Frequently Asked Questions on personal insolvency

What are your charges?

The initial consultation is FREE. After this meeting we would advise on the appropriate alternatives available to you. If you require us to act as Nominee we will give you a fixed price, for any other of our services we normally charge on a hourly basis but our charges will be discussed and agreed with you on the outset on an individual basis.

What happens to my house in bankruptcy?

If you are bankrupt any net equity in the house belongs to your trustee. If you have a mortgage a third party will have to keep paying the mortgage to prevent the house being repossessed. If the house and mortgage is in joint names the trustee will ask you co-owner if they would like to purchase the bankrupt’s share of the net equity in the property. If that is not possible the property will have to be sold. The trustee can take steps to make you sell or vacate the property after 12 months.

If the property has negative equity and your partner has the funds to continue paying the mortgage purchase the net equity for £1 so the house and mortgage can be transferred into your partner’s name.

What happens on the making or a Divorce settlement?

Matrimonial claims are not provable in a personal bankruptcy proceeding and accordingly difficulties do arise when there is an intervening divorce settlement.

Although the law is evolving in this area, where there is a conflict between Insolvency and matrimonial law, the Insolvency law generally takes precedence.

How long does an IVA Last?

A IVA can be for any period, very short if the proposal is based upon an individual event. If it is based upon monthly payments from future it will normally last three to five years.

When should I seek Advice?

You must seek advice at the earliest opportunity from a Licensed Insolvency Practitioner. This should be when you think you may be unable to pay your debts as they fall due. The sooner you seek advice the more the available options.

What are the benefits of a lengthy IVA if a bankruptcy only lasts one year? Even though you are a bankrupt in most cases for a maximum of one year the effects of the bankruptcy order lasts longer. All assets owned at the date of bankruptcy remain the property of the Trustee even if they are unsold: also the Court can make Income Payment Orders which last for 3 years despite you having obtained your discharge.

Other advantages include:

• the costs and fees are often less than those of bankruptcy
• you retain ownership of assets
• if you are trading you can continue to do so
• an IVA is not advertised, whereas a bankruptcy is
• you can act as a director and retain your professional qualification eg solicitor, accountant
• you can be employed as a policeman, fireman, etc
• there are no restrictions placed on your actions

What if I am Already Bankrupt?

If you have assets and or are able to make monthly contributions to the fund for your creditors we may be able to help you get an annulment of your bankruptcy and put an IVA in its place. Whilst it is not always possible to do this we consider individual circumstances on their merits and advise you accordingly.

What if legal action has already been or is about to be taken against me? We can help you apply for an Interim Order which prevents any creditor taking any action against you whilst you put your proposal to your creditors. This action can even prevent possession proceedings of your house. Once the proposal is accepted all unsecured creditors are prevented from taking action against you.

I am Self-employed. Can I continue trading?

Yes. However you must be able to identify how your problems arose and what you will do to ensure the business is profitable. It is vital that the business is viable and can meet it's liabilities as they fall due and that it is profitable.

Why can’t simply write to creditors seeking an informal scheme?

Whilst this is possible, there are four main disadvantages from the debtor's point of view:

• There is no legal timetable for the creditors to reply to your request
• An IVA binds in creditors who do not chose to accept the proposal - provided the IVA is passed by the requisite majority of votes
• The IVA process provides a formal legal framework for the creditors to accept a lesser sum than you owe in full and final settlement.
• Interest charges continue to accrue.
• legal action can be commenced taken against you