Archive for July, 2009

A3 Premises Establishment Closing Due to Debt

Restaurants
Plenty of restaurant owners opt for limited company status since it offers them lower financial liability because it establishes a seperate legal entity. Sole traders and partners, however, are held personally liable for their business debts. It’s widely known that 10% of all new restaurants either fail or close their doors at some point during the first year of trading and face insolvency as a result.
Bars and Pubs
One of the most volatile industry sectors in the UK is Bars and Pubs. Not only is this market well known for its ease of setting up a business, but also for the common occurence of closures and changes in ownership.
This bar and leisure sector is divided into these segments:
* Independent high street bars
* Branded chain bars
* Bar food restaurants
* Hotel bars
* Upmarket, Chef/patron restarant / bars
The borders between these markets continues to become increasingly blurred. For example, some bars sell high quality food, pubs that are closer to being a bar and “free house” bars.
Hotels traditionally held their bars to be a necessary service, but typically a loss leader that they did not expect to profit from. This trend is shifting, though, and in the last decade hotel owners have developed some very successful bars.
The shifting bar industry sector and its ever changing commercial landscape has led to an increase in insovlences, bankruptcies and company liquidations.
Closing Down a Bar
Once you have decided to close your bar business, you need to inform various individuals and organisations of this decision, telling them the timeframe involved. This could involve a great deal of planning and organizing depending upon the size and type of your bar business. There will also be details that differ depending upon your business status: partnership, sole trader or limited company. If there are multiple owners or investors involved, closing you bar business can be especially stressful.
Closing a Nightclub
When your club or nightclub has mounting debts and fails, owners often end up facing the prospect of company and personal insovency.
Since being a limited company offers financial liability by establishing a separate legal entity, most club and nightclub owners choose LTD status. Those who are willing to be personally liable for their business debts choose to be sole traders or take on partners.
It is commonly known that 10% of all new clubs will fail or close down within the first year of their trading and as a result, face insolvency. Depending upon the status that the club owners have chosen to trade under, such as Sole Trader, Partnership or Limited Company (LTD), the method of treating this insolvency will be different.
“CVL – Liquidation” is the most common insolvency procedure for an LTD and is often referred to as “Phoenix”. As a director of an LTD, this liquidation allows the company’s unsecured debts to be written off so that you can start again.
Closing a Pub
Upon the opening of any new pub, the owners must make a decision about the pub’s legal status and carefully consider the issues involved. In this section we will look at the main choices available, including limited company (LTD), partnership or sole trader. We will also look at the impact that this choice will have should the business close or face insolvency.
The majority of those who open a pub have worked their way up from a position as barperson to running a pub of their own. This career structure is most effective because it means the manager has experience and therefore has a higher chance of having developed both a strong business and management skill set.
Dealing with the Alcohol License
The majority of A3 premises have a license which allows them to sell alcoholic beverages on site. This license gives the the club the right to serve alcohol up to certain times and it is crucial to protect this license in order to maintain the validity of the establishment itself.
By making an application to the Magistrate’s Court for a protection order a business can obtain temporary permission to sell alcoholic drinks pending full tranfer of the license. A protection order lasts either transfer sessions of approximately three months or a maximum of two periods.
It’s important to keep in mind that an application for a transfer order usually triggers visits by  environmental health officers and fire officers. These individuals hold the power to demand work be carried out in order to bring the club up to acceptable standards. When considering a decision to continue trading, you want to take into account this potential capital expenditure because it can involve significant sums of money.
Case Study of Restaurant Business Failure
This case involves an unnamed individual we will call Mr. Durano, an Italian who moved to the UK in 1994. He had worked for a reputable restaurant in London for 10 years as a Head Chef and had always had a strong desire to open his own restaurant. When the opportunity to make this dream come true arose in 2004, he and his brothers opened a restaurant in Middlesex that focused on fine Italian dining.
The Durano brothers had to sign personal guarantees to cover the risks posed by finance companies in order to acquire funding and finance to pay for the catering equipment. After forming a Limited Company, they began trading but they were forced to close down after only 18 months when the property freeholder decided to redevelop the land the restaurant’s building stood on.
Mr. Durano had to initially arrange to liquidate the company by opting for a “Creditors Voluntary Liqidation (CVL)”. In both England and Wales, a CVL is the most common form of liquidation used and it brings the operation of the company to an end. This method is employed for companies that are simply not viable any longer, companies that have run out of cash and can no longer afford to pay their liabilities at the scheduled times.
Unfortunately, the assets of the Duranos’ restaurant were not valuable enough to eliminate the debt owed by the finance companies and that meant those companies turned to Mr. Durano himself in an attempt to recover the outstanding £35,000 debt. Instead of the bankruptcy that was being threatened, Mr. Durano sought advice from a qualified Insolvency Practitioner (IP) and ended up choosing the far more flexible and less stressful Individual Voluntary Agreement, a sensible alternative to bankruptcy.

Restaurants

Plenty of restaurant owners opt for limited company status since it offers them lower financial liability because it establishes a separate legal entity. Sole traders and partners, however, are held personally liable for their business debts. It’s widely known that 10% of all new restaurants either fail or close their doors at some point during the first year of trading and face insolvency as a result.

Bars and Pubs

One of the most volatile industry sectors in the UK is Bars and Pubs. Not only is this market well known for its ease of setting up a business, but also for the common occurence of closures and changes in ownership.

This bar and leisure sector is divided into these segments:

* Independent high street bars

* Branded chain bars

* Bar food restaurants

* Hotel bars

* Upmarket, Chef/patron restaurant / bars

The borders between these markets continues to become increasingly blurred. For example, some bars sell high quality food, pubs that are closer to being a bar and “free house” bars.

