Our Services - Personal Insolvency
We provide advice on Debts, Informal Arrangements, Debt Management Plans, Individual Voluntary Arrangements, Debt Relief Orders, County Court Administration Orders, Bankruptcy, Deceased Insolvent Estates, Fixed Charge and LPA Receiverships.
Debt advice, informal arrangements and debt management plans
In some cases an IVA or bankruptcy is not appropriate and a debt management plan or other informal arrangement is preferable. We will consider the advantages and disadvantages of such a solution given your particular circumstances. As a general rule however, they should not last for too long a period of time. Where protection from creditors is needed and debt forgiveness is sought such an approach is likely to have limited applicability. See the government publication: "In Debt- dealing with your creditors" for an impartial comparison of the alternatives at the following website:
Individual Voluntary Arrangements (IVA’s)
If you alone or jointly with your business partner or spouse have financial problems arising from personal expenditure or from your unincorporated business you may wish to consider Individual Voluntary Arrangements as a preferable alternative to Bankruptcy. An IVA is a very flexible procedure. Each proposal is tailored to suit the individual’s circumstances incorporating and dealing appropriately with domestic and business assets and liabilities. In simple terms it is a legally binding contract between you and your creditors. An IVA may allow the survival of a viable core business, it may allow you to retain your home and it is not necessary to offer a payment in full to your unsecured creditors where the facts demonstrate that this is not possible within a reasonable timeframe. A fair and reasonable proposal will be treated by creditors on its merits. Creditors may seek to modify the proposal but only with your consent. If seventy-five percent or more by value of the creditors who vote accept what is offered, the rest of your creditors are bound by the terms of the proposal.more information
Debt Relief Orders (DRO's)
Where individuals have creditors of less than £15,000, assets of less than £300 (ignoring in the calculation pension funds and vehicles valued at less than £1,000 because they are excluded) and surplus income of less than £50/month after paying essential personal and household expenditure, a Debt Relief Order (DRO) may be appropriate. A DRO lasts for one year. Once a DRO has ended you are released from your debts. For further information please follow the website link to the Insolvency Service below:
County Court Administration Order
The court may make an administration order if you owe no more than £5,000 to at least two creditors and you have a court judgment entered against you by one of your creditors that you can not pay in full. Under the order you must make weekly, monthly or quarterly payments from your income to the court which shares them among your creditors in proportion to the amounts owed. The Court may make an attachment of earnings order directing your employer to deduct the payments from your wages. You can apply to make payments for a limited period (eg 3 years) using a composition order. For more information please use the following website link:
Bankruptcy is a formal court procedure which may commence either by you filing your own bankruptcy petition or by one of your creditors doing so if you owe them at least £750. 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 a vehicle) unless they have a high value. If you have surplus income after meeting your reasonable household and personal expenses, you will have to make payments out of your income for three years. Your assets are dealt with by the Official Receiver (a government official of the Insolvency Service) or a licensed insolvency practitioner. Bankruptcy usually lasts one year (although its restrictions may be extended in exceptional circumstances where you are you are subject to a bankruptcy restriction order). Once you have been discharged you are, with certain exceptions, released from your debts.
Fixed charge and LPA Receivers
Fixed charge documents usually enable a lender and holder of fixed charge security over a property to appoint a fixed charge or an LPA Receiver over that property and to take possession and dispose of it in order to settle or part settle the lenders debt. Property usually refers to freehold or leasehold land or buildings but can also include accounts receivable (sales ledgers) and fixed plant and machinery. A creditor holding a fixed charge may appoint a receiver with certain limited statutory powers under the Law of Property Act 1925, s101(1). In practice the fixed charge will be drafted much more widely to include, for example, powers to manage the debtor's business from the freehold premises subject to the charge and to sell the property. Insolvency Practitioners at Richard J Smith & Co are qualified to act as Fixed/LPA Receivers. For further information please see:
Deceased Insolvent Estates
Deceased Insolvent Estates can be dealt with under the Administration of Insolvent Estates of Deceased Persons Order 1986, which is similar to Bankruptcy, but it is often possible to work with the Executors and deal with such estates in an informal manner with the agreement of the creditors of the deceased.