Bankruptcy and Individual Voluntary Arrangements, and a London solution

If you cannot pay your debts you could be made bankrupt, or make yourself bankrupt.

Other options are an individual voluntary arrangement (‘IVA’) which means that you pay your creditors a percentage in the pound over a period such as 2-5 years.

75% of your creditors by a value have to accept that arrangement.

It can avoid terminal damage to your credit rating, and means that the creditors get something.

Institutional creditors like banks and finance companies have a different policy. American Express has a different policy from Diners Club.

Expert legal advice should be taken at an early stage.

The Official Receiver will be your trustee and will handle your affairs but very often a private trustee will take over, typically a Chartered Accountant or Insolvency Practitioner. They have wide powers and are not your friends. They tend to be based in the West End or North London and pass work between themselves accountants and solicitors and it is something of a “mafia”.

The whole thing is fee driven. They do not care about the creditors, and only want to get their fees. A typical fee is £5,000 and therefore very often if they get that amount an arrangement can be made not to pursue you too hard.

It is important to cooperate and above all when you give the Official Receiver or trustee details of your assets and liabilities, it must be completely true. The form you have to sign has the force of the Perjury Act and you can go to prison if you tell lies or do not completely disclose all your assets.

Most bankruptcies are preceded by a statutory demand and you only have 18 days to set it aside, not the 21 days that the form suggests. This is on the basis that you do not owe the money, or you have a counterclaim or the debtor has security.

If you need help with an application to set aside a statutory demand, help is at hand and Hylton-Potts offer highly competitive fixed fees, and have particular experience handling the bankruptcy court in London.

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