No. It is your name, not your address, that the debt and IVA, DMP or bankruptcy is listed against. Your parents, partner, or any other people in your household will not affected by your debts. However, if you hold any debts jointly, you are both jointly and severally liable for that debt. This means that the creditor can demand full repayment of the debt from either person, so if you enter into a debt plan with any joint debts, the creditors of those joint debts can demand full payment from the other person.
Not usually, but the IVA will include any interest and charges, once it is set up. Once the IVA has been agreed, no additional interest and charges will be applied.
A Debt Management Plan is an informal arrangement between yourself and your creditors and as such, there is no definite regulation regarding the freezing of interest and charges. We will certainly do our best to get creditors to agree to freeze interest and charges, as this will mean more of the payment goes to reducing the amount of your debt.
In most cases, bankruptcy or a Debt Relief Order would be the only debt solutions which would put your sole trader business in jeopardy.
An IVA is an appealing alternative to bankruptcy for those with their own business, as they can continue trading and the business is usually unaffected.
We are specialists in non-standard IVA proposals and see many sole traders and self-employed individuals each year.
If your business needs credit to operate at any time during the IVA period, this must be discussed with the supervising Insolvency Practitioner.
The days of this kind of public shouting from the rooftops are, thankfully, over and the stigma attached to bankruptcy has faded hugely. Bankruptcies are advertised in a daily paper called the London Gazette, which is a publication of official notices. It is a little-read paper that very few people have heard of, so it is very unlikely that anybody would find out you were bankrupt in this way. Bankruptcies can be advertised in local newspapers, but this is rare these days with only public interest cases being advertised locally.
Bankruptcies are also recorded on the Personal Insolvency Register, which is a public record and searchable by anybody who wishes to do so. As with the London Gazette, somebody would have to go searching for specific information in order to find out that you were bankrupt.
Debt Relief Orders are not advertised, but are recorded on the Personal Insolvency Register.
In most cases, it is only your creditors who need to know about your financial arrangements. In the process of setting up your IVA or DMP, all of your creditors, secured and unsecured, will be given notice of the creditor’s meeting.
Other than creditors, it is up to you who you choose to tell about your debt arrangement. Other than a situation where you worked for a bank or other creditor to whom you owed money, there would be no reason that your employer would be informed.
An IVA is listed on the Personal Insolvency Register, sometimes called the IVA Register, and this is a public record. Anybody is allowed to search this register online, so there is a possibility that people could find out this way, but they would have to be searching out the information.
It is also likely that your IVA will be made known to credit reference agencies.
IVAs, bankruptcy and DROs are formal arrangements that protect you from legal action by your creditors, so once the procedure is in place, the letters and phone calls will stop.
A DMP is a more informal arrangement, and whereas most creditors and debt collection agencies will stop chasing for payment if you stick to the terms of the plan, there is no legal obligation for them to do so.
During the setting-up period, it is likely that your creditors and debt collection companies will continue to call or write. The best thing to do is let them know that an IVA is being set up by an Insolvency Practitioner; this will usually be enough for them to cease contact as they will know to expect notice of the creditors meeting.
Our personal insolvency team are highly experienced at communicating with creditors and are more than happy to speak to them on your behalf, even during the set-up period. You can either let us have the details of any creditors who are continuing to contact you and we will call them, or you may give them our contact details and advise them to contact us directly.
Yes, technically there’s nothing to stop your creditors from taking more serious action before the IVA has gone through, but this is rare. Also, we can apply to the courts for an Interim Order to stop any further action until the creditor’s meeting has been held.
Most debt solutions, such as bankruptcy and DMPs are based around individuals. If you have a lot of jointly held debts, you could opt for a joint or ‘interlocking’ IVA.
However, it’s worth exploring all of the options available to each of you, even if a lot of your debt is in joint names. For example, bankruptcy or a debt management plan may be the more suitable route for one party, while an IVA is the best option for the other. We are able to advise you on the merits and drawbacks and help you to decide on the best way forward.
The IVA period is typically five years. It is uncommon for an IVA arrangement to last longer than this, but an IVA can be much shorter than the five years, if, for example, a friend or family member lends you a lump sum to offer full and final settlements.
There is no set time period that a DMP can last for. It is most suitable if you’ve hit a temporary sticky patch with your finances and reduces your monthly payments until you are in a position to resume your normal repayments.
