Personal Debt

Are you regularly receiving letters and telephone calls from your creditors demanding payment of your arrears with threats of debt collectors, court action or even bankruptcy?

After your basic living costs, do you have an amount of money that you are desperately trying to spread amongst all of your creditors?

If this sounds familiar, then an IVA could be the ideal solution to remove that creditor pressure once and for all.

An IVA may be appropriate if you are self-employed, a sole trader, employed or in receipt of a pension or benefits.

When you consult us, we will review your financial situation and produce an accurate assessment of your circumstances and then clearly explain the different options that are available to you to resolve your financial difficulties.

We provide straightforward, unbiased advice and a full explanation of both the benefits and drawbacks of the different solutions so that there are no unknowns or surprises.

There are no fees or other expenses for you to pay up to this stage and no obligation on you to enter into an IVA or any other debt solution.

We want you to choose the debt solution which you think is the best for you.

Speak to one of our expert advisers on 01204 292 373  All conversations are held in the strictest confidence and without any obligation.

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A brief overview of the main debt solutions available is provided below and also details of free advice that is available to people in debt.

Individual Voluntary Arrangement “IVA”

An IVA is an agreement between you and your creditors and it will protect you against any further action from your creditors providing that you stick to your side of the agreement.

When an IVA is accepted it must be supervised by an authorised Insolvency Practitioner.

Newton Cooper will work out what you can afford to repay and how long the IVA lasts, which is typically 5 years if the only money to be paid into the IVA is from your future income.

The IVA could be much shorter than 5 years if there are additional lump sum amounts to be paid into the IVA but in some circumstances it could be extended, usually to 6 years.

Newton Cooper will draft a Proposal to put before your creditors which will include details of all of your assets and liabilities and your monthly income and expenses.

Your creditors will be asked to vote for the acceptance of the IVA and it will be accepted if creditors owed 75% of your debts agree to it.  It will apply to all your creditors, including any who disagreed to it.

Creditors may ask for modifications to the IVA before they will accept such as a slightly increased monthly payment or an increased duration but these modifications cannot be accepted without your agreement.

You will be advised whether your failure to agree to any proposed modification will mean that your IVA will be rejected and thus leaving you to consider another solution to your financial difficulties.

All costs of the IVA will be deducted from the money that you pay into the IVA and will include a set-up fee, known as the Nominee’s fee, and then fees for supervising the IVA after it has been accepted, usually based on a percentage of the money you pay into the IVA.

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Bankruptcy Annulment

Newton Cooper can help you to apply to cancel (‘annul’) your bankruptcy at any time if the bankruptcy order should not have been made, you have entered into an IVA or you have paid (or a third party has guaranteed to pay) all of your debts and the costs of the bankruptcy.

You will still need to attend your interview with the Official Receiver if you have been asked to.

If successful, the annulment will remove the bankruptcy order from your records as if it had never been made.

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Bankruptcy

Making yourself bankrupt is one option to deal with your financial difficulties but you should take advice before you make this decision so that you are fully aware of the advantages and disadvantages of being made bankrupt.

The Government will charge you £680 to make yourself bankrupt and this amount may be paid by instalments but the bankruptcy order will not be made until after the costs have been paid in full.

After you have filed your bankruptcy petition and fully paid the costs, an adjudicator will make the decision as to whether to make you bankrupt and you will usually get an email or letter from the adjudicator within 28 days of submitting your application to say if you have been made bankrupt.

You will then get a letter from the official receiver with an information pack that explains what you need to know and what you must do.

You may be asked to fill in a questionnaire, attend an interview with the official receiver (or be interviewed by telephone) and give the official receiver more information about your debts, creditors, assets and income.

Your assets can be used to pay your debts but you can usually keep items needed for your job, such as tools or a vehicle and also household items, such as clothing, bedding or furniture.  You will have to comply with bankruptcy restrictions.

After 12 months you are usually released (‘discharged’) from your bankruptcy restrictions and debts but any assets that were part of your bankruptcy can still be used to pay your debts.  Your release may be delayed if you do not provide the information requested from you by the official receiver.

Your home may be sold depending on the value of your equity (your share after any secured debts such as a mortgage have been paid).

You may be able to delay the sale of your home if you need to organise somewhere for your children or a partner to live but the sale cannot be delayed for more than 1 year.

The official receiver will tell you if you have to make monthly payments from your spare income and these payments, which can last for up to 3 years, are called an Income Payments Agreement (IPA).

If you do not agree to the IPA, the official receiver can ask the court to order you to make monthly payments and this is called an Income Payments Order (IPO).

An insolvency practitioner may be appointed as the trustee of your bankruptcy in place of the official receiver and his duties will primarily be to collect in your assets, including the monthly payments from your income, and distribute this money between your creditors.

Your creditors are also able to issue a petition for your bankruptcy providing that they (or several of them acting together) are owed at least £5,000.

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Debt Relief Order (DRO)

A Debt Relief Order (DRO) is another way to deal with your debts if you owe less than £20,000, do not own your home, own assets worth less than £1,000 and have spare income of less than £50 per month.

You must also have lived or worked in England and Wales within the last 3 years and have not previously applied for a DRO within the last 6 years

If you obtain a DRO your creditors cannot recover their money without the court’s permission and you are usually freed (‘discharged’) from your debts after 12 months.

You get a DRO from the official receiver but you must apply through an authorised debt adviser known as an intermediary, who will help you fill in the paperwork.

The official receiver’s fee is £90 and the intermediary will tell you how and when to pay it.

If you get a DRO, you must follow rules called ‘restrictions’ which state that you cannot borrow more than £500 without telling the lender about your DRO, act as the director of a company, create, manage or promote a company without the court’s permission nor can you manage a business without telling those you do business with about your DRO.

The DRO can be cancelled if your finances improve or you do not co-operate with the official receiver.

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Administration Order

An administration order is a way to deal with your debt but you will only be eligible if you have a county court or High Court judgment against you, which you cannot pay in full, and you owe less than £5,000 to at least 2 creditors.

You will have to prove that you can afford regular monthly repayments and you will make 1 payment each month to your local court, which the court will divide between your creditors.

The court decides how much of your debt you have to repay (all or just part of it), how much your monthly repayments will be and how long the arrangement will last.

Creditors listed on the administration order cannot take any further action against you without the court’s permission.

If you do not keep up your repayments, the court can cancel the arrangement or ask your employer to take money from your wages.

You may still be able to keep your business running, if you have one.

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Debt Management Plan (DMP)

A Debt Management Plan is an agreement between you and your creditors to pay all of your debts and can only be used to pay ‘unsecured’ debts, which are debts that have not been secured against your property.

You can arrange a plan with your creditors yourself or through a licensed debt management company that is authorised by the Financial Conduct Authority (FCA).

You will give the company details of your financial situation and they will work out your monthly payments.

The company will contact your creditors and ask them to agree to the plan (they don’t have to) and, unless stated in the agreement, your creditors can still ask you to pay your full debt at a later date or take action to recover their money even if you keep up your payments.

You will make regular payments to the company and they will share the money out between your creditors.  Your plan can be cancelled if you do not keep up your repayments.

Some companies will charge a set-up fee and a handling fee each time you make a payment.

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Free Debt Advice

The Money Advice Service set up by the Government provides free and impartial money advice.