{"id":11050,"date":"2011-09-29T15:06:34","date_gmt":"2011-09-29T14:06:34","guid":{"rendered":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/?p=11050"},"modified":"2019-08-05T15:12:33","modified_gmt":"2019-08-05T14:12:33","slug":"insolvency-solutions","status":"publish","type":"post","link":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/insolvency-solutions\/","title":{"rendered":"Insolvency solutions"},"content":{"rendered":"\n

Let\u2019s face it. If in this day and age you want a structured way out of your personal insolvency in the UK, one that is tightly controlled by laws and regulations, you will probably have to utilize one of the big two solutions, bankruptcy or an individual voluntary arrangement (IVA). <\/p>\n\n\n\n\n\n\n\n

Sure, you may tinker around for years with a debt management plan but given that you will have to repay every penny of your unsecured debts, you need to take a long view with a debt management plan. After all you may have to serve a repayment sentence of ten years or more before all your debts are cleared and there is no guarantee that all of your creditors will agree to freeze interest charges or waive penalties. In fact there is no legal obligation on them to do anything of the sort. You are really relying on the kindness of strangers when you are in a debt management plan and even if you successfully complete the plan, your credit file will still remain to be repaired at the end of the term. Of course if your debt levels are low enough, if you have no assets and if you have negligible disposable income you might be eligible for a Debt Relief Order. The Debt Relief Order is sometimes described as the poor man\u2019s bankruptcy since the very low limits restrict entry to this solution: debts less than \u00a315,000, assets less than \u00a3300 and monthly disposable income less than \u00a350.\u00a0 <\/p>\n\n\n\n

So back to the big two. The IVA allows the debtor to make affordable monthly payments, repaying creditors as much as possible while retaining their home, their car and their employment. It provides relief from debts and it avoids the stigma of bankruptcy, with considerably less publicity. The IVA is binding once 75% of voting creditors approve it, it costs less and yields higher realizations than bankruptcy, leading to higher returns for creditors. While IVAs are highly controlled and regulated they require minimal court involvement and even if the debtor\u2019s circumstances change the IVA can be varied flexibly.<\/p>\n\n\n\n

\"Applying<\/figure>\n\n\n\n

On approval, creditor contact with the debtor ceases, interest is \nfrozen and penalties are stopped. All debts are written off at the end \nof the IVA term, usually five years but it can be shorter.<\/p>\n\n\n\n

What\u2019s not to like about an IVA? Well, at least 75% of voting \ncreditors must approve the IVA and if not approved, creditors can pursue\n other legal actions such as petitioning for bankruptcy, seeking court \njudgments and registering charges on the debtor\u2019s assets. Creditors also\n have the power to modify the IVA at proposal stage in order to for \nexample increase the debtor\u2019s monthly payments and such a modification \nmay be the catalyst for the failure of the IVA in supervision if the \ndebtor is unable to sustain the increased payments. Payments usually \nhave to be made for five years versus a maximum of three years in \nbankruptcy. The debtor must stop borrowing except with the express \npermission of the supervisor and creditors and will suffer from a poor \ncredit rating for at least a year after successful completion of the \nIVA.<\/p>\n\n\n\n

Bankruptcy also has a lot going for it with greatly reduced stress \nand worry nowadays. The debtor or a creditor can petition at a \nrelatively low cost of about \u00a3500 and there are no other legal costs \ninvolved. CAB and Court officers can assist in completing relatively \nsimple forms. Most debts do not survive the bankruptcy from which \ndischarge occurs within one year. The debtor\u2019s contributions via Income \nPayments Orders (IPOs) or Income Payments Agreements (IPAs) are limited \nto three years and in many cases no IPO or IPA is exacted, while living \nallowances can be more generous in bankruptcy than in an IVA.<\/p>\n\n\n\n

The main downside to bankruptcy is that the debtor loses control of \ntheir assets, particularly their share of the family home while the \nstigma of bankruptcy is still a considerable impediment for most people.\n The disabilities, obligations and restrictions of bankruptcy, which can\n last for two to fifteen years, make it difficult and sometimes \nimpossible for the debtor to trade and to obtain or retain employment \nwith many professions and trades imposing sanctions such as expulsion on\n bankrupt members of their organizations. The bankruptcy trustee has \npowers to challenge the validity of any prior transactions if they \nappear to be preferential or at an under-value and the bankrupt debtor \nhas to beware of their potential liability for bankrupt offences. Costs \nof bankruptcy are higher than those in an IVA, resulting in lower \nreturns to creditors, who in many cases receive nothing. The debtor may \nnot borrow prior to discharge without the express permission of the \ntrustee and will suffer from a poor credit rating even after discharge. \nThe debtor\u2019s name will continue to appear on credit files for six years \nfrom the commencement of bankruptcy.<\/p>\n","protected":false},"excerpt":{"rendered":"

If in this day and age you want a structured way out of your personal insolvency in the UK, you will probably have to enter bankruptcy or do an IVA. <\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_seopress_robots_primary_cat":"none","_seopress_titles_title":"","_seopress_titles_desc":"","_seopress_robots_index":"","footnotes":""},"categories":[2,7],"tags":[],"class_list":["post-11050","post","type-post","status-publish","format-standard","hentry","category-bankruptcy-articles","category-iva-articles"],"_links":{"self":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/11050","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/comments?post=11050"}],"version-history":[{"count":1,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/11050\/revisions"}],"predecessor-version":[{"id":11060,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/11050\/revisions\/11060"}],"wp:attachment":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/media?parent=11050"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/categories?post=11050"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/tags?post=11050"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}