Personal insolvency advice – the important information needed
For individuals facing financial trouble, a number of insolvency procedures can be implemented to aid their situation.
In any instances where this threat prevails it is of vital importance to act quickly to limit any potential negative impacts that could occur.
It is recommended that professional help from insolvency practitioners is sought as they should be able to provide personal insolvency advice and recommendations on the best course of action.
There are a wide range of options available for individuals in difficulty, but in the main, information relating to bankruptcy and individual and partnership voluntary arrangements are sought.
Individual voluntary arrangement
In an IVA, an offer will be made to the creditors that is above what they would otherwise receive should bankruptcy occur.
Any agreements are legally binding and will detail how liabilities and debts must be handled by the individual involved.
A preferred option, an IVA enables control to be maintained over an individual’s business so that the financial situation should not impact too heavily upon operations.
Any liabilities will be repaid over a certain period of time – either in full or in part depending on if it cannot be afforded.
Importantly, any issues with the Inland Revenue or VAT can also be dealt with using this method.
Partnership Voluntary Arrangements
In a similar vein to an IVA, a partnership and partners could be faced with that partnership being petitioned into liquidation or the potential of bankruptcy.
Partners can look to avoid the stigma that comes with bankruptcy while a PVA should also reduce the likelihood of losing any professional qualifications as a result of a bankruptcy order.
Using a PVA also enables a business to continue trading, viewed as being beneficial to creditors, while it means a company could be sold as a growing concern, possibly providing higher returns.
Essentially, this format of agreement is made between partners and creditors and will see creditors repaid from any future profits, or from the sale of business assets.
For bankruptcy to occur, a creditor must present a bankruptcy petition to court which must then be agreed.
The assets of a bankrupt individual are then vested in their trustee who realises them to the benefit of creditors.
It is possible to obtain a discharge from bankruptcy after 12 months but a number of circumstances must be met in order for this to occur.
By Phil Smith