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

Individual Voluntary Arrangements The Advantages

IVAs dont suit everybody, but for those who do meet the criteria, the benefits are fantastic:

• You can legally write off up to 75% of your debt.

• You can reduce your monthly repayments by calculating how much you can afford to repay each month & then make just one affordable repayment.

• You can stop all your creditors, debt collection agencies & bailiifs hassling you (your Insolvency practitoner will take care of all this).

• You can avoid Bankruptcy.

Example Scenario:

Tony has 125,000 worth of Debt including 5 credit card debts, 1 personal loan, income tax debts & business debts (with personal guarantees). He also owns his family home which has a current open market value of 200,000 with an outstanding mortgage of 175,000.

Tonys monthly debt repayments (credit cards, personal loans etc) currently amount to 1200 per month but he is currently living off his credit cards to enable him to stay on top of these repayments he is basically robbing Peter to pay Paul.

Tony has been approached by a Company who claim they can write off all his debts for a fee of 1800. Tony has correctly stated that even if they are successful (which is a gamble in itself) he will still have his tax debts & business debts to worry about, so there really is no point (Nice try though, eh)

Tony has a monthly income of 2500 (after allowance for tax) and monthly expenses of 2225 (without the above debt repayments).
Tony has entered into an IVA that protects his family home by selling the equity in the house to his Mother & Father for 15000 (using a realistic immediate sale value, less costs) & paying just 275 per month for 5 years.

Tony has therefore cleared all his 125,000 debts by paying only 31,500 & reduced his monthly debt repayments from 1200 to 275.

Tony is a very happy man

IVA Services
Entering into an IVA can be very daunting, thats why I provide the following services, entirely Free of charge to all my clients:

• Initial Free assessment to ensure an IVA is the right debt solution for you & your circumstances.

• Preparation of your Income & expenditure account.

• Preparation of additional financial statements, including cash flow forecasts, budgets and forecasted Profit & Loss accounts where required.

• Advice on saving your family home in an IVA.

• Attendance at meetings; the IVA meetings themselves can often be quite daunting, if necessary I will attend your IVA meetings with you to advise & assist you through the process.

Call me now on 0800 533 5370 for further details of IVAs & how they can solve your debt problems.

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