Bankruptcy

In effect the death of a person financially. The Official Receiver or a Licensed Insolvency Practitioner acting as trustee deals with all the bankrupts assets and liabilities accrued to the date of bankruptcy. The bankruptcy term is normally one year or less but, depending on your circumstances, you may have to pay contributions from your income for up to 3 years to the trustee. You can petition for your own bankruptcy or a creditor may petition for you to be made bankrupt for any debt over £5,000. All bank accounts held at the time of bankruptcy are normally lost but you can set up a simple bank account the day after you are made bankrupt. During bankruptcy you can only obtain small amounts of credit, are barred from being a company director and cannot be an MP! If you own a property in your sole name or jointly any equity will have to be realised by the trustee. However a third party, your spouse or another relative, friend (etc) can offer to buy your equity from the trustee and usually on very favourable terms. Your bankruptcy stays on credit files for 6 years.

If you have small debts under £20,000 and minimal assets (£1,000 assets plus a vehicle worth not more than £1,000) and have a maximum monthly surplus income of £50 you can apply for a Debt Relief Order (DRO) as an alternative to bankruptcy.

Individual Voluntary Arrangement (IVA)

A step away from bankruptcy. All your assets and liabilities are listed together with details of your income and expenditure and circulated to your unsecured creditors with an offer of payment to them, either as a one off lump sum of as monthly payments over 36 to 60 months. The offer must give a better return to your creditors than they would receive if you were made bankrupt. In most cases this usually means an offer of at least 30 pence in the pound and in any event normally a minimum contribution of at least £250 per month. Although IVA’s are legally binding formal arrangements they are not advertised in your local paper. To propose an IVA you have to use a Licensed Insolvency Practitioner to act as Nominee. Our managing director, Steve Little, is a director of a national firm of Insolvency Practioners and can advise you fully on all aspects of IVA’s.

Goldsmith Little  – Call us now on 01253 713799