Hotels traditionally held their bars to be a necessary service, but typically a loss leader that they did not expect to profit from. This trend is shifting, though, and in the last decade hotel owners have developed some very successful bars.

The shifting bar industry sector and its ever changing commercial landscape has led to an increase in insovlences, bankruptcies and company liquidations.

Closing Down a Bar

Once you have decided to close your bar business, you need to inform various individuals and organisations of this decision, telling them the time frame involved. This could involve a great deal of planning and organizing depending upon the size and type of your bar business. There will also be details that differ depending upon your business status: partnership, sole trader or limited company. If there are multiple owners or investors involved, closing you bar business can be especially stressful.

Closing a Nightclub

When your club or nightclub has mounting debts and fails, owners often end up facing the prospect of company and personal insolvency.

Since being a limited company offers financial liability by establishing a separate legal entity, most club and nightclub owners choose LTD status. Those who are willing to be personally liable for their business debts choose to be sole traders or take on partners.

It is commonly known that 10% of all new clubs will fail or close down within the first year of their trading and as a result, face insolvency. Depending upon the status that the club owners have chosen to trade under, such as Sole Trader, Partnership or Limited Company (LTD), the method of treating this insolvency will be different.

“CVL – Liquidation” is the most common insolvency procedure for an LTD and is often referred to as “Phoenix”. As a director of an LTD, this liquidation allows the company’s unsecured debts to be written off so that you can start again.

Closing a Pub

Upon the opening of any new pub, the owners must make a decision about the pub’s legal status and carefully consider the issues involved. In this section we will look at the main choices available, including limited company (LTD), partnership or sole trader. We will also look at the impact that this choice will have should the business close or face insolvency.

The majority of those who open a pub have worked their way up from a position as bar person to running a pub of their own. This career structure is most effective because it means the manager has experience and therefore has a higher chance of having developed both a strong business and management skill set.

Dealing with the Alcohol License

The majority of A3 premises have a license which allows them to sell alcoholic beverages on site. This license gives the the club the right to serve alcohol up to certain times and it is crucial to protect this license in order to maintain the validity of the establishment itself.

By making an application to the Magistrate’s Court for a protection order a business can obtain temporary permission to sell alcoholic drinks pending full transfer of the license. A protection order lasts either transfer sessions of approximately three months or a maximum of two periods.

It’s important to keep in mind that an application for a transfer order usually triggers visits by  environmental health officers and fire officers. These individuals hold the power to demand work be carried out in order to bring the club up to acceptable standards. When considering a decision to continue trading, you want to take into account this potential capital expenditure because it can involve significant sums of money.

Case Study of Restaurant Business Failure

This case involves an unnamed individual we will call Mr. Durano, an Italian who moved to the UK in 1994. He had worked for a reputable restaurant in London for 10 years as a Head Chef and had always had a strong desire to open his own restaurant. When the opportunity to make this dream come true arose in 2004, he and his brothers opened a restaurant in Middlesex that focused on fine Italian dining.

The Durano brothers had to sign personal guarantees to cover the risks posed by finance companies in order to acquire funding and finance to pay for the catering equipment. After forming a Limited Company, they began trading but they were forced to close down after only 18 months when the property freeholder decided to redevelop the land the restaurant’s building stood on.

Mr. Durano had to initially arrange to liquidate the company by opting for a “Creditors Voluntary Liquidation (CVL)”. In both England and Wales, a CVL is the most common form of liquidation used and it brings the operation of the company to an end. This method is employed for companies that are simply not viable any longer, companies that have run out of cash and can no longer afford to pay their liabilities at the scheduled times.

Unfortunately, the assets of the Duranos’ restaurant were not valuable enough to eliminate the debt owed by the finance companies and that meant those companies turned to Mr. Durano himself in an attempt to recover the outstanding £35,000 debt. Instead of the bankruptcy that was being threatened, Mr. Durano sought advice from a qualified Insolvency Practitioner (IP) and ended up choosing the far more flexible and less stressful Individual Voluntary Agreement, a sensible alternative to bankruptcy.

Student Debt and Helpful Grants

Student Debt and Helpful Tips to Reduce Debt
There will always be student debt incurred by those wishing to pursue further education before starting their careers. This article is intended to show both the types of debt that can be taken on in the course of pursuing one’s education and some ways to help alleviate that debt which are available through your LEA (Local Education Authority).
Student Loans:
The SLC (Student Loan Company) pays student loans to students in order to help with living costs while they are attending a college or university. Usually, these are paid in three installments throughout the course of a given year. In order to get them apply to your LEA for each year of your course. A full 25% of a loan is based on you and your family’s income. You can expect a maximum of about £5,000 per loan.
Tuition Fees:
If you apply to your LEA before you start your course then you may be able to get help towards your tuition fees. The amount you get depends on you and your family’s income unless you get classed as an “independent student”. As an independent student you have to take into account that if you have a partner their income will be included as part of the assessment.
Grants and Allowances that may help you reduce your debt are below.
DSA’s (Disabled Students Allowances):
Students with disabilities may be eligible for a Disabled Students Allowance to help with costs they incur while attending their course. These are available to full-time and part-time students with disabilities. DSA assistance does not have to be repaid the way a student loan must. Consult your LEA in order to find out if you can claim.
Care Leavers Grant:
Students who have left care are often able to claim a Care Leavers Grant which will help with accomodations costs during the long vacation that is usually during the summer months. Consult your LEA to see if you can claim because it can be worth up to £100 per week during the long vacation.
Childcare Grant:
For those with childcare costs during their school term and sometimes during vacations, there is the the Childcare Grant they may be able to claim. The amount available depends on their income and the income of their dependants so consult your LEA if you want to attempt a claim.
Parents Learning Allowance:
Those wiht dependant children may be able to claim a Parent Learning Allowance to help with course related costs. Their income and their dependant’s income will be taken into account when it comes to eligibility.
Lone Parents Grant:
For students who are also lone parents there is the Lone Parent Grant that they may be able to claim which helps supplement their income. Depending upon their income the amount awarded can be different. Your LEA will be able to advise you if you can claim.
Higher Education Grant:
This newer grant can be worth up to £1,000 a year, but how much is awarded depends upon the student’s income and their household income, as well. For those with a household income around £15,000 the grant received should be around £1,000. Partial grants are made available to those with household incomes between £15,000 and £21,000. The grants pay out in three installments, one at the beginning of each term.

