-habiting couple, a parent and an adult child, two adult siblings, two business people who have set up as a formal business partnership or indeed any two consenting adults who have something in common, be it family, personal or business. The joint loan imposes contractual obligations on each of the joint borrowers and this is part of the reason that lenders like to have joint signatories on funds that they lend.

Oscar Wilde’s humorous claim that a man who pays his bills on time is soon forgotten is probably just as true today as it was in his lifetime. Wilde also stated tongue in cheek that it was only by not paying one’s bills that one could hope to live in the memory of the commercial classes.

People sometimes have difficulty in distinguishing between different types of personal debt and lenders can sometimes be less than helpful in explaining these differences. One distinction which is important to understand is whether a personal debt is secured or unsecured. Take for example a situation where you are considering buying a car or some other type of motor vehicle.

Many of us dream of owning our own home or even our own car. In the current recession it may just remain a dream but for the lucky few or should that be the thrifty few, it remains a real ambition. Provided that one can control one’s debts, and have a reasonable level of regular income then it is possible to go from owing to owning. There has been a huge growth in personal indebtedness over the last ten or more years. It is generally agreed that the use or perhaps more accurately the misuse of credit cards is largely to blame for consumers getting into debt which may be beyond their ability to repay. It is not the credit card in itself that is at fault. It would be irrational to assign the blame to a piece of encoded plastic. In truth the blame lies with us who borrowed too much money and with the credit industry which extended too much credit to us. Neither we the borrowers nor they the lenders paid anything like sufficient attention as to whether we could repay our debts.

Capital punishment for even the most heinous crimes has been abolished in most western democracies with some significant exceptions such as the USA. In regard to debt however, the USA has a most benign set of laws dealing with insolvency both personal and corporate. Contrasting significantly in both of these matters is the Republic of Ireland. The death penalty has been long abolished in Ireland but the personal insolvency regime there has been described by many august authorities as unpractical, unused, excessively costly and overly penal.

If you owe money to banks or other creditors they have the right to seek the repayment of these debts in accordance with the terms and conditions under which the funds were borrowed or the liability was incurred in the first place. If however the debtor cannot or will not comply with the agreed repayment schedule then creditors can avail of a wide variety of means to compel the delinquent debtor to repay them the monies they are owed. These include getting a County Court Judgment (CCJ) against the debtor and following this up with action by bailiffs which might include the seizure of goods or other assets.

Many students who expect to graduate this year will have debts of £25,000 or more to dampen their enthusiasm as they seek to enter a less than buoyant jobs market. Surveys have found that half of those currently graduating expect that it will take them at least ten years to repay their student debts while one in ten think it could take as long as twenty years to be debt free. With tuition fees inexorably increasing year on year, average student debt could rise to as much as £80,000.

When people think about their serious debt problems they often think of how dreadful it would be if they had to go bankrupt. Whether they petition for their own bankruptcy or one of their creditors petitions for it, the stigma or perceived stigma of bankruptcy is just about the worst feeling a debtor can have. However, there are other real and practical remedies other than personal bankruptcy. It may even be better for both the debtor and his or her creditors to use an alternative procedure to bankruptcy.

A challenge to Ireland’s arcane insolvency regulations may perhaps be made to the High Court within just a few months, as per a newly released report in The Sunday Independent by Maeve Sheehan.

It offered to hit the ground running and the new Irish Government will in the near future be a hundred days in office. It is fully commited to execute a great deal of transitions and that being said maybe right now is the time to ask numerous basic questions as to exactly what it is providing in support of the ordinary citizen as distinct from what it is doing in relation to bankers, builders, NAMA and sovereign interest rates in its undoubtedly difficult efforts to meet its committed EU and IMF performance goals.