Archive for the IVA Advice Category
The United Kingdom has been struggling to keep debts manageable at the consumer level for some time, but many factors appear to be making it difficult for the average person to dodge debts. Recent statistics have been put together by Credit Action, and these show that the average debt per household in the UK today stands at over £55,800. This figure does include mortgages as part of personal debts and is shocking to see, particularly since it has been shown that at the end of June 2011, the total personal debts owed in the UK stood at over £1.45 billion.
Why is this figure so shocking? Analysts say that this level of debt is comparable with entire output of the UK economy between the 2nd Quarter of 2010 and the 1st Quarter of 2011. While the overall levels of debts owed by consumers has actually slid by nearly £6 billion over the past year or so, financial experts say that the reason for this decline is actually IVAs (Individual Voluntary Arrangements) and similarly formal debt solutions. This shows that these solutions have helped to write off a massive amount of consumer debt, something that offers a real glimmer of hope to those still struggling with debts in the UK right now.
The statistics for those struggling in the UK today are truly staggering. The Citizens Advice Bureau is sawmped by requests for help with more than 9,000 requests made each day. This means that every 5 minutes a new consumer is declared either bankrupt or insolvent – not a pretty picture for the UK economy by any means.
Some critics have said that it should be noted that figures for bankruptcies have actually been in decline. Analysts, however, are quick to point out that this could be due to the fact that a bankruptcy costs £700 as opposed to the £100 it cost in the past. Instead, many people are finding an IVA to be the solution which can meet their needs, with over 12,000 IVA’s being made in 1st Quarter of this year alone.
The Office of Budget Responsibility has also stated that they believe debts in UK households are going to increase. In fact, by the conclusion of 2015 the OBR predicts that household debt will have hit well over £2.1 billion, a figure that means average debt per household would be over £80,000. In addition, with the UK growing at a rate of over 1,200 new citizens per day through 2021, the economy will be dramatically affected, making it all the more important for consumers to get their finances straightened now.
Credit cards, unsecured personal loans and finance deals for cars or stores are a prime culprit for debt today. If you need help, please explore this site for links to services that can help you. There is no reason to go it alone when expert debt assistance is available and proven to help people get back their financial security and their peace of mind.
Recent figures from the Government of the United Kingdom’s help line for insolvency have shown that there are a significantly larger percentage of women in the UK than men who are choosing loans for debt consolidation as a means of straightening out their finances. Financial experts suggest that often an IVA could have been a better solution for these women, but a lack of information is pushing them towards other solutions that could keep their cycle of debt going – not a good sign with such heavy cuts coming from the UK government that could send many spiraling down further into debt if they do not find a way to fix financial problems.
The figures themselves showed that 22 per cent more women in the UK are now facing a serious financial problem that they hope such loans will cure, compared to 8 per cent more British men. Some have pointed out that the issue could be a case where women tend to be in charge of managing household finances in the UK and therefore may be the half of a married couple most likely to call in and seek help from the Government’s help line.
However, some have stated that there is a preponderance of choosing luxury or simply more expensive goods among women that is a tendency which can be shared by men, but is often not. Of the more than 64,000 women tallied in those figures, it appears that many had been consistently spending more than their incomes could bear for quite some time. This desire to keep up a seemingly extravagant lifestyle shown in TV programmes and movies appears to be hitting women in the UK hardest if they are between the ages of 25 and 49 years old. In that demographic, more than 45,000 ended up as part of the 64,000 women calling in for help. While not blaming such businesses flat out, experts said that retailers constant bombardment of women in this age group to encourage spending has revved up during the economic crisis Britain has undergone recently and that such advertising could be having a mild subconscious effect on consumer buying habits. However, the solution they pointed to was simply better fiscal education for consumers.
Often, these women have reported actually borrowing money to purchase more disposable goods instead of to fund investments to get themselves ahead. Financial responsibility advocates suggest that had they leveraged their borrowing power to be able to improve their situation rather than ‘treat the symptoms’ of financial pain, they could well have ended their own debt problems. Now, instead, they face bankruptcy and still are not aware that an Individual Voluntary Arrangement could be entered into as a solid path to financial recovery.
These days, credit in very easy to obtain for those living in the UK. Those looking to led money include small scale money lenders, mail order firms, credit unions, finance companies, insurance companies, credit card companies, building societies and banks. Most of us will eventually require credit in some form or another, whether it is a mortgage to buy a house or a loan to purchase expensive electronics, furniture or a new car. The definition of credit is buying a product or service under conditions that offer you time to pay it off. That credit itself is paid for in the form of interest. Those who borrow money would be wise to check the APR (Annual Percentage Rate) to make sure they are getting the cheapest credit possible.
