Every so often people have financial problems, we may be able to provide the right solutions for you. Remember that you are not alone – even though this is the probably first time you have had these problems, Carmichael & Co deals with them every day, and can usually put your mind at rest very quickly giving you appropriate advice. Whilst your creditors may not work late at night, if you want to call us use our out of hours number (0330 223 0965) which diverts to a senior person’s mobile phone, not a call centre, though it still costs the same as a local call. They can answer your question as long as they are awake and their battery is not dead.
This page provides solutions if you have personal finance problems. If your company has a problem, please look here. Reading is just the first step – talking to us for specific advice is the next one, and we won’t charge you until we have worked out which of the solutions is best for you.
If someone owes you money and you have been contacted by the Licensed Insolvency Practitioner acting for them, please look here.
Individual Voluntary Arrangements (“IVA”)
IVA’s can be a really good way to solve your financial problems if you are able to make an offer to your creditors that they are likely to accept. This normally means something better than bankruptcy. In return, creditors will not insist on making you bankrupt, so that you can hold on to your home, carry on trading and avoid your neighbours finding out.
If you are already bankrupt, you may be able to offer your creditors an IVA to get out of bankruptcy. There are strict time limits, so it is best to do this as soon as you can.
To enter an IVA, you tell the Licensed Insolvency Practitioner about everything you own and everything you owe, and discuss with him what you can afford to offer your creditors. Whilst we would always suggest that you make your offer as high as you can, you should always be conscious that offering more than you can afford will make it harder to stick to the agreement and may lead to the failure of the IVA.
When your offer has been prepared, it is sent to your local court with the Licensed Insolvency Practitioner’s report on it, and then sent to your creditors. They then have about 3 weeks to consider it, and vote. Occasionally creditors will attend the meeting, but usually they will complete a proxy form telling the Licensed Insolvency Practitioner how to vote. Sometimes creditors will accept the IVA if you agree to make certain changes, in these cases the Licensed Insolvency Practitioner will discuss the changes with you and explain what this will mean to you.
When your IVA is accepted by creditors, you will need to maintain the payments you have agreed. Otherwise, the Licensed Insolvency Practitioner will have little choice but to fail the IVA.
If you have done everything you should have done, at the end of the IVA you will have successfully dealt with all of your debts.
Bankruptcy is an insolvency process which is started by a bankruptcy petition. This can either be brought by you as someone who owes the money, or by someone you owe money to.
If you owe someone more than £750, after they have provided you with time to pay and taken certain types of legal action they may present a bankruptcy petition. You will have an opportunity to avoid bankruptcy (by showing that you have paid the debt and legal costs, or that the debt is not due), but if you really do owe the money you will be made bankrupt by the Court.
If you know that you owe someone money, and are unable to pay, you may decide that it makes more sense to petition for your own bankruptcy. Whilst this sounds an odd thing to do, it will mean that the process will start sooner and therefore end sooner. Experience has shown that this also removes some of the stress associated with the beginning of bankruptcy, and may therefore be a slightly easier option if either you or your partner is of a nervous disposition.
No matter how you got into bankruptcy, the procedure of the bankruptcy itself is always the same. You will be bankrupt for 1 year (unless you have contributed to your financial position), though the administration of the estate will continue until everything is dealt with. If this is not your first bankruptcy, it is usually expected that you should have learned from the first one so you are more likely to have the term extended.
Your affairs will first be dealt with by the Official Receiver, who works for the Insolvency Service, an executive agency sponsored by the Department for Business, Innovation & Skills. Your case may stay with that department, or may be transferred to a Trustee in Bankruptcy such as Marc Landsman of Carmichael & Co. Either way, almost all of your assets will be sold and the money used to pay the costs of the bankruptcy and your creditors. The main exceptions to assets which are sold are things you need for your work and personal effects such as clothing and furniture (unless it is particularly expensive).
If you own your home, any share of the equity in it will come into your bankruptcy. Since it is not possible to sell half a home, it will normally be offered to your partner if you have one. Otherwise, you may be able to buy it when you receive your discharge from bankruptcy. If this is not possible, the whole house will be sold, and your partner will get their share of the net proceeds. There are other solutions to this, but these are the most common.
Carmichael & Co is able to help you present your own bankruptcy petition, or advise you if you have already been made bankrupt. Marc Landsman also often acts as Trustee in Bankruptcy and therefore knows the position from both sides of the fence. Because Carmichael & Co acts for both bankrupts and creditors, we are used to all aspects of the problems which can arise, and can deal quickly and efficiently with them.
