Famous Actor Admits to Turning to Individual Involuntary Agreement

If you are one of many UK citizens dealing with debt of all kind and wondering where to turn, then you can take solace in the fact that you are at least not alone.

Famous UK actor Neil Morrissey has admitted that he owes credit companies a total of 2.6 million pounds and has thus had to turn to an individual voluntary agreement. Morrissey poured money into a business venture that involved a chain of luxury hotels, but the idea did not pan out and Morrissey is now paying the price.

The actor ran into major problems when the company behind the hotel chain fell into administration. It took the hotel far longer to get their ideas in motion that originally planned and there are a number of people that are facing serious debt due to it, including Morrissey.

Many people are impressed with Morrissey’s decision to take the high road and avoid bankruptcy. He says he intends on paying back his creditors in full, and that is why he has taken the path of an IVA. He told local newspapers that bankruptcy is the easy way out and that he instead decided to take blame for his decisions and work his way out of things so that everyone could get back they money that they were owed.

Morrissey has officially begun undertaking in an individual voluntary agreement and in agreeing to do so has promised to pay back as much money as he can. All of his spare cash will go directly to creditors, but once he has paid them back he will have a lot more financial freedom than if he had taken the route of bankruptcy.

An IVA may seem like the hard way to go about things if you are facing serious debt, but in the long run it is a much more beneficial decision than simply calling quits and declaring bankruptcy.

Rules for Debt Relief may be Made Easier

It appears that new rules and regulations may be put into place to allow UK residents that have pensions to use debt relief orders in order to fight back and rid themselves of their insolvency. Business departments around the UK are coming up with certain changes that can be made to DROs that would make them more easily accessible for people so that they do not always have to turn to bankruptcy or individual voluntary agreements.

Debt relief order rules can allow people to rid themselves off a lot of debt within as little as a year, but people cannot use them if they have any assets that are more than 300 pounds in value. This means that at the moment it is hard for anyone with a pension fund to access a DRO, but that may all change soon.

Although these DROs were only introduced in April, there is already a plan for a new common sense change that would allow easier rules and let people with pension funds still take advantage of their benefits. Essentially these debt relief rules target people that have less than 50 pounds of excess income each month and have debt that is lower than 15,000 pounds. 12,000 people have used these DROs since they have been put into place and the government is trying to find a way for more people to use them.

The only discussion right now is how to determine how big of a pension pot should be before people are not allowed into the process, and where to draw the lines. There has been a lot of concern that people were getting denied for these rules even though they met all the criteria, and reports showed that 96% of people were excluded from the DRO process based on their pension. And in 78% of those cases the citizens pension funds were less than 5,000 pounds.

Personal Insolvency in the UK is on the Rise

In the last quarter of 2009, England and Wales saw the number of people that were declared insolvent each its highest number of all time. The Insolvency service has released figures that show that more than 35,000 people had to declare insolvency in the final three months of the calendar year, which is a staggering increase of 25% from the year before. On top of that, more than 6,355 businesses were forced to declare bankruptcy in the same time period which was also a record.

For the entire year of 2009 there were over 134,000 that were declared insolvent in the UK which was a 26% increase from the year before and almost 30,000 more than the previous record which was seen in 2006.

Many people thought that record low interest rates would have saved a lot of people from being declared as insolvent, but the increase of long term unemployment just meant that some people did not have the chance to fight back and compile enough money to pay off their debts. Due to these new increases many creditors have tightened the reins on consumers and started to act a lot tougher. The increase in toughness by creditors could have a lot to do with the increase in individual voluntary agreements, but the increase in the last few months of the year was surprising as usually people wait until after Christmas to deal with their debt issues.

IVAs may also have risen as more people seem to be aware of their options and want to pay back some debt rather than go bankrupt. No matter how you look at, most people agree that there is a lot more to come for UK consumers before things get better and we actually find a way to climb out of the recession.