There is no set time period that a DMP can last for. It is most suitable if you’ve hit a temporary sticky patch with your finances and reduces your monthly payments until you are in a position to resume your normal repayments.
In the UK, a bankrupt is usually discharged after twelve months. In rare cases, the Official Receiver can choose to extend the restriction period if there has been an element of misconduct.
As with bankruptcy, a DRO lasts for twelve months.
Any changes to your circumstances should be discussed with your IVA supervisor.
If you find your circumstances have changed for the worse, leaving you with less money that at the time the IVA proposal was agreed, it is possible to reduce the amount of the monthly payments. Any changes must be agreed by your creditors and it’s best that a reduction in payments doesn’t happen too quickly after the start of the IVA, as you’re creditors may question your commitment to the plan.
If you’re circumstances improve, for example, if you have pay raise or secure a better paying job, it’s important that you inform your IVA supervisor. In most cases, 50% of the extra income will be expected to be paid towards the IVA. Each IVA includes an annual meeting, whereby your income is reported, so any pay increases etc will need to be reported.
If your circumstances change and you have less money available to pay your debts than you did at the time the plan was agreed, you should speak to your DMP supervisor. They will re-negotiate the amounts with your creditors, or may advise that a different debt solution, such as an IVA, is now the most suitable.
If your circumstances change for the better and you are able to afford to resume normal monthly payments, you should also discuss this with your DMP supervisor who will either bring the plan to a close and inform your creditors, or suggest an increase in the monthly payment amount to the plan.
If you receive an unexpected windfall during the bankruptcy or DRO period, you must make the Official Receiver, or your bankruptcy/DRO trustee aware. It is likely that the money will be taken to repay your creditors and you will be permitted to keep the remaining balance.
A standard IVA, with all of the paperwork made available promptly, can take as little as four weeks to set up. Six weeks is the typical IVA set-up period, but it can take longer if non-standard proposals need drawing up or if paperwork isn’t available.
As a DMP is a less formal arrangement, it usually takes about two to three weeks to set up. You can ensure that the set up goes as quickly as possible by returning forms and sending in any statements and other paperwork that has been requested, as quickly as possible.
The amount of time it takes to declare yourself bankrupt will depend on how busy your local court is. Many individuals choose to fill in the forms themselves, and then it is simply a case of returning them to the court. You will then be given an appointment to attend Court for the bankruptcy to be finalised. This can happen the same day, or it could take a couple of weeks.
We would expect a Debt Relief Order to be granted within ten days of application.
Court fines, matrimonial debt (maintenance payments) and student loans are excluded from all debt solutions: bankruptcy, DROs, IVAs and DMPs.
IVAs and DMPs also exclude secured debt, such as a mortgage or a loan secured on a car or other asset.
Yes, it is possible, but it’s not as easy as just deciding you don’t want it anymore. An IVA is a formal, legal agreement and serious consideration should be given to all of its implications beforehand. You can always discuss any problems you are having with the IVA with your IVA contact and your supervising Insolvency Practitioner. They are there to support you and to help give the IVA the best possible chance of success. The failure of an IVA can lead to bankruptcy, especially if your circumstances haven’t improved in order to allow you to afford your repayments.
Yes, a DMP is designed to be a more informal arrangement, so if your circumstances improve, you can cancel the DMP and return to your normal repayments. If your circumstances haven’t changed, however, you need to think about how you are going to make repayments as you would have been accepted onto a DMP because you couldn’t afford your debt.
On the rare occasions that an IVA proposal we put forward is rejected, we will discuss the reasons for rejection with the creditors concerned and work to remove the obstacles. It is not the end of the road for your IVA if a creditor rejects a proposal, we can still communicate with them to resolve the issues.
Our personal insolvency team are experts in putting together difficult, non-standard IVA proposals and have an exceptional approval rate. Much of this is due to the fact that we would never advise you to apply for an IVA if you weren’t suitable. We are committed to giving ‘best advice’, meaning that if an alternative debt solution was better for you, we would advise you accordingly, even if this meant advising you of a debt solution that didn’t give us a fee.
If your creditors reject the initial DMP offer, we can negotiate; it is not the end of the line. We request explanations from creditors who have turned down the offer and do everything we can to remove any obstacles.
