Im sure many of you have heard this pearl of wisdom before, I know I have. But is it really that simple Is it as straightforward as it sounds whats involved in the Bankruptcy process

Well, as somebody who has actually been through the process I can assure you it is anything but simpleand for many people it definitely isnt straightforward.

So whats involved

An appearance before the judge

Most people who go bankrupt have never actually been to court (although people in debt are often made to feel like criminals) and this in itself can be quite a daunting experience. The court hearing itself isnt too bad, provided you treat the judge with respect & courtesy; hell most likely treat you in the same manner.

Questionnaire

The next step is all the form filling. The main form to complete is the Bankruptcy questionnaire which is a very detailed & lengthy document. This is where you detail all your debts, your assets & your current situation you have to be sure that you enter the correct detail on this form, this will play a major part in your interview with an Insolvency examiner (see below).

The Interview from hell

For those of you who can remember the feelings of fear & trepidation you experienced at job interviews Multiply it by 100 and youre close to how you could feel at this interview

Obviously it all depends on which Insolvency examiner is dealing with your case, you may sail through this stage of the process or it may be one of the worst days of your life

Bankruptcy restriction orders / Income payment orders / Loss of assets

Basically, the Insolvency examiner will be looking for reasons why you should be subjected to a Bankruptcy Restriction order (which can mean that the nasty effects of bankruptcy could last for up to 15 years, rather than 12months) or an Income payments order which would mean that a large % of your surplus income would be paid to the Official receiver for a period of 3 years. The examiner will also be looking for assets that you own that could be taken from you.

So, does it still seem as simple as being debt free in 12months?

As you can see, although it is possible to be debt-free in just 12months, there is also a good chance that youll end up losing your assets or with either a Bankruptcy restriction order or an Income payments order around your neck.

So, avoid Bankruptcy, then?

Not necessarily for many people, Bankruptcy is the right solution and if you undertake the process in the right manner, you will be debt-free in 12months, but you must ensure you do everything right ensure you know how to complete the questionnaire correctly know what to say in court & at the interview and know your rights Dont go it alone You could end up in a worse position than youre in now.

For further information, see http://www.thedebtsurvivor.com/personal-debt-solutions/bankruptcy/

Best wishes

Paul Johnson

Einstein was right (not for the first time in his life)
about compound interest. It is indeed the most powerful force in the universe.

Unfortunately though, most people are suffering from this
force. A few days ago I posted a blog
entry entitled How long will it take me to pay off my credit cards. This blog
entry used an example of a person with a 5000 credit card making minimum
payments every month.

The result was astounding it would take 69 years (and
20,850 in repayments) to reduce the balance from 5000 to 100

This just shows the power of compound interest being used on
a daily basis by the banks & credit card companies.

However; there are people in the world that use Compound
interest in their favour.

I was recently introduced to a private members Investment club
where they achieve over 45% per annum return on investment. I am still
undertaking my own due diligence prior to working with them but so far the
figures seem to stack up.

So, I decided to do a few calculations just to illustrate
the power of compound interest and the results were amazing

For example; if you were to invest 500 per month (many
people that I speak to about their debts pay more than this each month in
credit card interest alone) in a fund that grew at 45% per annum, in a 10year
period you would have invested 60,000

This 60,000 will grow over this 10year period to a
staggering 1,133,000 (over 1million)

So, if you could find a way to reduce your monthly outgoings
by 500 and then find an investment vehicle to invest the money saved into In
10years, youd be a millionaire

As I said earlier Einstein was definitely right, Compound
interest is the most powerful force in the universe

If youre finding it difficult to pay off your debts and you dont qualify for an IVA, a Debt Management Plan may be just the thing for you.

So what is involved in a Debt Management plan?

• By taking out a Debt Management Plan you pay back the debts you owe to your creditors in affordable, regular instalments;

• you make only one payment directly to a Debt Management Company which will then divide the payment fairly between all your creditors.

• An additional advantage of this method is that you dont have to speak to your creditors yourself to arrange the plan; the Debt Management Company does it for you.

• The main Advantage to a Debt Management plan is that it is not a legally binding agreement meaning that you can cancel the plan at any time.

• But the main Disadvantage to a Debt Management plan is that it is not a legally binding agreement meaning that your creditors can cancel the plan at any time

The other major disadvantage of a Debt management plan when compared to an IVA is that the plan will continue until your debts are cleared or until you wish to end the arrangement (for example if your income improves and you can afford to revert to the original monthly payments).

Therefore with a Debt management plan you dont have the advantage of writing off up to 75% of your total debt as you do with an IVA, but you can enter into a plan if youre debts are less than 15,000 or if you have surplus assets that prohibit you from entering into an IVA.

If you feel that Debt Management is your best option, give me a call on 0800 533 5370 now to discuss it further.

For most people Bankruptcy really should be seen as a last resort, but if youre unable to take advantage of any of the other debt solutions available or if they simply do not suit your circumstances it may be the best way out.