It’s easier than you might think to end up borrowing more money than you have the ability to repay and when you do that, the resulting money owed is called debt. To word it another way, credit is debt that you have under control while debt is credit that has gotten out of control. Many people end up borrowing even more money against their debts in the hope of clearing what they owe, instead creating an even larger debt for themselves.
When people experience debt problems it is usually due to multiple debts they owe becoming overdue, such as:
Overdue on Holidays (Particularly ‘Fly now, pay later’)
Overdue on furniture payments
Overdue on TV/Video/Stereo equipment
Overdue on car payments
Overdue on electricity, gas or telephone utilities with the result of being cut off
Overdue on council tax with the result of bailiffs or worse consequences
Overdue on mortgage with the frightening result of repossession and subsequent homelessness
Debts have a nasty tendency to ruin lives when they get out of hand so it is crucial that you seriously consider borrowing money each and every time you do so. You and your family’s lives are what will be affected should the situation spiral out of your control. More often than is commonly believed, debt is a cause of the breakdown of a marriage. Your golden rule could be: Never borrow more money than you are absolutely certain you can pay back.
If you do, despite your best intentions, find yourself struggling with debt, take a moment to consider your options for getting your financial life back on track.
A Debt Management Plan or Individual Voluntary Arrangement (IVA) may be exactly what you need to get yourself back into financial health once again.
These days, credit in very easy to obtain for those living in the UK. Those looking to led money include small scale money lenders, mail order firms, credit unions, finance companies, insurance companies, credit card companies, building societies and banks. Most of us will eventually require credit in some form or another, whether it is a mortgage to buy a house or a loan to purchase expensive electronics, furniture or a new car. The definition of credit is buying a product or service under conditions that offer you time to pay it off. That credit itself is paid for in the form of interest. Those who borrow money would be wise to check the APR (Annual Percentage Rate) to make sure they are getting the cheapest credit possible.
It’s easier than you might think to end up borrowing more money than you have the ability to repay and when you do that, the resulting money owed is called debt. To word it another way, credit is debt that you have under control while debt is credit that has gotten out of control. Many people end up borrowing even more money against their debts in the hope of clearing what they owe, instead creating an even larger debt for themselves.
When people experience debt problems it is usually due to multiple debts they owe becoming overdue, such as:
Overdue on Holidays (Particularly ‘Fly now, pay later’)
Overdue on furniture payments
Overdue on TV/Video/Stereo equipment
Overdue on car payments
Overdue on electricity, gas or telephone utilities with the result of being cut off
Overdue on council tax with the result of bailiffs or worse consequences
Overdue on mortgage with the frightening result of repossession and subsequent homelessness
Debts have a nasty tendency to ruin lives when they get out of hand so it is crucial that you seriously consider borrowing money each and every time you do so. You and your family’s lives are what will be affected should the situation spiral out of your control. More often than is commonly believed, debt is a cause of the breakdown of a marriage. Your golden rule could be: Never borrow more money than you are absolutely certain you can pay back.
If you do, despite your best intentions, find yourself struggling with debt, take a moment to consider your options for getting your financial life back on track.
A Debt Management Plan or Individual Voluntary Arrangement (IVA) may be exactly what you need to get yourself back into financial health once again.
Employment and How Debt Problems Affect Your Job
With this article we want to address the ways in which serious debt troubles can affect your ability to work and keep your job or even your career. Our hope is that you may learn information here that can help you if you or a loved one faces serious debt that has begun to affect your or their ability to work. It is never a positive experience to have your job at risk due to a terrible debt struggle.
Debt solutions are available for those who do not wish to have their work life interrupted or even ruined do to debt. The effects can be much more long lasting than you might imagine. For example, a bankruptcy can have effects that last a decade.
Here are a few solutions that may suit your needs:
An IVA, the Individual Voluntary Arrangement
- An IVA is an agreement for those who owe £15,000 or more. With an IVA, the advantage is that it will not affect your job or ability to keep working for almost all employers.
A DMP, the Debt Management Plan
- If your job is on the line due to debt then a Debt Management Plan may be for you. This popular solution has the advantage that it takes your unique individual circumstances into account.
