The debt situation in the UK seems to be getting worse as the credit card age is catching up with many people in Britain.  Many consumers have lived on their credit cards for the last few years and now they find themselves making payments they can barely afford and little expendable income.

Personal insolvencies in England seem to be pointing to a divide between the North and the South of England, according to figures last year.  New data released from the Insolvency Service shows that bankruptcies and individual voluntary arrangements (IVA’s) were at the highest rate in the North East of England with the lowest level being in London.

Bankruptcy – The oldest way of getting rid of unmanageable debt. Bankruptcy is usually over after one year, but you are likely to lose  your house and any other assets you may have in order to pay your creditors

Individual voluntary arrangement (IVA) -  An IVA is a deal between you and your creditors to pay your debts.  Less stigma, less chance of losing your home, but involves paying a percentage of your debts over a number of years

Debt Relief Orders – The were first brought into force in 2009 and allow people with debts of less than £15,000 and little assets  to write off debts without having to declare themselves bankrupt.

Due to people finding themselves out of work with unmanageable credit card bills, personal insolvency’s are currently at record highs.

The reason that the North East of England has been  hit the hardest is partly due to the fact that it had a higher than average unemployment rate and one of the region’s main source of jobs: the construction industry, was hit dramatically during the recent economic downturn.

These figures that were recently released show the statistic’s for 2009 however if recent data is to believed, then these figures are due to become much worse. The number of people being declared insolvent have been increasing each quarter with that trend expected to continue.

There was a 17.9% increase in personal insolvencies compared with the same period a year earlier.

The advice from the United Kingdoms debt charities is to get help as soon as they realise they are facing unmanageable monthly payments.  They continue to say that you should not ignore your debts as many people in the UK seem to do.  It can be tempting to ignore the calls and throw the letters in the bin but this is not a long term solution.  Only be confronting the debt can you start to resolve it.

Many people in debt might consider an IVA as the best way forward.  The first thing to do when considering an Individual Voluntary Arrangement is to arrange a meeting with an Insolvency Practitioner. This meeting can take place over the telephone or face to face.  This meeting will determine if you are suitable for an IVA and you may also discuss what your other options are.  If its decided that an IVA is the best solution, then the next step is for the Insolvency practitioner to get all the information in relation to the debtor’s finances.

The Insolvency practitioner is under obligation to verify all information given by the client, therefore they will require proof to that the details you have provided are correct.  Once the Insolvency practitioner had verified the  information, they will begin to draft their proposal. The proposals must be fair to both the creditor and debtor. The idea of this is to detail the maximum amount the debtor can afford  and to show the creditor this information so the creditor will accept the amount offered.
Once the proposals have been drawn up, the debtor will peruse proposals and sign them. An IVA is legally binding so it is imperative that all information is accurate.  Once the proposals are signed by the debtor, they are then sent to the creditors.

Creditors are given approximately 2 to 3 weeks to decide if they are to accept the proposal. Creditors can choose to accept, reject or accept with modifications.
To get an IVA passed, 75% of the value of the debt must be accepted. So, as long as the creditors who represent 75% or more of the total debt choose to accept the proposal, then the IVA is accepted even if some creditors decline the proposal..

Petitioning for bankruptcy can be a very daunting process, however, the procedure is probably not quite as bad as anticipated.
You Must go to the court where you live and obtain the forms and find out how much the fee will be. Once you complete the forms you must return to court with the fee. Above all you should take advice before you take this very major step.
Once the petitioner has their bankruptcy order, they will then be given directions to go to the Official Receivers office.  When they arrive at the office, they will need to wait until their name is called.  Once their name is called, a copy of the bankruptcy order will be taken and they will be given information regarding bankruptcy.

The petitioner will then be given a time and date of an appointment with the Official Receiver, on occasions this can be done on the same day, but more often than not a telephone appointment will be given anywhere up to 2 weeks after.

On occasions the petitioner will need to return to the Official Receivers office for an appointment.  Either way is possible so there is no need for concern if the petitioner is required to go back to the office rather than receiving a telephone call, it will basically be which way is more convenient.

Bankruptcy generally lasts 1 year; however, discharge from bankruptcy can be earlier or later depending on if there are any restrictions placed on the bankruptcy.

Choosing to go bankrupt or deciding to go down the IVA route are major decisions and should be given thorough thought before you decide what to do.  Although this article cannot possibly go into every aspect, it does give a very good idea of what to expect.

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