Student Debt and Helpful Tips to Reduce Debt

There will always be student debt incurred by those wishing to pursue further education before starting their careers. This article is intended to show both the types of debt that can be taken on in the course of pursuing one’s education and some ways to help alleviate that debt which are available through your LEA (Local Education Authority).

Student Loans:

The SLC (Student Loan Company) pays student loans to students in order to help with living costs while they are attending a college or university. Usually, these are paid in three installments throughout the course of a given year. In order to get them apply to your LEA for each year of your course. A full 25% of a loan is based on you and your family’s income. You can expect a maximum of about £5,000 per loan.

Tuition Fees:

If you apply to your LEA before you start your course then you may be able to get help towards your tuition fees. The amount you get depends on you and your family’s income unless you get classed as an “independent student”. As an independent student you have to take into account that if you have a partner their income will be included as part of the assessment.

Grants and Allowances that may help you reduce your debt are below.

DSA’s (Disabled Students Allowances):

Students with disabilities may be eligible for a Disabled Students Allowance to help with costs they incur while attending their course. These are available to full-time and part-time students with disabilities. DSA assistance does not have to be repaid the way a student loan must. Consult your LEA in order to find out if you can claim.

Care Leavers Grant:

Students who have left care are often able to claim a Care Leavers Grant which will help with accomodations costs during the long vacation that is usually during the summer months. Consult your LEA to see if you can claim because it can be worth up to £100 per week during the long vacation.

Childcare Grant:

For those with childcare costs during their school term and sometimes during vacations, there is the the Childcare Grant they may be able to claim. The amount available depends on their income and the income of their dependants so consult your LEA if you want to attempt a claim.

Parents Learning Allowance:

Those wiht dependant children may be able to claim a Parent Learning Allowance to help with course related costs. Their income and their dependant’s income will be taken into account when it comes to eligibility.

Lone Parents Grant:

For students who are also lone parents there is the Lone Parent Grant that they may be able to claim which helps supplement their income. Depending upon their income the amount awarded can be different. Your LEA will be able to advise you if you can claim.

Higher Education Grant:

This newer grant can be worth up to £1,000 a year, but how much is awarded depends upon the student’s income and their household income, as well. For those with a household income around £15,000 the grant received should be around £1,000. Partial grants are made available to those with household incomes between £15,000 and £21,000. The grants pay out in three installments, one at the beginning of each term.