If you meet the criteria for bankruptcy or a DRO, the only reason a judge will not pass it is if he or she is of the opinion that you haven’t given it serious enough consideration and explored your other options.
It is important to remember that the main criteria for being accepted onto any debt solution is that you cannot afford your debt. You will not be approved for bankruptcy, a DRO, IVA or DMP if you can afford your repayments, but would rather write some of them off.
A secured debt includes mortgages, hire purchase agreements etc, as these are ‘secured’ on an asset. Unsecured debt includes credit cards, store cards, personal loans and overdrafts.
If you are applying to make yourself bankrupt, you will have to attend Court. It will generally not be a public affair and more often than not will involve a meeting with a judge in his chambers. Due to the rise in the number of bankruptcy applications, many applicants do not even need to do this; their paperwork is taken off them and taken to the judge who ‘rubber stamps’ it, and that’s it!
If a creditor is trying to make you bankrupt, there is no obligation to appear at Court, unless you want to dispute the case.
Court attendance is not part of the DRO procedure and it is very rare that a proposed IVA client would be required to appear at Court, but if this does happen, we can attend on your behalf.
As a DMP is not a formal arrangement, a court appearance is not part of the procedure.
For any debt solution, we would advise that you open a new bank account with a bank to which you do not have any outstanding debt. Banks perform credit checks when you apply to open an account, and sometimes, applications can be turned down if you’ve been having financial difficulties and not making repayments. Again, this is not the end of the road and we can help with recommended banks that have a policy of accepting applicants with a less than perfect credit history.
To find out if an IVA is the right debt solution for you, you should speak with an experienced debt adviser. If you are completely honest with them about your situation, and let them have all of the details and paperwork they request, your debt adviser will let you know if an IVA is the right course of action for your specific situation.
An IVA is a flexible arrangement and can be adapted to work for a great many debtors. In 2010 over 50,000 people successfully entered into an IVA with their creditors.
As a guideline, to meet the criteria for an IVA, you should have unsecured debts of £15,000 or more, at least three creditors and be able to pay at least £150 a month into the arrangement.
A full and final settlement is an arrangement with your creditors whereby they accept a lump sum payment, which is less than the total amount they are owed, in final settlement of your debt to them.
Full and final settlements stand a better chance of being accepted if creditors understand that you can’t afford the monthly repayments to all of your creditors and this situation is unlikely to improve. The lump sum can come from a friend or family member, or the sale of an asset.
All fees of the IVA are built into the monthly payments, so you will not have to meet any additional costs.
The fees involved are the ‘nominee fee’ for putting together and presenting the IVA proposal, and the ‘supervisor’s fee’ for overseeing the IVA from start to finish (usually five years).
Creditors agree the fees and they are taken out of the monthly contributions that you make, before we make distributions to creditors, so everything is taken care of with the single monthly payments that you make.
As with an IVA, all costs for the set-up and supervising of a DMP are built into the monthly payments. The set-up fee is equal to a single month’s payment on the plan, so we would keep the first month’s payment that you make and begin to make payments to your creditors on the second month. This is a standard procedure with DMPs and is agreed by the creditors.
The cost of supervising the DMP is 15% of your payments each month. When you make a payment, we would withdraw our 15% from it and then pay your creditors. Again, this is a standard procedure, agreed by creditors.
A Debt Relief Order is a single fee of £90.
The fee for the bankruptcy procedure is £680. If a creditor makes you bankrupt, they will have to pay a fee of £302, £990 deposit plus any solicitor’s costs, and you will not pay any fees.
One of the main appeals of an IVA is that your home is usually protected, which is not the case with bankruptcy. You may however decide that you would prefer to sell your home and put the proceeds towards repaying your debt.
As long as you keep up your mortgage repayments, there should be no threat to your home. You must also ensure you keep up with your IVA payments, as a failed IVA can lead to bankruptcy, which may well put your home in danger.
Towards the end of your IVA, you may be asked to release some of the equity by remortgaging, but this is subject to affordability and securing a remortgage deal.
Yes, as long as you keep up repayments on your mortgage, your house should remain unaffected by a DMP.
During the process of bankruptcy, your assets are ‘realised’, which means that your home and other assets will be sold to raise money to repay your creditors.
Individuals who own their own homes are not eligible for a Debt Relief Order.
