Questions That We Frequently Come Across
Insolvency Q) If I am bankrupt will I be able to continue my business?
A) This will be dependant on the official receiver or your Insolvency Practitioner supervising your bankruptcy. It is possible for a business to continue if it can be demonstarted that it is to the benefit of the creditors. Each case will be dealt with on its merits and may have to be approved by the creditors.
Insolvency Q) What will it cost to petition for my own bankruptcy?
A) If one petitions for their own bankruptcy, which can now be done in a county court, the cost is at present £475.
IVA Q) What will be the cost of an IVA application?
A) Many Insolvency Pracitioners do not charge an upfront fee, the fees come out of the contributions made by the IVA applicant(s).
Insolvency Q) Will a bankruptcy affect my employment?
A) Bankruptcy will affect some senior and managerial positions, such as a Police Officer, a MP, for further qualifications please request a formal list.
Insolvency Q) If i enter bankruptcy, what will happen to my assets?
A) Once a person or company goes into bankruptcy all the assets become the property of the trustee who will dispose of the the benefit of creditors, there are provisions for someone who is self-employed to retain their tools of trade, a vehicle acceptable to the creditors and household furnishings inline with basis needs.
Insolvency Q) How long does a bankruptcy last?
A) A bankruptcy would normally last for 12 months (1 year) however there are provisions with the law to extend this period, the normal would be that one would receive a certificate of discharge pf bankruptcy after 12 months, however contributions would normally last 36 months (3 years).
Insolvency Q) Who can issue a bankruptcy?
A) Any creditor owed more than £750 can make an application.
IVA Q) What is an interim order?
A) The An interim order is an application order by the Insolvency Practitioner to the court to prevent any further court action taking place within a specific period mainly to allow a bankruptcy or IVA application.
Insolvency Q) How long does it take for a bankruptcy to be put into place?
A) If one applies for bankruptcy then this is done swiftly as it is dealt with at the local county court, however a bankruptcy application by other means would have to submit an application to the court and then there would be a period of time to allow a response or a defense, thnis would normally be 21-28 days or more.
IVA Q) What are the alternatives to bankruptcy?
A) The alternatives to bankruptcy would be governed by your financial position as it could be possible that you might be able to consolidate your current mortgage, you might be able to come to an agreement with your creditors, you might be able to put a proposal forward for an IVA, these are only examples, however should you wish to explore further then please write with your current situation.
Insolvency Q) Who will supervise my bankruptcy?
A) A bankruptcy is normally overseen by the Official Receiver and subject to assets could be past to an Insolvency Practitioner to oversee to the benefit of creditors.
Insolvency Q) Will a bankruptcy clear all my debt?
A) All debt should be declared to the Official Receiver who will notify creditors accordingly, the Official Receiver will deal directly with the creditors and therefore control is taken out of your hands.
Insolvency Q) I am self-employed, can I go bankrupt?
A) One can go bankrupt if self-employed, however i would stress that they should carefully consider other options before doing so.
Insolvency Q) If I am in a bankruptcy will i be able to have a bank account?
A) Any bank account will be governed by bankruptcy rules. (For further asistance please e-mail)
Insolvency Q) Will lose my pension?
A) Pensions become an asset of the Official Receiver or Insolvency Pracitioner for the benefit of creditors and as such will be assessed on a case by case situation.
Insolvency Q) Will I be able to retain my mortgage?
A) Depending on the size of the mortgage and the equity within te Official Receiver or Insolvency Practitioner will assess as to what benefit would be available to the creditors. It is possible that the Official Receiver made decide that the renting of a property is better suited than the current mortgage and as such the property could be sold.
Insolvency Q) Will my partner's income be included?
A) Your partner is a seperate individual and should the debts be attached to yourself only then your partner would be excempt other than your household bills and living expenses. Further clarity needs to be taken from the Official Receiver as each case will have its own merits.
Insolvency Q) Can my creditors still take other action?
A) All known creditors within a bankruptcy are bound by the bankruptcy itself.
Insolvency Q) Who will know about my bankruptcy?
A) Once bankrupt a notice will be placed in the London Gezuette, a further notice will be placed within a local newspaper, there is also a bankruptcy register which the public have access. In certain cases it should be drawn to your employers attention.
Insolvency Q) What happens if i win the lottery or have a tax rebate?