A Bankruptcy
- Since your job may be impacted if you undergo a bankruptcy, particularly if you work in the legal sector, banking or finance, you will want to get sound advice before you consider this step.
Once you have already lost your job due to debt, it is too late to do anything constructive about it. However, if you’re struggling with debt and you need answers, then you will want to act quickly because as we all know, debt piles up quicker than we hope it will.
Employment and How Debt Problems Affect Your Job
With this article we want to address the ways in which serious debt troubles can affect your ability to work and keep your job or even your career. Our hope is that you may learn information here that can help you if you or a loved one faces serious debt that has begun to affect your or their ability to work. It is never a positive experience to have your job at risk due to a terrible debt struggle.
Debt solutions are available for those who do not wish to have their work life interrupted or even ruined do to debt. The effects can be much more long lasting than you might imagine. For example, a bankruptcy can have effects that last a decade.
Here are a few solutions that may suit your needs:
An IVA, the Individual Voluntary Arrangement
- An IVA is an agreement for those who owe £15,000 or more. With an IVA, the advantage is that it will not affect your job or ability to keep working for almost all employers.
A DMP, the Debt Management Plan
- If your job is on the line due to debt then a Debt Management Plan may be for you. This popular solution has the advantage that it takes your unique individual circumstances into account.
A Bankruptcy
- Since your job may be impacted if you undergo a bankruptcy, particularly if you work in the legal sector, banking or finance, you will want to get sound advice before you consider this step.
Once you have already lost your job due to debt, it is too late to do anything constructive about it. However, if you’re struggling with debt and you need answers, then you will want to act quickly because as we all know, debt piles up quicker than we hope it will.
Debt from Ill Health is More Common Than You Think
One of the more common problems that people end up finding themselves in debt due to is ill health. Unfortunately, the stress from debt also ends up being a contributing factor to health problems which creates something of a circle of negative effects.
Some of the common methods of UK debt management which may help solve ill health debt problems are:
1 – IVA (Individual Voluntary Arrangement)
1 – Debt Management Plan
3 – Protected Trust Deed (for residents of Scotland)
4 – Bankruptcy
There are so many reasons that people experience debt due to ill health. Here are a few reasons that you might not have thought of:
- In times of illness, finances are often understandably neglected
- A sudden drop in income is not unusual since it may lead to a loss of work
- The cost of tranport for treatment can increase debt
- The cost of respite care can also raise debts
- Situations of deteriorating health from illness due to the process of handling debt in the first place can make dealing with the debt even more difficult
- Food required for special diets or medicines needed to treat illness can lead to debt
- Ill health can force clients in physical labour jobs to lose work or stop working entirely
- Making payments on debts can drastically reduce the disposable incomes of those suffering illness
- Care service cost can sabotage the budgets of those with ill health
- Mental health related issues may mean those suffering are unable to work for significant periods of time
Job Options for Those Suffering Ill Health and the Employment Market They Face
Debt problems can pile up quickly as a person adjusts to the onset of ill health. Even those who can find employment, if they have a small income change or an extra demand placed on that income, they could find themselves in a debt problem. Merely being in ill health can also keep people from being able to get a job. Despite strict employment laws in the UK, people suffering from illness many times have difficulties because they are unable to work standard hours.
Debts from ill health can also occur when a there is a change in income due to the loss of a benefit or a partner’s earnings. Those suffering from illness who have a long term dependency on benefits it can be even more difficult to resolve this debt, especially fi they are receiving disability benefits and essentially at the mercy of the government for their income.
In the UK, the problem for some people who struggle with debt due to ill health is that they do not qualify for any Disability Living Allowance (DLA) due to technicalities in the law.
This can be a real struggle for those battling illness, but depending upon your payment history and whether your ill health is prone to be long or short term, you can sometimes get your lender to agree to:
- The lender may agree to reduce your payments over a period of time you both agree to
- The lender may charge interest for a shorter period of time if you have a repayment mortgage instead of having you pay both capital and interest
- The lender may extend your mortgage’s term in order to lower your payments
- The lender may offer you a ‘payment holiday’
Some reasons that people end up in debt can be:
- General financial over commitment
- Poverty
- Loss of work
- Illness
- Breakdown in their relationships
Debt and Illness – What if You Are In Debt Already?
Depending on your track record of making payments in a timely manner, if you have fallen behind then your lender can suggest ways to pay off the arrears gradually along with your usual payments. If you are unable to meet the extra payments you may be able to have them either delayed temporarily or added onto your loan.