There are other ways to deal with your debts which Carmichael & Co do not deal with. This does not mean that they are not appropriate for you, but we do not offer loans (or introduce you to loan companies) as there are so many deals around we could not keep up with the best from everywhere. Other solutions are only dealt with by the court or other specialist firms and we believe that it is better to be good at what we do rather than offer a lot of answers which may be wrong.
|Bankruptcy||Individual Voluntary Arrangement (IVA)||Debt Relief Order||Informal Agreement with creditors||Loan||Debt Management Plan (DMP)||County Court Administration Agreement (CCAO)|
|Does it cancel all my debt?||Yes, when you are 'discharged', subject to certain exceptions listed later. But you will still have to pay your debts that are not allowed in bankruptcy, listed later.||Yes, when you have completed the terms of the IVA||Yes, debts are 'discharged' at the end of 12 months subject to certain exceptions. But you still have to pay debts that are not allowed in the DRO, listed later.||No||No||No||No, unless the court makes an order of this|
|What types of unsecured debts are owed?||Any, with certain exceptions, such as fines, student loans and maintenance payments||Any, but in practice debts excluded by bankruptcy are usually excluded from IVA.||Any, with certain exceptions, such as fines, student loans and maintenance payments.||Any||Any||Any||Any|
|Will they all be included?||Yes||Yes, if your proposal is approved by 75% or more of creditors (having regard to how much is owed to each of them) on the day they consider your proposal.||Yes, but only on creditors included on your application form.||No||Only on creditors paid in full||Only on creditors paid in full||Yes|
|Does it stop them from chasing me?||Yes||Yes - when creditors agree your proposal||Yes||No||No||No||Yes|
|How much debt can be included?||No minimum if it is your own petition (£5,000 if the petition is by a creditor)||Legally, anything, but practically unless you owe more than about £15000 and can afford to pay £200 per month one of the other solutions is probably better.||Maximum amount owed in total is £20,000||Any||Any||Any||Anything up to £5000. You must have at least 1 judgment debt.|
|I own my home - will I lose it?||May be avoided if you, a spouse/partner or a relative can buy your share of the equity in it. Again, keep up to date with the mortgage.||If you keep up with your mortgage, probably not, but you may need to pay something from your share of any equity in it||No, homeowners will not qualify for DRO||No, but you need to keep up mortgage||No, but you need to keep up mortgage. The provider may wish to secure this against your property.||No, but you need to keep up mortgage||No, but you need to keep up mortgage|
|What about my other assets?||Most assets fall into the bankruptcy and the Trustee will sell them (things you need for work or living are generally outside this)||Whatever you agree with the creditors||You can only get one if you have less than £1,000 in assets (subject to some restrictions), so you keep them||Usually you keep them, but will have to tell the creditors, and they may ask you to sell them||Not affected, though you may need to provide them as security for the loan||Usually you keep them||Usually you keep them|
|How long will it take?||Usually 1 year but you may have to make payments from your income for up to 3 years||Typically 5 or 6 years for an income based IVA or approximately 12-15 months if a lump sum deal.||Usually 1 year||No fixed time||No fixed time||No fixed time||Until last payment made|
|Will it affect my job?||Possibly if you handle money or are in certain professions||Possibly if you handle money or are in certain professions||Possibly if you handle money or are in certain professions||Probably not||Probably not||Probably not||Probably not|
|Is there any investigation?||Yes||The Nominee will review to make sure your offer is reasonable and you have not tried to mislead creditors||The Approved Intermediary will review to make sure your offer is reasonable and you have not tried to mislead creditors||No||No||No||No, but you will have to make a declaration to the court that it is correct|
|Is my credit rating affected?||Yes (for a period of 6 years from date of commencement)||Yes (for a period of 6 years from date or commencement)||Yes (for a period of 6 years from date of commencement)||Possibly||Possibly||Yes (for the duration of the DMP)||Yes (for a period of 6 years from date of commencement)|
|Will it be recorded on a Public Register?||Yes||Yes||Yes||No||No||No||No|
|Who chooses who deals with it?||The creditors or Official Receiver||Suggested by you, normally agreed by the creditors||The Official Receiver||You or do it yourself||You, but you may not get the loan||You||The Court|
Just to remind you, reading this page was just the first step – talking to us for specific advice is the next one, and we won’t charge you until we have worked out which of the solutions is best for you.
If you speak to us and we think one of the solutions we do not offer is the best, we will always tell you.