A) Should you win the lottery or recieve a tax rebate while in bankruptcy, then you should notify the Official Receiver or Insolvency Practitioner straight away.
Insolvency Q) Can i do a joint bankruptcy?
A) A bankruptcy would be treated as two individuals and it will also attract two sets of application fees.
Insolvency Q) If i am bankrupt, how do they work out what i can afford?
A) The Official Receiver addressing the bankruptcy will require you complete a comprehensive Income & Expenditure itemising your debts and your day to day living costs. From the information gathered he should be able to establish any disposable income and this is what your contribtuion is based upon.
Insolvency Q) What happens if my circumstances change once i am in bankruptcy?
A) Any change of circumstances should be notified to the Official Receiver or Insolvency Practitioner overseeing your bankruptcy.
Insolvency Q) Will bankruptcy affect my credit rating?
A) Bankruptcy will almost certainly affect your credit rating and well beyond the point of discharge.
Insolvency Q) What is a London Gazuette notice?
A) This is a where all legal issues are placed to notify any concerned parties.
Insolvency Q) What will happen to my home if i go into bankruptcy?
A) If your home is mortgaged then the Official Receiver or Insolvency Practitioner will assess any value within the property after the mortgage, they will further assess the monthly mortgage payment as should it be shown a rented property within the area would be less than the mortgage monthly payments, then they might find it beneficial to sell the property and the bankrupt to move into rented accomodation, however, it will be for the Official Receiver or Insolvency Practitioner to decide as they are effectively the owners of your property once you are bankrupt.
Insolvency Q) Will i have to go to court?
A) Going to court beneficial in that it will allow you to put your case to the judge, however it is not compulsery unless stated.
Insolvency Q) Can i be made bankrupt for any amount of debt i cannot afford to repay?
A) One can only be made bankrupt if there is an outstanding debt of £750 or more to any one creditor.
Insolvency Q) Will i lose everything?
A) Once you go bankrupt then effectively all assets belong to the Official Receiver or the Insolvency Practitioner to the beneficial interest of the creditors. Certain household items and tools necessary for employment, there is also provisions in respect of a low value vehicle, however anything of value will have to be drawn to the attention of the Official Receiver or insolvency practitioner.
IVA Q) I was a student, will my student loan be written off as well?
A) When you were a student you obtained a government loan which is attached outside any bankruptcy application, at one point it was possible that this would be written off within a bankruptcy, but not now.
Insolvency Q) What is bankruptcy?
A) Bankruptcy is the result of a creditor taking an action whereby they are owed more then £750. Other creditors can appendix themself to the same action. If the bankruptcy is approved then the Official Receiver will either conclude matters or assign them to an Insolvency Practitioner who will be known as your trutee in bankruptcy.
IVA Q) Can a bankruptcy be reversed?
A) A bankruptcy can be reversed to an IVA if it can be shown that an Individual Voluntary Arrangement would be best suited and could provide a better return for the creditors than that of bankruptcy. If this was to be the case then an application could be put beforethe court to have the bankruptc annuled and the IVA approved.
Insolvency Q) Can i be made bankrupt without being informed?
A) Any bankruptcy notice will be issued to ones last known address and therefore it is possible that someone could be made bankrupt if such mail has not been forwarded to the current address.
Insolvency Q) Will i be able to borrow money when i am bankrupt?
A) Any borrowings within bankruptcy is not permitted without the approval of the Official Receiver or the Insolvency Practitioner and if granted such a limit is currenly £250.
Insolvency Q) What is an annulment?
A) An annulment is a cancelation of a current order.
Insolvency Q) Is bankruptcy the right choice?
A) Before entering into bankruptcy, one should explore all avenues as such a decision may have a long lasting effect on ones life and credit history. Bankruptcy should be the last resort if one finds that their financial situation is not sustainable to make a binding agreement with creditors.
A guideline would be income and expenditure and disposable assets, along with pressure from creditors. Some people can not take the pressure or hassle one would encounter from the creditors or their representatives and feel that bankruptcy is the easier option.
There are plenty government bodies providing advice and this root should be taken before any action.
Insolvency Q) If I were made bankrupt, what would be the process?
A) If one was made bankrupt the Insolvency service overseeing my affairs may require you to undergo a public examination of your finances.
Insolvency Q) What will happen to my property if I go into bankruptcy?