You will want to pay as much as you can afford each month because keeping up with your usual payments (even if they are not in full) proves you are committed to repaying what you owe. If you can prove you are committed then your lender is likely going to be more sympathetic to your plight and possibly minimise the arrears charges, as well.
Some anonymous case studies (to protect personal identities in this sensitive aspect of life) regarding debt for those who suffer from ill health are featured below along with some examples of situations that cause this type of debt:
- Debt from ill health affects people’s emotional states by compounding severe stress
- Ill health renders many people unable to work
- Debt can be linked to uncontrollable physical conditions such as epilepsy
- Debt is often linked to suicide
Debt From Epilepsy
This is the case of a woman who bought a car with hire purchase whom we will refer to as Laura. Right after purchasing this car her doctor diagnosed her with epilepsy and Laura could no longer drive. Obviously, she decided she would need to sell this car. Upon informing her finance company of this decision, they told her she would not be able to sell the car privately and that, instead they would sell the car on her behalf then let her know what the remaining balance she owed would be. Later, the company informed Laura that she owed £8,000 plus £3,000 in insurance premiums for policies that could not be cancelled even though they covered risks related to not being able to pay on her loan even though this insurance was to be discharged. As you can see this situation would be incredibly difficult to cope with, not to mention highly unfair, but these are real life situations that people like Laura in the UK face when struggling with debt from ill health.
Ill Health Leaves Man Unable to Work
This case involves a man whom we will call Robert who lived on a very small income and therefore used credit cards in an effort to meet his basic essential needs. This results in £25,000 in unsecured debt on a total of six separate credit cards. Robert became unable to work due to his poor health, becoming more and more stressed by the debt accumulating due to this. He suffered a breakdown specifically tied to his inability to repay on his debt. Robert’s situation is also not unusual in the UK, sadly.
Debt Leads to Emotional Problems
A woman whom we will call Harriet had a hire purchase agreement for a car purchase. After two and a half years she defaulted after becoming temporarily unemployed. Harriet now lives with her parents and has a job once again. After becoming involved in a car accident that resulted in a fatality, Harriet was left with severe emotional trauma. On top of this, her mother suffers from ME. Harriet now must go to court due to defaulting on repayments, but three months after her default, she and her parents were receiving an average of twenty calls per day between 6am and 9pm. This greatly exacerbated Harriet’s emotional problems and her mother’s condition, as well. Once again, situations such as this are not entirely uncommon in the UK.
Debt Stress and Its Ties to Suicide
As extreme as it may seem on the surface, one man who we’ll call Phillip, lost his job because of ill health. He had several low debts that were not high priority. Despite this, Phillip was called frequently from highly aggressive debt collectors until he felt extreme distress and actually attempted suicide. Phillip’s situation represents the emotional state of many people who get in over their heads with debt they never expected to take on in the first place or believe they would be easily able to repay until a drastic, unexpected change in their finances took place..
A Brief List of How Debt Impacts People’s Lives
- Creditors are not always sympathetic about genuine tragedies debtors are faced with
- Some people are unable to cope, feeling as though they are in crisis and their health is subsequently affected
- Family arguments arise over debt and the strain it puts on families
- Some people seek treatment for stress, anxiety and depression related to the strain debt puts on their health
- The stress from debt and ill health leaves some unable to get and hold down jobs
- Debt stress can affect mental health and change people’s lifestyles towards unhealthy habits
If you are facing debt, whether from ill health or not, you owe it to yourself and your family to seek out a solution that can help you. You can learn more about Debt Management Plans or IVAs (Individual Voluntary Agreements) online or, if the situation you face is extremely dire, learn about Bankruptcy.
You need quality advice from an expert professional. Don’t hesitate to get the help you need because no one wants to see you enduring situations such as those described above.
Debt from Ill Health is More Common Than You Think
One of the more common problems that people end up finding themselves in debt due to is ill health. Unfortunately, the stress from debt also ends up being a contributing factor to health problems which creates something of a circle of negative effects.
