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What Are The Options If I am Personally Insolvent?
07th June 2017

If the situation is hopeless, the obvious option is bankruptcy.

An alternative is an individual voluntary agreement (‘IVA’) with your creditors — similar to a CVA (see 9), except that the contract is between the individual who owns the business, and all of their creditors. At least 75% by value of the creditors who vote at a meeting must agree to it. Secured creditors will still be able to enforce their security. As with a CVA, a licensed insolvency practitioner must be appointed to supervise the process.

You will have a better chance of avoiding bankruptcy if you take action before a creditor tries to force you into bankruptcy. It can sometimes be possible, however, to reach a voluntary arrangement even after a bankruptcy order has been made and to have the order cancelled.

If you owe less than £15,000, the total value of your assets (excluding any car worth less than £1,000) is no more than £300, and your disposable income (after tax, national insurance contributions and normal household expenses) is no more than £50 per month, you may be able to apply to the court (online) for a debt relief order – although there are other conditions too. This stops creditors from enforcing their rights against you for (usually) a year, while you try to sort your affairs out.

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