A) It is more than likely if one is made bankrupt that the property would be sold with any surplus being credited to the estate.
Insolvency Q) Will a bankruptcy affect my personal banking?
A) Bankruptcy will almost certainly effect your personal banking as you will be curtailed to further borrowing and in most cases banking facilities.
Insolvency Q) Is there a bankruptcy register?
A) Once made bankrupt a notice will be placed within the national paper in your locality as well as the London Gazette, it is then registered on the bankruptcy register.
Insolvency Q) Is there any legislation covering a bankruptcy?
A) The 1986 and 2000 Insolvency Act cover legislation for Insolvency and Bankruptcy.
Insolvency Q) What does a bankruptcy do?
A) Bankruptcy is a restriction on ones life for a period of time and there after it can and will effect the credit aspect and can leave a stigma on credibility.
Insolvency Q) How long does a bankruptcy take to be implemented?
A) If one makes themselves bankrupt this can be done through the local court very quickly and the timescale will be variable. Should one be made bankrupt this can take up to 6 weeks from the time of receiving the bankruptcy petition.
Insolvency Q) Will a bankruptcy affect my credit cards?
A) Once in bankruptcy all credit cards will be cancelled and you will be under the supervision of the acting Insolvency Practitioner.
Insolvency Q) Should I receive a bankruptcy petition, what should I do?
A) If in receipt of a petition for bankruptcy you should seek immediately advice form your local citizens advice office or independent solicitor.
Recent Insolvency Questions & Answers
Insolvency Q) How long will an IVA (Individual Voluntary Arrangement) last?
A) An IVA normally lasts up to 5 years / 60 months.
Insolvency Q) Can I afford an IVA (Individual Voluntary Arrangement)?
A) An IVA agreement will be dependent upon disposable income.
Bankruptcy Q) If I become bankrupt or enter an IVA will I lose my home?
A) Normally in an IVA your home will be fully protected unless you default resulting in bankruptcy.
Insolvency Q) Is there any IVA legislation?
A) IVA legislation relating to Insolvency can be found in the 1986 & 2000 Insolvency Act’s.
Insolvency Q) Will an IVA (Individual Voluntary Arrangement) affect my credit rating?
A) Once an IVA has been approved you will be unable to borrow and it will have an affect for a period of time on your credit rating.
Insolvency Q) Can I have a bank account if I enter an IVA?
A) Whilst in an IVA you can run a bank account in the normal manner.
Insolvency Q) If I was in an IVA and had a wind fall (e.g. Lottery Win) will I have to make a payment to creditors.
A) Any wind fall during an IVA or gift should be brought to the attention of your Insolvency Practitioner (I.P.) who is overseeing your affairs.
Insolvency Q) If I was in an IVA or bankruptcy and should I have a change of circumstances, what should I do?
A) If in bankruptcy or an IVA any change of circumstances should be addressed through your Insolvency Practitioner who will guide you.
Insolvency Q) If in an IVA do I have to keep updating my affairs?
A) The Insolvency Practitioner overseeing your IVA will require you once a year to submit any change in circumstances that may have occurred over the previous 12 months.
Insolvency Q) If I was in an IVA what would happen if I cannot maintain the monthly payments?
A) A formal IVA agreement would be binding and therefore if one finds themselves in a position whereby as change of circumstances they cannot fulfil their agreement payments, then they should seek advice at that time from their Insolvency Practitioner.
It is possible that your Insolvency Practitioner could apply for a variation to your IVA agreement.
Bankruptcy Q) Is an IVA bankruptcy?
A) An IVA is an alternative to bankruptcy, without the stigma and restrictions of a bankruptcy.
Insolvency Q) What costs would I encounter if I entered an IVA?
A) Costs within an IVA are built into the premiums paid by the applicant, many companies state that there are no costs and this is not the case.
There are ongoing discussions within the Insolvency Industry to reduce the overall costs which will allow creditors to be more sympathetic, resulting in more approvals.
Insolvency Q) Will an IVA affect my property?
A) Your property will only be affected if it is within your IVA proposal. An IVA proposal being accepted could in certain circumstances affect the equity within your property at a later date and therefore it is imperative that you are aware of such.
Insolvency Q) What is the difference between an IVA and Debt Management?
A) An IVA is an Individual Voluntary Arrangement based on an agreement between 3 and 5 years and supervised by an I.P. (Insolvency Practitioner).