Debt Collection Help and Tips for Dealing with Creditors

Some tips and general advice on debt collection
If you are ever contacted by a debt collection help organisation, be sure to verify that they are licensed by the office of fair trading. With over 20,000 agencies and bailiffs specialised in UK debt collection, you are may end up having to deal with one of the more aggressive firms out there. These collection firms collect the debts of both private and public companies, so do your homework before dealing with them.
The principles that drove companies offering debt collection services, in a perfect world, would be fair, fast and professionally undertaken debt collection. However, more and more aggressive debt collection practices have led to the emergences of a greater number of complaints and general reports of bad practice in debt collection by consumers. Fortunately, there are decent firms out there who have signed up to “The Better Payment Practice Code” in order to provide genuine debt collection help that isn’t unethical.
To promote a better debt collection help practice within the UK, the Better Payment Practice Group was established. They work to urge all debt collection help firms to take on a responsible attitude when it comes to debtors paying in a timely matter. The Group allows debt collection help companies to sign up to the Better Payment Practice code and agree to maintain the four cornerstones of timely payment:
1. Agreeing to debt collection payment terms at the outset of a deal and sticking to them
2. Explaining debt collection payment procedures to suppliers in an effort to help them, as well
3. Paying bills in accordance with any contract agreed to by the supplier or required by the debt collection laws
4. Notifying suppliers immediately when an invoice is contested while helping to settle debt collection disputes quickly
Here are Some Options for Those in Need of Debt Collection Help
The IVA (Individual Voluntary Agreement)
An IVA is an effective and potent tool which enables to you not only clear your debt, but also to return to a clean financial balance on your accounts once again.
Bankruptcy
Considered an option that must be addressed once a person can no longer pay their debts as they fall due, bankruptcy genrerally allows a first time bankrupt to received their discharge a year after the bankruptcy order’s date.
Debt Management Plan
For those struggling to pay loans, store cards, catalogues or credit cards who want someone to help with sorting out payments and talking to credit cards, a Debt Management Plan may be the perfect solution. If a debtor can pay a single payment that they can afford towards all creditors then this can be an excellent way to cut that debt down over time.
Debt Consolidation Loans
You can consolidate your debt and reduce your payments each month by up to 50% with a proper debt consolidation loan.
Scotland Trust Deeds
For residents of Scotland who are in debt of £8,000 or more, a trust deed (also known as a protected trust deed) offers a legally binding debt repayment agreement. These trust deeds are only available to those residing in Scotland and last a maximum of 3 years. After this, the rest of the debt is written off and you are entirely debt free.
Tips for Dealing with Harassment from Creditors:
* Firstly, write to your creditor and in your communication, outline what you find offensive about the way the company is treating you. Let them know that you are familiar with the terms of the Administration of Justice Act’s Section 40. Ask them to take steps to avoid a repeat of the offensive behaviours that have exhibited towards you.
* Let you creditors know how you prefer to be contacted and ask them to confirm that they are in agreement with your request. If you send the letter during this early stage, you may avoid the trouble of having to take further action against the debt collection help company.
* Inform the creditor that you will consider making a complaint about their tactics under the guidance of the OFT Debt Collect Help Guidance. While it can be difficult to convince the police to prosecute in harassment cases until a more serious offence such such as fraud, blackmail or violence is involved, you should definitely make a complaint about any debt collection to your local council’s trading standards / consumer protection department.
* Your local council should invetigate whether an offence has been committed and wether prosecution is the correct next step. There is a fine of up to £5,000 in the Magistrates Court is a penalty is enforced. Also, a conviction can provide evidence that the creditor should not hold a consumer credit license to carry out debt collection help because they would be deemed no longer a ‘fit and proper person’ for that role. It may be worth considering contacting the Office of Fair Trading directly if the Trading Standards department doesn’t end up acting. While the OFT usually doesn’t take up individual complaints, their Debt Collection Help Enforcement Team does collect information which can be used to take the consumer credit license from abusive creditors. You may also wish to find out if the creditor is a member of a trade association that has a code of practice. If you find out they are a member of such an association you could write there with your complaint.
Additional Options for Debt Collection Help
Perhaps a final straw alternative is pursuing your own prosecution of an unruly creditor in the Magistrates Court. This could be expensive so you need proper legal advice before you decide to do this. A newer service from BT called “Choose to Refuse” may help if you are getting a high volume of calls from a particularly unpleasant creditor. You will need a pin number to key in after they’ve called you. Then, the caller will hear an automated message that states you do not wish to take their call once they ring. The service cost £8.00 per quarter. If your telephone service is through another provider, ask them if they have a similar feature available to you.
The Malicious Communications Act 1988 could be used in your favor, you can refer to it as it deals with letter or articles being sent for the purpose of causing “distress or anxiety.”
If you choose to try for a penalty to the creditor from the Magistrates Court, and it is successful with the creditor being found guilty, they will be fined. You must present a letter or article that was sent to you which contains one or more of these things:
- An indecent or grossly offensive message
- A threat
- Information which is either known or believed to be false by its sender
It is a criminal offence to cause “Harassment, alarm or distress” with intent by utilizing “threatening, abusive or insulting words or behaviour” under the Criminal Justice Act and Public Order Act 1994 Section 4a. However, this only counts as an offence if the action takes place in a public place outside your home. In order to prosecute for this offence, the police need to be contacted immediately after.
It is a criminal offence to harass people and put “people in fear of violence” under the Protection from Harassment Act 1997, also, but the harassment must happen on a minimum of 2 seperate occaisions and the police would need to agree to prosecute.

Some tips and general advice on debt collection

If you are ever contacted by a debt collection help organisation, be sure to verify that they are licensed by the office of fair trading. With over 20,000 agencies and bailiffs specialised in UK debt collection, you are may end up having to deal with one of the more aggressive firms out there. These collection firms collect the debts of both private and public companies, so do your homework before dealing with them.

The principles that drove companies offering debt collection services, in a perfect world, would be fair, fast and professionally undertaken debt collection. However, more and more aggressive debt collection practices have led to the emergences of a greater number of complaints and general reports of bad practice in debt collection by consumers. Fortunately, there are decent firms out there who have signed up to “The Better Payment Practice Code” in order to provide genuine debt collection help that isn’t unethical.

To promote a better debt collection help practice within the UK, the Better Payment Practice Group was established. They work to urge all debt collection help firms to take on a responsible attitude when it comes to debtors paying in a timely matter. The Group allows debt collection help companies to sign up to the Better Payment Practice code and agree to maintain the four cornerstones of timely payment:

1. Agreeing to debt collection payment terms at the outset of a deal and sticking to them

2. Explaining debt collection payment procedures to suppliers in an effort to help them, as well

3. Paying bills in accordance with any contract agreed to by the supplier or required by the debt collection laws

4. Notifying suppliers immediately when an invoice is contested while helping to settle debt collection disputes quickly

Here are Some Options for Those in Need of Debt Collection Help

The IVA (Individual Voluntary Agreement)

An IVA is an effective and potent tool which enables to you not only clear your debt, but also to return to a clean financial balance on your accounts once again.

Bankruptcy

Considered an option that must be addressed once a person can no longer pay their debts as they fall due, bankruptcy genrerally allows a first time bankrupt to received their discharge a year after the bankruptcy order’s date.

Debt Management Plan

For those struggling to pay loans, store cards, catalogues or credit cards who want someone to help with sorting out payments and talking to credit cards, a Debt Management Plan may be the perfect solution. If a debtor can pay a single payment that they can afford towards all creditors then this can be an excellent way to cut that debt down over time.

Debt Consolidation Loans

You can consolidate your debt and reduce your payments each month by up to 50% with a proper debt consolidation loan.

Scotland Trust Deeds

For residents of Scotland who are in debt of £8,000 or more, a trust deed (also known as a protected trust deed) offers a legally binding debt repayment agreement. These trust deeds are only available to those residing in Scotland and last a maximum of 3 years. After this, the rest of the debt is written off and you are entirely debt free.

Tips for Dealing with Harassment from Creditors:

* Firstly, write to your creditor and in your communication, outline what you find offensive about the way the company is treating you. Let them know that you are familiar with the terms of the Administration of Justice Act’s Section 40. Ask them to take steps to avoid a repeat of the offensive behaviours that have exhibited towards you.

