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What is Insolvency and How Can You Deal With It?

This debt advice applies to individuals in the UK with personal debts.

Insolvency means you cannot sustain nor afford debt payments at their due period. An individual who is in the state of Insolvency is termed as insolvent.

When you have more debts or liabilities that you’re unable to pay than your overall assets, you’re in the condition of insolvency. This means an insolvent individual is incapable to satisfy debt payments upon the date that the debts become due.

If you are insolvent, you can explore several debt solutions that you can qualify. These can be legally binding, which allows you to secure protection against your creditors and write off your debts.

Each of the debt solutions consists of set requirements for you to qualify. In most instance, insolvency solutions can only be appropriate for those whose debts are over the total value of your assets.

If you are uncertain which insolvency solutions to consider, our debt experts can guide you in choosing the best possible option.

Insolvency Solutions in the UK

The insolvency solution that you can consider depends on where you live in the UK.

Insolvency in England and Wales

Debt Relief Order (DRO) – allows you to write off your debt when you don’t have inadequate disposable income, few assets and low debt levels.

Individual Voluntary Arrangements (IVA) – an IVA is designed for people who can’t afford payments but may still have the adequate disposable income to sufficed reduced payments each month over 60-70 months while writing off the outstanding debts.

Bankruptcy – if you cannot pay any to your debts and there’s no chance or hope that your circumstances might improve over a short period

Insolvency in Scotland

Minimal Asset Process (MAP) – this is for people with 0 disposable income and few assets

Protected Trust Deed – it is similar to an IVA but differs for payments terms where it can take over four years while an IVA takes around five or six years

Sequestration – it is Scottish bankruptcy, which is also referred to as full administration bankruptcy

Insolvency in Northern Ireland

Debt Relief Order (DRO) – allows you to write off your debt when you don’t have inadequate disposable income, few assets and low debt levels.

Individual Voluntary Arrangements (IVA) – an IVA is designed for people who can’t afford payments but have the adequate disposable income to pay in lower than the original payments over 60-70 months.  This will write off any outstanding debts.

Bankruptcy – if you cannot pay any to your debts and there’s no chance or hope that your circumstances might improve over a short period

Insolvency Register

Both individual or business insolvencies are registered on The Gazette.  Anyone who wishes to view it can access the information online. 

In Scotland, personal or individual insolvencies are listed in the Register of Insolvencies, while some of the corporate or business insolvencies are registered in the Edinburgh Gazette.

Moreover, the insolvency register contains the information of all current insolvencies and those that are termed within the last 3 months. Restriction orders are also recorder such as bankruptcy restriction orders.

Registers within each country in the UK are also present. These are:

How can I become insolvent?

Each insolvency option differs when it comes to the process of application. In most instances, you need a a government accredited money advisor  to help you process the application.

Though creditors can apply to the court for your bankruptcy, this is rare in practiced. Creditors are unlikely to consider this options since it has extra costs and it is uncertain that you have enough assets to cover the debt. If a creditor file bankruptcy for debtors whose assets cannot cover the costs and amount of debts, the creditor is unlikely to et the money back.

UK Insolvency Service

The law concerning insolvency differs depending on where you reside in the UK. Each country has its own governing body.

In England and Wales, the Insolvency Service runs the insolvency. In Scotland, the Accountant in Bankruptcy administers the personal bankruptcy process and designates corporate insolvencies in place of the Scottish Government.

Insolvency Help and Advice

Before considering any insolvency solutions, make sure you seek for a debt advice. We can help you weigh things and determine the best possible alternatives for you.

You can use our debt advice tool or contact us and speak to our debt experts. We will help you in choosing the best alternatives to knock down your debts. We keep everything confidential. Should you wish to speak via phone, call us on 0800 193 1024.