A Debt Management is an unregulated agreement that could take much longer to conclude and it is unlikely you will receive a similar discount to an IVA agreement.
Insolvency Q) What are the costs involved in an IVA?
A) Many companies state that there are no costs within an IVA, this is not the case as any costs are built into the premiums paid by the applicant to the I.P. The I.P. has a set up cost and fee and will have an overall cost for managing the proposal, resulting in a reduced dividend to the creditors.
Insolvency Q) What is the estimated timescale of an IVA?
A) Timescale of an IVA will depend on the applicant providing all the necessary documentation to allow a proposal to be placed before the creditors.
The IVA proposal can be in various formats, however the normal is between 3-5 years (36-60 months) unless a third party payment is injected as a capital sum. If this was to happen and accepted by the creditors, then the IVA timescale would be much reduced and could go be as little as 3 months.
Insolvency Q) Is an IVA subject to creditors approval?
A) An IVA proposal is subject to approval by the creditors and requires a 75% acceptance, should an acceptance not take place then a variation of the IVA proposal could be modified and presented for consideration.
Insolvency Q) Will an IVA affect my personal banking?
A) An IVA will almost certainly affect your personal banking in that you will be restricted to further borrowings set by your I.P. You will be unable to utilise bank accounts that form part of your IVA proposal.
Insolvency Q) Is there an IVA register?
A) Yes
Insolvency Q) What happens if I cannot complete my IVA agreement?
A) Should you find yourself with a change of circumstances to the IVA agreement, it is possible that your I.P. on your behalf could request a variation to your IVA agreement. The alternative being bankruptcy.
Insolvency Q) Is an IVA suitable for business purposes?
A) There are provisions for a business IVA (CVA) for sole traders and businesses alike and work on similar lines to that of an Individual Voluntary Arrangement.
Insolvency Q) Will an IVA affect my pension?
A) An IVA will only effect your pension if it forms part of the IVA proposal agreed by the creditors.
Insolvency Q) Is there any legislation covering an IVA?
A) Legislation in respect of an IVA is covered by the 1986 nsolvency Act and the 2000 Insolvency Act.
Insolvency Q) What is the purpose of an IVA?
A) The purpose of an IVA is that, it is an alternative to bankruptcy without the stigma of bankruptcy whereby one can make a proposal to existing creditors that would result in a better return for the creditors against that of a bankruptcy.
Insolvency Q) If I enter an IVA will I lose my personal assets?
A) Personal assets within the IVA will have to be declared to the IP (Insolvency Practitioner) who will decide on what should be inclusive within the assets of any IVA proposal presented to the creditors.
Insolvency Q) What does an IVA do?
A) An IVA is beneficial in that a one monthly contribution is paid to the I.P who in turn will distribute it to the various creditors. At the end of the IVA any outstanding debt is normally written off making one debt free.
An IVA further removes the hassle of creditors and debt collectors calling and more importantly it lets one get their life back, it is also an alternative to bankruptcy without the stigma.
Insolvency Q) What proportion of debt can be written off with an IVA?
A) Many companies promise what they can not put into practice. Creditors are more aware and are seeking a higher return in respect of the debt. There are no formal guidelines and normally it will be on a case by case on any IVA proposal.
It is worth noting that it will be the creditors who decide any IVA proposal and what debt they are prepared to discount. As a guideline it will be very much based upon disposable income.
Insolvency Q) After the completion of an IVA, am I debt free?
A) If you fulfil your IVA agreement then any debt is discounted (See 1986 Insolvency Act).
Insolvency Q) How is an IVA prepared?
A) An IVA is based upon the information received from the debtor, at times this is cross referenced with various agencies, property valuations and income and expenditure, there also maybe other issues that need to be taken into consideration such as insurance policies or hirer purchase.
The I.P has to have an overall view before he can make recommendations or prepare an IVA proposal for consideration by creditors.
Insolvency Q) What information is used within an IVA proposal?
A) All relevant personal information covering income and expenditure, debts, mortgage, insurance, pensions and any other relevant information required by the I.P to formulate an IVA proposal.
Insolvency Q) How long does an IVA take to be implemented?
A) The preparation of an IVA will be dependant upon the debtor providing the necessary information required by the I.P and will vary depending upon the content within the IVA proposal.