* Let you creditors know how you prefer to be contacted and ask them to confirm that they are in agreement with your request. If you send the letter during this early stage, you may avoid the trouble of having to take further action against the debt collection help company.

* Inform the creditor that you will consider making a complaint about their tactics under the guidance of the OFT Debt Collect Help Guidance. While it can be difficult to convince the police to prosecute in harassment cases until a more serious offence such such as fraud, blackmail or violence is involved, you should definitely make a complaint about any debt collection to your local council’s trading standards / consumer protection department.

* Your local council should invetigate whether an offence has been committed and wether prosecution is the correct next step. There is a fine of up to £5,000 in the Magistrates Court is a penalty is enforced. Also, a conviction can provide evidence that the creditor should not hold a consumer credit license to carry out debt collection help because they would be deemed no longer a ‘fit and proper person’ for that role. It may be worth considering contacting the Office of Fair Trading directly if the Trading Standards department doesn’t end up acting. While the OFT usually doesn’t take up individual complaints, their Debt Collection Help Enforcement Team does collect information which can be used to take the consumer credit license from abusive creditors. You may also wish to find out if the creditor is a member of a trade association that has a code of practice. If you find out they are a member of such an association you could write there with your complaint.

Additional Options for Debt Collection Help

Perhaps a final straw alternative is pursuing your own prosecution of an unruly creditor in the Magistrates Court. This could be expensive so you need proper legal advice before you decide to do this. A newer service from BT called “Choose to Refuse” may help if you are getting a high volume of calls from a particularly unpleasant creditor. You will need a pin number to key in after they’ve called you. Then, the caller will hear an automated message that states you do not wish to take their call once they ring. The service cost £8.00 per quarter. If your telephone service is through another provider, ask them if they have a similar feature available to you.

The Malicious Communications Act 1988 could be used in your favor, you can refer to it as it deals with letter or articles being sent for the purpose of causing “distress or anxiety.”

If you choose to try for a penalty to the creditor from the Magistrates Court, and it is successful with the creditor being found guilty, they will be fined. You must present a letter or article that was sent to you which contains one or more of these things:

- An indecent or grossly offensive message

- A threat

- Information which is either known or believed to be false by its sender

It is a criminal offence to cause “Harassment, alarm or distress” with intent by utilizing “threatening, abusive or insulting words or behaviour” under the Criminal Justice Act and Public Order Act 1994 Section 4a. However, this only counts as an offence if the action takes place in a public place outside your home. In order to prosecute for this offence, the police need to be contacted immediately after.

It is a criminal offence to harass people and put “people in fear of violence” under the Protection from Harassment Act 1997, also, but the harassment must happen on a minimum of 2 seperate occaisions and the police would need to agree to prosecute.

Understanding Debt and Causes of Debt

Debt can be caused by many problems such as debt incurred as a result of a disability, ill health or injury, even debt from a loss of work or redundancy. During times as difficult as these, many people can find themselves in debt from mortgages, car financing or both personal and secured loans. Other people have mail order debt or find themselves overwhelmed by the payments on their credit cards and loans. As a result, they wind up being chased for late payments.
People also frequently have gambling debts or are feeling the results of a shopping addiction that’s gotten out of control. Many times it’s difficult to find solid information on how to avoid a bankruptct. Often, an Individual Voluntary Arragement (IVA) can be the alternative to a bankruptcy or in some instances, a Debt Management Programme. Regardless of the solution you choose to deal with the difficulties of unmanageable debt, understanding the causes can lead to better insight into debt accumulation and therefore, how to handle the debt that you have or want to incur to move yourself forward.
Here is a brief look into the basics of debt:
According to recent estimates, the average consumer’s debt is a staggering £15,000 while the total amount of credit taken out is a mindblowing £150 million and that figure doesn’t even include mortgages! That is more than three times more debt than was recorded only ten years ago.
Often times, people will assume that a person in debt got there through sheer carelessness or financial wrecklessness, but that’s not always the cause. There are plenty of causes that are not always preventable that can lead to debt being taken on and then spiralling out of control.
The majority of people’s failure to meet debt obligations that they’ve taken on come from changes in their circumstances. Loss of jobs, births, ill health, becoming bereaved; all of these situations can trigger the taking on of debt and wind up devastating individuals and families alike. This can mean that the debtor’s home, goods and services, not to mention liberties can be put at risk if not lost outright.
These triggers for taking on debt can leave people feeling angry and frustrated or even guilty which can have a detrimental effect on both their physical and mental health. Many times, this leads to wear and tear on personal relationships, in the end it often destroys them over time.
As for the common (and not so common) causes of debt, let’s examine these:
* Failure to work out a budget and ending up forgetting about non-standard purchases such as Christmas gifts or school expense.
* One of the primary causes is simply ignoring the debt problem for too long.
* An unrealistic view of basic necessities like food, clothing, utilities and fuel can harm budget planning and lead to debt.
* Failure to inform creditors early on once difficult financial circumstances have arisen. A reasonable view can be expected from the lender if they are truly reputable and know about your circumstances.
* Ignoring letters and reminders of default notices constitutes a failure to maintain you agreements with creditors and that failure can cost you significantly.
* Avoiding court hearings will work against you.
* Taking on even more debt to pay off existing debt increases your outgoings while delaying the actual solution to your problems.
* Failing to prioritize rent or mortgage payments means that you may risk losing your home.

Debt can be caused by many problems such as debt incurred as a result of a disability, ill health or injury, even debt from a loss of work or redundancy. During times as difficult as these, many people can find themselves in debt from mortgages, car financing or both personal and secured loans. Other people have mail order debt or find themselves overwhelmed by the payments on their credit cards and loans. As a result, they wind up being chased for late payments.

