Insolvency explained

What is insolvency?

There are two forms of insolvency in the UK: business and personal insolvency. Here we will provide information on personal insolvency – a situation facing thousands of individuals in the UK.

Insolvency basically means that you are unable to make payments towards your debts.

If you have debts of £15,000 or more, an IVA could be the answer to your debt problems. An Individual Voluntary Arrangement is a legally binding agreement between you and your creditors, which also provides protection from court action as you work towards clearing your debts.

An IVA allows you to pay and write off debt providing your creditors agree to the proposed repayment plan; however this is not always guaranteed*.

Insolvency and IVAs

Many people struggling with substantial amounts of debt think that Bankruptcy is their only option – but it’s not!
If you have tried to cut back on living expenses and are still finding it difficult to repay your debts, you may qualify for an IVA, which is a highly effective way for you to repay creditors at a rate you can afford. And providing you keep to the terms of the arrangement, you could become free from unsecured debts usually within 60 months.

An IVA is a specific type of debt solution that is built around the individual applying for an arrangement. To help you get started, we will help you complete a full expenditure form which will outline your current financial situation including your total income and outgoings. This information will help an Insolvency Practitioner create a realistic repayment plan, which they will use during negotiations with your creditors.

If your debts are lower than £15,000 and you need help getting your finances back on track, you may find that a Debt Management Plan is more suitable.

The Insolvency Register

If your creditors agree to the IVA proposal created by an Insolvency Practitioner and you continue with the arrangement, then you must be aware that your credit rating will be affected in the medium to long term, which will harm your ability to secure credit in the future. If you have a history of missed or late payments, then your credit rating may already be affected.

Your details will also appear on the Personal Insolvency Register, which is available to view online.

Discuss IVA and insolvency issues with our experienced team

If you would like to speak to our team about Insolvency or our services including IVAs, Debt Management Plans, please don’t hesitate to contact us on 0800 096 1331.

*For an IVA to be approved and interest and charges to be frozen it needs to be accepted by 75% of the creditors (by value). Homeowners may be required to re-mortgage after 4 years and release available equity to pay off some or all of the debt. Your credit rating will be affected for up to 72 months. Failure to adhere to an IVA may result in bankruptcy.