The Enterprise Act 2002 came into force on 15th September 2003. It made various changes that reduced the effects of Bankruptcy, including:

• Reduce the number of restrictions that are automatically imposed on undischarged bankrupts and provide for the automatic discharge of nearly all bankrupts after a maximum of 12 months.

• Introduce Bankruptcy Restrictions Orders (BROs) to protect the public and the commercial community from bankrupts whose conduct before and during bankruptcy has been found to be culpable.

• Introduce Income Payments Agreements (IPA) as an administrative alternative to court-based Income Payments Orders (IPO). IPAs will carry the same conditions as IPOs and both will be able to run for a period of up to three years.

• Enable the Official Receiver (OR) to act as nominee and supervisor of new fast-track IVAs begun after bankruptcy order has been made.

• Require the Official Receiver to investigate why a bankrupt failed only where he thinks that this is necessary.

• Limit to three years the period in which a trustee may deal with a bankrupts interest in the sole or principal home of the bankrupt, the bankrupts spouse or a former spouse before that interest revert to the bankrupt.

For many people, bankruptcy is a way of drawing a line in the sand with regards to their debts & although it is never to be seen as an easy way out or an ideal solution, it can serve a purpose in certain circumstances if (and only if) all of the other debt solutions, e.g. IVAs are unsuitable.

If you think that Bankruptcy is your only option, phone me now on 0800 533 5370 & speak to somebody who has just been through it

There are 3 types of liquidation

(i) Members Voluntary Liquidation

A Members Voluntary Liquidation MVL is a voluntary procedure to wind up the affairs of a solvent company.

Solvent, what does this mean?A company is capable of paying its liabilities in full plus statutory interest plus the costs involved in winding up, within 12 months.

When is the MVL procedure appropriate?When a solvent company has come to the end of its useful life and needs to be wound up. For example:-

• Shareholders want to retire and have a property within the company which they want to transfer into their personal names. i.e. a distribution in specie.
• Rationalisation of a group of companies involving transfer of assets, write off of inter-company loans and winding-up of subsidiaries.

(ii) Creditors Voluntary liquidation

Creditors Voluntary Liquidation CVL is the process where the directors of an insolvent company can voluntarily take steps to wind up the company. The directors call meetings of the companys shareholders and creditors to consider resolutions to wind up the company and to appoint a liquidator.

WHEN IS A CVL USEFUL?

When a company is insolvent and no longer has a viable business worth saving. For example:

A company which has insufficient sales to cover its overheads and cannot continue to trade.

Insolvent, what does this mean?

S123 IA86 sets out the definition of insolvency which includes:- Creditor(s) are owed more than 750 and have either served a 21 day demand which has not been met or judgment has been given or it is proved to the satisfaction of the Court that the company cannot pay its debts as they fall due, or the companys liabilities exceed its assets including contingent liabilities.

(iii) Compulsory liquidation

Compulsory Liquidation, usually referred to as Winding-Up, is the process to wind up an insolvent company through the courts.

Insolvent, what does this mean?

S123 IA 1986 sets out the definition of Insolvency:- Creditor(s) are owed more than 750 and have either served a 21 day demand which has not been met or judgment has been given or it is proved to the satisfaction of the Court that the company cannot pay its debts as they fall due or the companys liabilities exceed its assets including contingent liabilities.

WHEN CAN A COMPULSORY LIQUIDATION OCCUR?

Compulsory Liquidation Winding-up is a court procedure usually initiated by a creditor of the company when all other debt collection procedures have failed. When a company is insolvent and fails to pay its debts, creditors can take steps to wind up the company by issuing a petition to Court. The procedure can also be used by the directors and shareholders of an insolvent company. There are other parties who can petition including the Secretary of State, the Official Receiver and a Supervisor of a Company Voluntary Arrangement.

If you feel that liquidation is the most appropriate debt solution for your Company, pick up the phone and call me now on 0800 533 5370

Company Voluntary Arrangement

There is legislation that enables a company to make a private arrangement with all its unsecured creditors. The CVA (Company Voluntary Arrangement) procedure was introduced by the Insolvency Act 1986 IA86 and is simply a formal mechanism which permits a company, which has debt problems, to reach a compromise with its creditors on the repayment of its debt.

Imagine if your company could

Freeze the companys debt and any interest charges

Repay the debt in affordable monthly installments

Prevent creditors from taking further action against your company

Write off a proportion of the companys debts with creditors consent

The CVA can be tailored to suit the companys and creditors needs. It could involve a five year payment plan or a full and final settlement in the form of a lump sum to creditors or a combination of the two.

The CVA avoids the need for liquidation, can save jobs and investments. A further advantage is that the Supervisor is not required to investigate the directors conduct nor submit reports to the Dti as in liquidation. However, if the directors conduct has been severely lacking, the Supervisor will need to advise creditors of this and this could effect creditors desire to support the CVA.

If you think that a CVA may suit your situation, give me a call now on 0800 533 5370