People also frequently have gambling debts or are feeling the results of a shopping addiction that’s gotten out of control. Many times it’s difficult to find solid information on how to avoid a bankruptcy. Often, an Individual Voluntary Arrangement (IVA) can be the alternative to a bankruptcy or in some instances, a Debt Management Programme. Regardless of the solution you choose to deal with the difficulties of unmanageable debt, understanding the causes can lead to better insight into debt accumulation and therefore, how to handle the debt that you have or want to incur to move yourself forward.

Here is a brief look into the basics of debt:

According to recent estimates, the average consumer’s debt is a staggering £15,000 while the total amount of credit taken out is a mindblowing £150 million and that figure doesn’t even include mortgages! That is more than three times more debt than was recorded only ten years ago.

Often times, people will assume that a person in debt got there through sheer carelessness or financial wrecklessness, but that’s not always the cause. There are plenty of causes that are not always preventable that can lead to debt being taken on and then spiralling out of control.

The majority of people’s failure to meet debt obligations that they’ve taken on come from changes in their circumstances. Loss of jobs, births, ill health, becoming bereaved; all of these situations can trigger the taking on of debt and wind up devastating individuals and families alike. This can mean that the debtor’s home, goods and services, not to mention liberties can be put at risk if not lost outright.

These triggers for taking on debt can leave people feeling angry and frustrated or even guilty which can have a detrimental effect on both their physical and mental health. Many times, this leads to wear and tear on personal relationships, in the end it often destroys them over time.

As for the common (and not so common) causes of debt, let’s examine these:

* Failure to work out a budget and ending up forgetting about non-standard purchases such as Christmas gifts or school expense.

* One of the primary causes is simply ignoring the debt problem for too long.

* An unrealistic view of basic necessities like food, clothing, utilities and fuel can harm budget planning and lead to debt.

* Failure to inform creditors early on once difficult financial circumstances have arisen. A reasonable view can be expected from the lender if they are truly reputable and know about your circumstances.

* Ignoring letters and reminders of default notices constitutes a failure to maintain you agreements with creditors and that failure can cost you significantly.

* Avoiding court hearings will work against you.

* Taking on even more debt to pay off existing debt increases your outgoings while delaying the actual solution to your problems.

* Failing to prioritize rent or mortgage payments means that you may risk losing your home.

Chances of IVA Rejection

Here is a common question we’d like to address for those of you who might be wondering this yourselves:
“I know each of my creditors have different view so what are the chances of my IVA proposal being rejected?”
During the Creditors Meeting that will be held in order to approve your IVA, creditors representing more than 75% of your debt’s value must approve the arrangement. If this passing vote cannot be reached and those creditors who have not voted cannot be convinced to vote in favor of the IVA, then it is considered rejected.
As you IVA is being drafted, your Insolvency Practitioner is there to make sure that the dividends each of your individual creditors want from you are included in the IVA whenever possible. Your Practitioner is a competent, licensed professional who would not offer you an IVA that he or she does not believe will have a strong chance of being approved. Keep in mind that your Practitioner works on your behalf so it is in their own best interest to give you the finest advice they possibly can.
Certain creditors will make it a point to require specific dividends during the 5 year period of your IVA. Most creditors will attempt to recoup 25% of what they loaned you originally through the IVA, but your Practitioner can take figure out the latest requirements those creditors involved have prior to putting your IVA together.
If your debt is very new there is the risk that a creditor may want to reject the proposed IVA. If the creditor believes the money was taken with the debtor knowing in advance that they could not repay it then that could be seen as cheating and make them less likely to cooperate.

Here is a common question we’d like to address for those of you who might be wondering this yourselves:

“I know each of my creditors have different view so what are the chances of my IVA proposal being rejected?”

During the Creditors Meeting that will be held in order to approve your IVA, creditors representing more than 75% of your debt’s value must approve the arrangement. If this passing vote cannot be reached and those creditors who have not voted cannot be convinced to vote in favor of the IVA, then it is considered rejected.

As you IVA is being drafted, your Insolvency Practitioner is there to make sure that the dividends each of your individual creditors want from you are included in the IVA whenever possible. Your Practitioner is a competent, licensed professional who would not offer you an IVA that he or she does not believe will have a strong chance of being approved. Keep in mind that your Practitioner works on your behalf so it is in their own best interest to give you the finest advice they possibly can.

Certain creditors will make it a point to require specific dividends during the 5 year period of your IVA. Most creditors will attempt to recoup 25% of what they loaned you originally through the IVA, but your Practitioner can take figure out the latest requirements those creditors involved have prior to putting your IVA together.

If your debt is very new there is the risk that a creditor may want to reject the proposed IVA. If the creditor believes the money was taken with the debtor knowing in advance that they could not repay it then that could be seen as cheating and make them less likely to cooperate.

An IVA is a Debt Solution That Cuts Debt Down

Let’s use an example to show how an IVA reduces one’s debt. This is a real world example we will use as illustration for how an IVA can help an individual:
A 60 year old woman whom we’ll call Mrs. Grace is supporting her husband who is ill. She has been their only income earner for over 20 years. When she got her IVA in late May, she slashed her monthly payments on her debt by over 60%.
Initially she had taken out a personal loan in an effort to make ends meet. Since she found getting credit to be very easy, she soon had a £53,000 debt on a bank loan, nearly a dozen credit cards, three store cards and her council tax. Once her IVA was approved, her interest was frozen and her Insolvency Practitioner convinced her creditors to accept £350 a month for 60 months. The creditors wrote off £32,000 of her debt, reducing her monthly payment by over £600.
This is only one example of the kind of financial relief an IVA can provide.