Insolvency Q) What is an IVA Interim Order?
A) An Interim Order can be requested by an Insolvency Practitioner on behalf of the debtor through the local courts, whereby there will be a restriction on any court action until the creditors have had the opportunity to consider a proposal of payment via an IVA for the debtor.
Insolvency Q) Will an IVA affect my employment?
A) Normally an IVA will allow the debtor to continue in their employment without interruption.
Insolvency Q) What happens if my IVA fails?
A) The creditors can reject any IVA proposal however in most cases a new application can be presented with IVA variations included. The alternative being that should the creditors over all reject then bankruptcy could then follow.
Insolvency Q) What happens if I default with my IVA agreement?
A) Should a default take place within an IVA agreement the I.P or Insolvency Practitioner can fail the IVA agreement which could result in a bankruptcy application.
Insolvency Q) What is an IVA variation?
A) An IVA proposal could be presented whereby a single or more creditor(s) require other factors in being built into the IVA agreement.
A second point could be that the financial circumstances have changed and as a result the I.P goes back to the creditors seeking a variation of the IVA agreement.
Insolvency Q) Will an IVA restrict further borrowing?
A) The clear answer is yes, however the best advice would be to seek clarity from the acting I.P.
Insolvency Q) Will an IVA affect my credit cards?
A) Yes. Restriction on credit is automatic however one should seek clarity from the acting I.P.
Insolvency Q) Is an IVA a binding agreement?
A) An IVA or Individual Voluntary Arrangement, is a binding agreement between creditor and debtor.
Insolvency Q) Should I get legal advice before signing any IVA agreement?
A) Almost certainly we would advise that any debtor seeks advice from their solicitor on any proposal to be presented to creditors, as any agreement IVA will be formally binding.
Bankruptcy Questions
Bankruptcy Q) Is bankruptcy the right choice?
A) Before entering into bankruptcy, one should explore all avenues as such a decision may have a long lasting effect on ones life and credit history.Bankruptcy should be the last resort if one finds that their financial situation is not sustainable to make a binding agreement with creditors.
A guideline would be income and expenditure and disposable assets, along with pressure from creditors. Some people can not take the pressure or hassle one would encounter from the creditors or their representatives and feel that bankruptcy is the easier option.
There are plenty government bodies providing advice and this root should be taken before any action.
Bankruptcy Q) What are the alternatives?
A) Alternatives come in different formats; an IVA for instance is an Individual Voluntary Arrangement whereby an agreement maybe reached between the debtor and the creditor(s).
If you are a home owner you maybe able to, increase your current mortgage and consolidate any additional debts.
It is possible that the debtor can downscale their property resulting in release of equity to service or clear any other outstanding debts.
Other alternatives maybe available and will only result with additional information.
Bankruptcy Q) If I were made bankrupt, what would be the process?
A) If one was made bankrupt the Insolvency service overseeing my affairs may require you to undergo a public examination of your finances.
Bankruptcy Q) Will have I have to attend a court?
A) Most people attend court however it is not compulsory.
Bankruptcy Q) How long a bankruptcy last?
A) A bankruptcy will normally run for a period of 12 months however in some cases this can be shorter, there is also provisions for to extend bankruptcy periods.
Bankruptcy Q) Will a bankruptcy effect my employment?
A) Bankruptcy will almost certainly effect your employment if say you were a police officer, security guard or an MP these are only examples and there are many other areas that could be effected.
Bankruptcy Q) What will happen to my property if I go into bankruptcy?
A) It is more than likely if one is made bankrupt that the property would be sold with any surplus being credited to the estate.
Bankruptcy Q) What are the costs involved in a bankruptcy?
A) If one makes themselves bankrupt which can be done through the local court there will be costs attached to any application they normally vary between £450-600.
If one is made bankrupt then the costs come out of the estate.
Bankruptcy Q) Will a bankruptcy affect my personal banking?
A) Bankruptcy will almost certainly effect your personal banking as you will be curtailed to further borrowing and in most cases banking facilities.
Bankruptcy Q) Is there a bankruptcy register?
A) Once made bankrupt a notice will be placed within the national paper in your locality as well as the London Gazette, it is then registered on the bankruptcy register.
Bankruptcy Q) Will a bankruptcy affect my pension?
A) Should one be made bankrupt then any private pension will normally be classed as an asset within the bankruptcy itself.