Some of the common methods of UK debt management which may help solve ill health debt problems are:
1 –
IVA (Individual Voluntary Arrangement)
4 – Bankruptcy
There are so many reasons that people experience debt due to ill health. Here are a few reasons that you might not have thought of:
- In times of illness, finances are often understandably neglected
- A sudden drop in income is not unusual since it may lead to a loss of work
- The cost of transport for treatment can increase debt
- The cost of respite care can also raise debts
- Situations of deteriorating health from illness due to the process of handling debt in the first place can make dealing with the debt even more difficult
- Food required for special diets or medicines needed to treat illness can lead to debt
- Ill health can force clients in physical labour jobs to lose work or stop working entirely
- Making payments on debts can drastically reduce the disposable incomes of those suffering illness
- Care service cost can sabotage the budgets of those with ill health
- Mental health related issues may mean those suffering are unable to work for significant periods of time
Job Options for Those Suffering Ill Health and the Employment Market They Face
Debt problems can pile up quickly as a person adjusts to the onset of ill health. Even those who can find employment, if they have a small income change or an extra demand placed on that income, they could find themselves in a debt problem. Merely being in ill health can also keep people from being able to get a job. Despite strict employment laws in the UK, people suffering from illness many times have difficulties because they are unable to work standard hours.
Debts from ill health can also occur when a there is a change in income due to the loss of a benefit or a partner’s earnings. Those suffering from illness who have a long term dependency on benefits it can be even more difficult to resolve this debt, especially fi they are receiving disability benefits and essentially at the mercy of the government for their income.
In the UK, the problem for some people who struggle with debt due to ill health is that they do not qualify for any Disability Living Allowance (DLA) due to technicalities in the law.
This can be a real struggle for those battling illness, but depending upon your payment history and whether your ill health is prone to be long or short term, you can sometimes get your lender to agree to:
- The lender may agree to reduce your payments over a period of time you both agree to
- The lender may charge interest for a shorter period of time if you have a repayment mortgage instead of having you pay both capital and interest
- The lender may extend your mortgage’s term in order to lower your payments
- The lender may offer you a ‘payment holiday’
Some reasons that people end up in debt can be:
- General financial over commitment
- Poverty
- Loss of work
- Illness
- Breakdown in their relationships
Debt and Illness – What if You Are In Debt Already?
Depending on your track record of making payments in a timely manner, if you have fallen behind then your lender can suggest ways to pay off the arrears gradually along with your usual payments. If you are unable to meet the extra payments you may be able to have them either delayed temporarily or added onto your loan.
You will want to pay as much as you can afford each month because keeping up with your usual payments (even if they are not in full) proves you are committed to repaying what you owe. If you can prove you are committed then your lender is likely going to be more sympathetic to your plight and possibly minimise the arrears charges, as well.
Some anonymous case studies (to protect personal identities in this sensitive aspect of life) regarding debt for those who suffer from ill health are featured below along with some examples of situations that cause this type of debt:
- Debt from ill health affects people’s emotional states by compounding severe stress
- Ill health renders many people unable to work
- Debt can be linked to uncontrollable physical conditions such as epilepsy
- Debt is often linked to suicide
Debt From Epilepsy
This is the case of a woman who bought a car with hire purchase whom we will refer to as Laura. Right after purchasing this car her doctor diagnosed her with epilepsy and Laura could no longer drive. Obviously, she decided she would need to sell this car. Upon informing her finance company of this decision, they told her she would not be able to sell the car privately and that, instead they would sell the car on her behalf then let her know what the remaining balance she owed would be. Later, the company informed Laura that she owed £8,000 plus £3,000 in insurance premiums for policies that could not be cancelled even though they covered risks related to not being able to pay on her loan even though this insurance was to be discharged. As you can see this situation would be incredibly difficult to cope with, not to mention highly unfair, but these are real life situations that people like Laura in the UK face when struggling with debt from ill health.
Ill Health Leaves Man Unable to Work
This case involves a man whom we will call Robert who lived on a very small income and therefore used credit cards in an effort to meet his basic essential needs. This results in £25,000 in unsecured debt on a total of six separate credit cards. Robert became unable to work due to his poor health, becoming more and more stressed by the debt accumulating due to this. He suffered a breakdown specifically tied to his inability to repay on his debt. Robert’s situation is also not unusual in the UK, sadly.
Debt Leads to Emotional Problems
A woman whom we will call Harriet had a hire purchase agreement for a car purchase. After two and a half years she defaulted after becoming temporarily unemployed. Harriet now lives with her parents and has a job once again. After becoming involved in a car accident that resulted in a fatality, Harriet was left with severe emotional trauma. On top of this, her mother suffers from ME. Harriet now must go to court due to defaulting on repayments, but three months after her default, she and her parents were receiving an average of twenty calls per day between 6am and 9pm. This greatly exacerbated Harriet’s emotional problems and her mother’s condition, as well. Once again, situations such as this are not entirely uncommon in the UK.