Let’s use an example to show how an IVA reduces one’s debt. This is a real world example we will use as illustration for how an IVA can help an individual:

A 60 year old woman whom we’ll call Mrs. Grace is supporting her husband who is ill. She has been their only income earner for over 20 years. When she got her IVA in late May, she slashed her monthly payments on her debt by over 60%.

Initially she had taken out a personal loan in an effort to make ends meet. Since she found getting credit to be very easy, she soon had a £53,000 debt on a bank loan, nearly a dozen credit cards, three store cards and her council tax. Once her IVA was approved, her interest was frozen and her Insolvency Practitioner convinced her creditors to accept £350 a month for 60 months. The creditors wrote off £32,000 of her debt, reducing her monthly payment by over £600.

This is only one example of the kind of financial relief an IVA can provide.

Long IVAs

IVAs that are longer than five years are becoming more and more common because they are sensible in certain situations. Six and even seven year IVAs are appropriate when the creditors believe the debtor won’t repay enough of their debt over the typical five year period.
These longer IVAs occur because the standard five year arrangement wwould not provide some of the debtor’s creditors with the artificially high sum they want to see repaid.
Another reason they may be suggested is because certain IVA providers want such high fees that the creditors’ expectations for repayment can’t be met without lengthening the period of the IVA.
While the first situation is understandable, the other two are not ethical because creditors need to judge each IVA based on whether or not its debtor is making a sincere best effort to repay the bill in payments they’re able to afford.
Still, it is true that most IVAs last only five years, but they can be either longer or even shorter. The key is to find an Insolvency Practitioner who is right for your needs and understands your unique financial circumstances.

IVAs that are longer than five years are becoming more and more common because they are sensible in certain situations. Six and even seven year IVAs are appropriate when the creditors believe the debtor won’t repay enough of their debt over the typical five year period.

These longer IVAs occur because the standard five year arrangement wwould not provide some of the debtor’s creditors with the artificially high sum they want to see repaid.

Another reason they may be suggested is because certain IVA providers want such high fees that the creditors’ expectations for repayment can’t be met without lengthening the period of the IVA.

While the first situation is understandable, the other two are not ethical because creditors need to judge each IVA based on whether or not its debtor is making a sincere best effort to repay the bill in payments they’re able to afford.

Still, it is true that most IVAs last only five years, but they can be either longer or even shorter. The key is to find an Insolvency Practitioner who is right for your needs and understands your unique financial circumstances.

IVA Advice

In case you haven’t heard, an IVA allows you to arrange to repay your creditors in situations where the prospect of ever truly paying off you debt is no longer available to you. An IVA (short for Individual Voluntary Arrangement) is a legally binding contract between yourself and those people or organisations whom you owe a debt to, such as creditors.
Once you’ve gotten connected with a licensed insolvency practitioner, you work out a sensible amount of your debt that you can realistically afford to pay back over a set time period – generally between 3 and 5 years. Provided that three quarters of your creditors are in agreement that your IVA is reasonable, all your debts, along with future interest they would otherwise accumulate, is frozen the moment the IVA proposal is accepted.
Because your insolvency practitioner is almost always able to convince your creditors to forego some of the debt you owe, at the end of the IVA’s duration, these debts are written off as long as you have kept up with your IVA payments.
If you are confident that you can maintain your IVA payments each month, an IVA could well be the solution that best meets your needs, helping you avoid the embarrassment of bankruptcy and making you debt free in 5 years or less.

In case you haven’t heard, an IVA allows you to arrange to repay your creditors in situations where the prospect of ever truly paying off you debt is no longer available to you. An IVA (short for Individual Voluntary Arrangement) is a legally binding contract between yourself and those people or organisations whom you owe a debt to, such as creditors.

Once you’ve gotten connected with a licensed insolvency practitioner, you work out a sensible amount of your debt that you can realistically afford to pay back over a set time period – generally between 3 and 5 years. Provided that three quarters of your creditors are in agreement that your IVA is reasonable, all your debts, along with future interest they would otherwise accumulate, is frozen the moment the IVA proposal is accepted.

Because your insolvency practitioner is almost always able to convince your creditors to forego some of the debt you owe, at the end of the IVA’s duration, these debts are written off as long as you have kept up with your IVA payments.

If you are confident that you can maintain your IVA payments each month, an IVA could well be the solution that best meets your needs, helping you avoid the embarrassment of bankruptcy and making you debt free in 5 years or less.

‘Unacceptable’ Availability of Home Loans First Time Home Owners

In order to keep from “deserting” the economy of the UK, many UK banks have been requested to make home loans more available to first time buyers during this present economic slump.
The managing director of MoneyExtra.com, Richard Mason, has mentioned that a “key reason” that lenders continue to remain caution over the past few months is the property market’s apparent volatility.
However, even as house prices are stablised and consumer confidence continues to rise, Mr. Mason explains that banks remain reluctant to resume lending as usual, the requests to do so having “fallen on deaf ears”.
In fact, research performed by the website recently indicates that the number of home loans the market had available fell by 15% in May. That, Mr. Mason explained is an “unacceptable” figure.
“Given the housing market’s recent stabilisation … we should be seeing the number of products rise, not fall; there is simply no reason for banks to hold back lending any longer,” he elaborated.
The request comes in spite of the British Bankers’ Association figures that showed the mortgages approval rates rising by 7.4% from April to May.

In order to keep from “deserting” the economy of the UK, many UK banks have been requested to make home loans more available to first time buyers during this present economic slump.

The managing director of MoneyExtra.com, Richard Mason, has mentioned that a “key reason” that lenders continue to remain caution over the past few months is the property market’s apparent volatility.

