insolvency bankruptcy

Insolvency Bankruptcy has been set up to provide free information in relation to both Insolvency and Bankruptcy.

When it gets to a stage when you are contemplating the effects of insolvency, bankruptcy or perhaps other financial hardship it can do no wrong to receive a free financial review from qualified debt professionals. The information on this site has been provided by Robson Scott Associates an insolvency practitioner based in the North East. They cover all aspects of debt management including IVA’s. Insolvency bankruptcy, Debt management plans and consolidation loans.

Insolvency is generally defined as a financial state in which a company can no longer pay its bills and other obligations on time. Insolvency occurs when liabilities or debts exceed assets and cash flow. Once a company becomes insolvent, it must take immediate action to generate cash and settle or renegotiate current debts. Companies which cannot successfully pull themselves out of insolvency often face bankruptcy proceedings, receivership or liquidation of all assets.

Insolvency is commonly confused with bankruptcy, and the two concepts are not dissimilar. Both insolvency and bankruptcy deal with liabilities exceeding assets, but insolvency is a state of being and bankruptcy is a matter of law. Companies can be insolvent but not legally bankrupt. Insolvency can lead to bankruptcy, but the condition may also be temporary and fixable without legal protection from creditors.

Bankruptcy means that your financial affairs are administered by an official receiver or a Trustee appointed at the creditors meeting or otherwise. In other words, a Trustee controls all that you own including your house. A Trustee also administers all that you owe. Essentially, the duty of a Trustee is to sell all your permitted assets (this can include your home contents, primarily those of high value) and use the money to pay as much as possible to your various creditors who are the people that you owe money to.

What is the diference between insolvancy and bankruptcy?
Although quite similar there is a significant difference between the two – Insolvency is described as either having more debts than assets or the preferred definition is not being able to pay your debts as they fall due.

Bankruptcy is the state you’re in after the judge has made a bankruptcy order against you. You have to be insolvent to be made bankrupt but you do not have to be bankrupt to be insolvent.

Alternatives to bankruptcy?
An IVA is an alternative to bankruptcy and was introduced in the insolvency act 1986. It allows an individual who has debts usually over £15,000 to make a proposal to their unsecured creditors to reach an affordable monthly settlement. If approved the IVA becomes legally binding and a payment schedule is put in place between the borrower and the lenders. This is usually arranged on a monthly basis over a five year term.
Qualifying for an IVA is relatively straight forward. It is usually based around three core elements.

1) You have a minimum of £15,000 debt.
2) You are in debt to a minimum of three different companies
3) You are in regular full time employment.

If you can match these criteria then you may be entitled to apply for an IVA and have up to 75% of your debt written off along with benefiting from all the other key benefits of an IVA.

What is the difference between bankruptcy and an IVA?
Fundamentally they are both financial tools designed to help resolve difficult financial situations. Outside of this similar characteristic they are both critically different. Bankruptcy is an application to the court to be discharged or rid of your debts. That comes with a price however. The price paid is both a substantial amount of up-front court fees that will need to be paid, loss of control of your assets and the reality that you will have been made bankrupt, a situation that can significantly impact your future credit file, ability to get credit and some jobs.

IVA, or Individual Voluntary Arrangement, on the other hand is an incredibly effective way to eliminate debt problems, without the pain and stigma of bankruptcy. The IVA allows debtors to come to a binding agreement with their creditors, reduce the total amount owed, make affordable monthly payments, maintain control of homes and other property, and does not impact job status.

All that being said, bankruptcy is an appropriate solution in situations where the debtor is unable to afford to make reasonable reduced monthly payments. Sometimes bankruptcy is the best tool to use and should not be discounted simply because it is bankruptcy.

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Free debt advice:
For a confidential debt advice service, handled by debt solution professionals, please complete the simple referral form below. When you complete the form on InsolvencyBankruptcy a debt recovery agent will make contact with you and fully asses your financial circumstances. They will then assist you in finding the best solution for your situation.

We are here to help
Divorce, illness, redundancy, and even moving house - all can cause added financial stress, which in today's society can lead to serious debt problems. Robson Scott Associates, was set up to offer those with debt problems free advice. We take a non-judgmental approach to your situation, and a straightforward approach to your finances. We specialise in all aspects of debt management including: Debt management plans, IVA’s, consolidation loans, bankruptcy, insolvency, remortgaging & informal arrangements. We are also licensed Insolvency Practitioners, so if you do require advice on a formal insolvency process like IVAs, we are in the best position to provide it. With the aid of Government Legislation, Robson Scott Associates could help you to:

Only pay back what you can afford

Reduce your monthly repayments

Stop interest and charges

Protect your home