Personal Insolvency

If you have a debt problem, one option for sorting it out may be bankruptcy. You can apply for bankruptcy if you cannot pay your debts. In addition to self-application for bankruptcy, a creditor to whom you owe money can apply to make you bankrupt, even if you don’t want them to. For a creditor to make you bankrupt, you must owe at least £5,000.

However, bankruptcy may not be your only option, and it may not be the best one for you. If you wish to discuss your options, please give us a call.

An Individual Voluntary Arrangement (IVA) is a formal, legally binding debt solution plan. It is an alternative to bankruptcy for individuals who are struggling to repay their debts. An IVA is an arrangement made between you and your creditors that, most commonly, allows you to pay one affordable monthly sum, which will then be distributed to your unsecured creditors on a pro-rata basis. What you pay is calculated according to your income and expenditure, allowing you to live your life reasonably and without creditor pressure, as an IVA prevents creditor threats and bailiff action. An IVA is available for anyone looking to avoid bankruptcy.

However, for IVAs to be most cost-effective, the debt needs to be over £10,000. For smaller amounts, debt management plans or Debt Relief Orders may be more appropriate. When considering an IVA – and if accepted by your creditors – it becomes a binding contract and will have a negative impact on your credit rating. Although if you have already been struggling with your finances, your credit rating may already be damaged.