However, even as house prices are stablised and consumer confidence continues to rise, Mr. Mason explains that banks remain reluctant to resume lending as usual, the requests to do so having “fallen on deaf ears”.

In fact, research performed by the website recently indicates that the number of home loans the market had available fell by 15% in May. That, Mr. Mason explained is an “unacceptable” figure.

“Given the housing market’s recent stabilisation,” he elaborated, “We should be seeing the number of products rise, not fall; there is simply no reason for banks to hold back lending any longer,” he elaborated.

The request comes in spite of the British Bankers’ Association figures that showed the mortgages approval rates rising by 7.4% from April to May.

When Should You Take Out Debt?

There’s a good reason that many people are frightened to take on debt. We’re told daily through the media and even from friends or family how we need to avoid debt, that we need to worry over how we will pay it back. This is certainly sound advice to be aware of those things, but there ARE times when taking on debt can not only be beneficial, but actually crucial. In fact, there are situations that can arise in both your business and personal life where under funding could cause extensive problems.
Consider these situations:
Buying a House
In the UK, the the largest transaction most people will ever be involved in throughout the course of their life is the purchase of a house. It’s true that the significant debt of tens or hundreds of thousands of pounds can be intimidating, if you’re under funded for the purchase, that will cause even more difficulties.
Quite often people will try to chop into their budget so that they don’t need as large of a mortgage only to find out that they could have avoided trouble in the future by taking on a larger mortgage up front.
Running Your Own Business
This is a crucial area for concern when it comes to under funding because so many small business people are loathe to take on debt. Of course, it is not always the best solution to take on a substantial debt for your business, in many situations you will need to make certain you’re properly funded in order to support your business operating costs.
In the beginning stages of your business, it is common to have higher costs flowing out than money streaming in. That means that it’s vital to keep a sensible perspective regarding debt in order to make sure that you not only cover your overhead and daily expenses, but also the spending you will need to do for advertising and promoting the growth of your operation.
Balancing Your Personal Finances
Yet again, personal finances are another area of money management where people have a tendency to view debt in a way that’s helpful in the short term, but not as helpful in terms of long term financial health due to the limitations it poses. While most UK citizens will have debts such as credit cards, loans or store cards, there are times when a windfall occurs. Often, people will rush to pay off all debts at once in order to reduce their short term debt.
Even though this appears to be reasonable at the moment, it ends up with many people being stuck in a situation where they end up returning to their bank for a loan once they’re short on funds again. If you instead choose to put that windfall into an interest earning savings account and hold to the repayment of the debt you already have, then you can have that money later for an emergency or to use once you’ve cleared your debts in the normal way.
In Conclusion
In the UK, many people are afraid of debt and for good reason, however balancing this with the understanding that proper management of borrowing can help ease your life can lead to a more sensible approach to managing your money. Debt properly utilized can help business dealings as well as personal situations. It is never appropriate to take on debt without solid reasoning, but at the same time you can use it as a tool to leverage yourself further along in life.
Remember, those people who are scared of debt quite frequently find themselves in situations that have gotten out of control for lack of taking action to fix them when it was possible. This leads to a long term situation where IVAs or bankruptcy are the only way out. If you have proper respect

There’s a good reason that many people are frightened to take on debt. We’re told daily through the media and even from friends or family how we need to avoid debt, that we need to worry over how we will pay it back. This is certainly sound advice to be aware of those things, but there ARE times when taking on debt can not only be beneficial, but actually crucial. In fact, there are situations that can arise in both your business and personal life where under funding could cause extensive problems.

Consider these situations:

Buying a House

In the UK, the the largest transaction most people will ever be involved in throughout the course of their life is the purchase of a house. It’s true that the significant debt of tens or hundreds of thousands of pounds can be intimidating, if you’re under funded for the purchase, that will cause even more difficulties.

Quite often people will try to chop into their budget so that they don’t need as large of a mortgage only to find out that they could have avoided trouble in the future by taking on a larger mortgage up front.

Running Your Own Business

This is a crucial area for concern when it comes to under funding because so many small business people are loathe to take on debt. Of course, it is not always the best solution to take on a substantial debt for your business, in many situations you will need to make certain you’re properly funded in order to support your business operating costs.

In the beginning stages of your business, it is common to have higher costs flowing out than money streaming in. That means that it’s vital to keep a sensible perspective regarding debt in order to make sure that you not only cover your overhead and daily expenses, but also the spending you will need to do for advertising and promoting the growth of your operation.

Balancing Your Personal Finances

Yet again, personal finances are another area of money management where people have a tendency to view debt in a way that’s helpful in the short term, but not as helpful in terms of long term financial health due to the limitations it poses. While most UK citizens will have debts such as credit cards, loans or store cards, there are times when a windfall occurs. Often, people will rush to pay off all debts at once in order to reduce their short term debt.

Even though this appears to be reasonable at the moment, it ends up with many people being stuck in a situation where they end up returning to their bank for a loan once they’re short on funds again. If you instead choose to put that windfall into an interest earning savings account and hold to the repayment of the debt you already have, then you can have that money later for an emergency or to use once you’ve cleared your debts in the normal way.

In Conclusion

In the UK, many people are afraid of debt and for good reason, however balancing this with the understanding that proper management of borrowing can help ease your life can lead to a more sensible approach to managing your money. Debt properly utilized can help business dealings as well as personal situations. It is never appropriate to take on debt without solid reasoning, but at the same time you can use it as a tool to leverage yourself further along in life.

Remember, those people who are scared of debt quite frequently find themselves in situations that have gotten out of control for lack of taking action to fix them when it was possible. This leads to a long term situation where IVAs or bankruptcy are the only way out. If you have proper respect