Bankruptcy

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UK Bankruptcy Law


Bankruptcy in England, Northern Ireland and Wales

Bankruptcy law offers debtors two routes. The first choice is one that debtors themselves opt for, and the second one is an option that the creditors can exercise. Debtors can file for a petition, called a debtor's petition, at the London High Court. This gives relief from financial miseries. Creditors can file a creditor's petition and this affords them an opportunity to recover any debts.

The Official Receiver or an Insolvency Practitioner manages the bankruptcy proceedings, though the IPO should be authorized by the relevant body's Department of Trade and Industry.

Bankruptcy in Scotland

The UK has two main personal insolvency practices: one for England and Wales and there is another one for Scotland. England and Wales mostly have “bankruptcies”, and the remainder fall into Individual Voluntary Arrangements or IVAs.

Scotland's equivalents are Sequestrations, and their Trust Deeds offer much the same as an IVA.

Trust Deeds differ slightly from the English IVA and are only available to Scottish residents but the underlying principles are the same: interest and charges get frozen and unpaid debt is written off at the end of the agreement.

Harrington Brooks is the leader in debt management, and offers advice on secured and unsecured loans, IVAs, debt consolidation plans and remortgages.


Individual Voluntary Arrangement (IVA):

  • Unsecured debts only
  • Initial debt advice is free but fees are payable if a debt solution is agreed.
  • An IVA should only be considered in extreme circumstances as failure to adhere could result in bankruptcy. Debt write off applies only where the IVA is accepted by at least 75% of your creditors (in terms of debt value) of those creditors who vote at the creditors' meeting convened to consider your IVA proposal and you have completed the, typically, 60 month term. Some homeowners may be required to release equity.
  • Fees and Costs: An estimate of the costs involved in the arrangement will be included within your proposal; however these fees are subject to change at the creditors meeting. Once the creditors have approved your IVA the basis of our fees will be set and an up to date schedule of fees will be issued to you. Chargeable fees are made up of Nominee's fees which relate to the assistance given to prepare your proposal and will be taken from the first payments made into your arrangement, and Supervisor's fees which relate to the ongoing monitoring, supervision and administration of your IVA and which will be charged on a monthly basis and deducted from the contributions you pay into the arrangement. No further fees are payable by you.
  • Credit Rating: A record of your IVA will be retained by credit reference agencies for a period of six years. Your credit rating will be impaired and it may be harder to obtain credit in the medium to long term.
  • Cooling Off Period/Right to Withdraw: You can withdraw your proposal for a voluntary arrangement at any point up and including the day of your creditor's meeting. Once the arrangement has been approved at the creditors' meeting and you have agreed to be bound by its terms, you have entered formal insolvency proceedings and no cooling off period applies.
  • Terms & Conditions apply.

The Insolvency Service have produced an 'In Debt? Dealing With Your Creditors' guide which summarises key features of each of the main ways of dealing with debt.

Financial Management Plans:

  • Unsecured debts only.
    Initial debt advice is free but fees are payable if a debt solution is agreed.
  • A key benefit of the Plan is the ability to only repay what you can afford each month. Clearly the consequence of this is that it will take longer to repay your debts, and creditors do not have to agree to freeze interest and charges. You will receive allowances to pay Secured and Priority debts.
  • Fees and Costs: An 'Initial Fee' is the set up cost of your Plan and is equal to two months disposable income, subject to a minimum of £295 and will be retained from your initial payment(s). Whilst you pay our initial fee, monies are not distributed to your creditors and this retained payment may place you in arrears.
    A 'Monthly Fee' payable for our services will be charged thereafter, equal to 17.625% of your monthly agreed disposable income, subject to a min of £35 and a max of £100.
  • Credit Rating: Entering into a Plan means contractual payments will be missed and your debt and repayment term could increase. Your credit rating will be impaired and it may be harder to obtain credit in the medium to long term as records will be retained by credit reference agencies for six years.
  • Cooling Off Period/Right to Withdraw: On receipt of your first payment we will issue to you a key features document and estimated fees schedule. If for any reason you wish to cancel we offer a seven-day cooling-off period from the date of said letter in which we offer a full refund of any fees which we have taken.
  • Terms & Conditions apply.

One Advice Group . Jackson House . Sibson Road . Sale . Manchester . M33 7RR . United Kingdom