Bankruptcy is a formal court procedure which you can start or which one or more of your creditors owed at least £750 can start. Your assets (with certain exceptions) are sold to help pay your creditors. However, you can usually keep your personal belongings, the contents of your home and your tools of trade (which may include your car) unless they have a high value. I search financial blog for advice and read on - Pros and Cons of an IVA.
If you have surplus income after meeting your essential household and personal expenses, you will have to make payments out of your income for up to 3 years.
Your assets and income are dealt with by a licensed and regulated insolvency practitioner or by a government official called the official receiver. Bankruptcy usually lasts for 1 year, and once you have been freed (discharged) from your bankruptcy, you are released from your debts (with certain exceptions).
• Debts are written off, with certain exceptions applying • Creditors can't take further action unless the debts are secured on your home or other property. • It allows you to make a fresh start after only a year. • You may be able to avoid having to sell your home if your spouse, partner or a relative can buy your share of its value after debts secured on it have been paid.
This means that your creditors accept a reduced offer of repayment to settle their debt. By entering into an IVA, your total debt repayments – including costs – can be reduced by up to 40-60%!
Payments are usually made over five years, after which the remainder of your debt is written off. During the repayment period, all interest and charges are frozen and you will receive no more correspondence from your creditors.
- All interest and charges on your account are frozen. - Your account is administered by a fully qualified, licensed insolvency practitioner, who takes responsibility for liaising with your creditors and distributing funds on your behalf. - We can perform a confidential review of your circumstances to see whether you are eligible. - A legal process for UK residents (excluding Scotland) with a significant debt problem. - On agreement your creditors accept a reduced offer of repayment in full and final settlement of the debt. - Payments are normally made over a 5 year period, following which the remainder of your debt is written off. - Debt write off applies only where an Individual Voluntary Arrangement is suitable, adhered to and at the end of 60 months. This relates to unsecured debts that were included with an IVA and does not include any secured debts, mortgages, HP or utility bills. Failure to adhere to an IVA can result in bankruptcy. An IVA will affect your credit rating for up to 72 months after the completion of your IVA. - A Fee payable – this is paid out of your month contributions to your IVA and will be notified to you in advance - Homeowners may be required to re-mortgage after 3 years. - Alternative solutions such as debt management may be offered.
PPI stands for 'Payment Protection Insurance'. It's designed to cover your loan or credit card repayments for a year in the event of an accident, sickness or unemployment, or sometimes just accident and sickness.
Mortgage PPI wasn't as commonly mis-sold, so it's less of an issue. Remember, good PPI protects your mortgage repayments in the event of accident, sickness or unemployment - see the Mortgage Arrears Help and Mortgage PPI guides for more.
Mortgage lenders can legitimately say that having PPI is a condition of allowing you a mortgage - but they aren't allowed to say it must be theirs.
Yet it's been widely mis-sold, and you could even have it without knowing. If you were mis-sold PPI, you may be able to reclaim £1,000s.
According to the Financial Services Authority (FSA) banks and other lenders have been "mis-selling" PPI for many years to millions of people in the UK. Following a ruling in April 2011 by the High Court, banks and other lenders must process claims made for mis-sold PPI but banks have been "unhelpful" causing unneccesary difficulty and delay. According to the FSA, redress paid to consumers in 2011 reached £1Billion, a fraction of the £7 Billion estimated to be reclaimed.
If you're struggling with debt call the Debt Helpline, no matter how bad the situation seems there's plenty of free advice available to help you with your debt solutions.
Almost everyone owes money, bills are a fact of life. But sometimes you may find you're swamped with debts and can't see a way of paying them all, call the Debt Helpline. The worst thing you can do is to ignore the problem it won't just go away.
If you're thinking about taking out cash from your credit card or even a single loan as debt consolidation to pay off all your existing debts, make sure you're not simply taking on more debt. Check that the terms of the loan interest rates and length of the loan. Be very careful about taking out a loan secured on your house as it will put your home at risk get debt advice.
If you know you can't pay all your debts, its important to prioritise your debts and to write to your creditors to see if you can agree on a repayment timetable. Those people who are already struggling with unmanageable debt should seek advice from an insolvency helpline as soon as they can to find out what options are available and how they can get their finances back on track and start fresh.
Many people are struggling with debts at present, and if you're one of them, you should get the right support as soon as possible. Seeking early expert advice combined with determination can avoid closure. Insolvency – also known as bankruptcy – is a complicated topic that is best addressed by a technical specialist rather than standard certified accountants. Accessing timely expert advice is vital. With the right advice, organisations exploring insolvency may not be in danger of mounting liabilities and could have a number of options other than closure available.
If you are experiencing the following, it may be time to seek specialist advice: - Mounting debts - Less cash flow - Rising income gaps - Worries that you cannot keep doing more with less
Accessing the right advice provided at the right time could have a substantial impact on your future. So if you are not sure if insolvency applies to your organisation, please ask now by calling an insolvency helpline.
Please note that bankruptcy has more than financial and legal consequences so it is important to read and understand the following:- - If you are a sole trader then usually your business will be closed and any employees dismissed. - Whilst you are bankrupt or subject to bankruptcy restrictions - If you are in a partnership at the time of your bankruptcy then the partnership will automatically dissolve upon the making of your bankruptcy order - Reputation could discourage former and potential associates. - Bankruptcy offences, which are punishable by imprisonment or fine or both - Previous transactions being reversed or altered. - Bankruptcy restrictions order, which prolong the restrictions of bankruptcy for between 2 and 15 years.
- An income payments order is a consequence that means you will still have to contribute to your bankruptcy debts for a period of 3 years - Bank accounts for bankrupts are difficult to obtain free of charge. Visit the bank accounts page for more information. - At the date of your bankruptcy you will lose control of your assets. - You risk losing assets of value, including your home. Go to the bankruptcy and home page for more information. - The bankruptcy order will remain on your credit report for six years making future borrowing difficult and expensive. When you apply for a mortgage you will usually be asked if you have ever been made bankrupt. - Some professions, licensing bodies, associations and legal acts prohibit individuals who have had a bankruptcy order made against them or currently have a bankruptcy restriction undertaking or bankruptcy restriction order in place.