Debt Stress and Its Ties to Suicide
As extreme as it may seem on the surface, one man who we’ll call Phillip, lost his job because of ill health. He had several low debts that were not high priority. Despite this, Phillip was called frequently from highly aggressive debt collectors until he felt extreme distress and actually attempted suicide. Phillip’s situation represents the emotional state of many people who get in over their heads with debt they never expected to take on in the first place or believe they would be easily able to repay until a drastic, unexpected change in their finances took place..
A Brief List of How Debt Impacts People’s Lives
- Creditors are not always sympathetic about genuine tragedies debtors are faced with
- Some people are unable to cope, feeling as though they are in crisis and their health is subsequently affected
- Family arguments arise over debt and the strain it puts on families
- Some people seek treatment for stress, anxiety and depression related to the strain debt puts on their health
- The stress from debt and ill health leaves some unable to get and hold down jobs
- Debt stress can affect mental health and change people’s lifestyles towards unhealthy habits
If you are facing debt, whether from ill health or not, you owe it to yourself and your family to seek out a solution that can help you. You can learn more about Debt Management Plans or IVAs (Individual Voluntary Agreements) online or, if the situation you face is extremely dire, learn about
Bankruptcy.
You need quality advice from an expert professional. Don’t hesitate to get the help you need because no one wants to see you enduring situations such as those described above.
Insolvency: A Danger Small Businesses Face
Since so many small businesses operate from very tight budgets, cash flow is an issue they must stay aware of every single day. In this article we will attempt to explain a little bit about Small Business or Sole Trader Debt as it relates to those involved in a small business.
When the assets of your business are worth less than your debts or if you are unable to pay your business debts when they become due, then your business is considered insolvent. Bankrupty or winding up can be the result of failing to pay your small business or sole trader debts quickly enough. While Bankruptcy applies to individuals, sole traders or small businesses that have given personal guarantees for loans, winding up and liquidation applies to companies. Becoming bankrupt often involves restrictions but for individuals whose small businesses or sole traderships have failed through no fault of their own, the situation is somewhat less trying. Most of these individuals are discharged from bankruptcy within a year but their credit ratings can be effected for a longer period of time.
Due to this, the need for small business debt advice is in demand as never before. Plenty of people who are sole traders or run limited companies (LTDs) and small businesses are strongly attached to their businesses and, as a result, have become short sighted to the point that they often fail to recognize the growing debt problem that they have right before their eyes. Some businesses create so much loss that they survive only because their owners use personal credit cards and loans to prop the business up financially. Due to the freedom that running one’s own business offers, many of these folks would rather run up debt being their own boss instead of working for someone else.
In order to find the best solution for your business when facing insolvency, you will want to consider your options. Do you want to head back to employment? Are you looking for a fresh start in business? Do you want to retire or would you like to save your business?
You have plenty of options when you face insolvency.
You can learn about Individual Voluntary Agreements (IVA).
You can learn about Bankruptcy.
You can learn about Debt Management Plans.
Whichever option you choose, your best bet is to look online and find a place that will connect you with people who offer quality advice over the telephone.
Insolvency: A Danger Small Businesses Face
Since so many small businesses operate from very tight budgets, cash flow is an issue they must stay aware of every single day. In this article we will attempt to explain a little bit about Small Business or Sole Trader Debt as it relates to those involved in a small business.
When the assets of your business are worth less than your debts or if you are unable to pay your business debts when they become due, then your business is considered insolvent. Bankruptcy or winding up can be the result of failing to pay your small business or sole trader debts quickly enough. While Bankruptcy applies to individuals, sole traders or small businesses that have given personal guarantees for loans, winding up and liquidation applies to companies. Becoming bankrupt often involves restrictions but for individuals whose small businesses or sole traderships have failed through no fault of their own, the situation is somewhat less trying. Most of these individuals are discharged from bankruptcy within a year but their credit ratings can be effected for a longer period of time.
Due to this, the need for small business debt advice is in demand as never before. Plenty of people who are sole traders or run limited companies (LTDs) and small businesses are strongly attached to their businesses and, as a result, have become short sighted to the point that they often fail to recognize the growing debt problem that they have right before their eyes. Some businesses create so much loss that they survive only because their owners use personal credit cards and loans to prop the business up financially. Due to the freedom that running one’s own business offers, many of these folks would rather run up debt being their own boss instead of working for someone else.
In order to find the best solution for your business when facing insolvency, you will want to consider your options. Do you want to head back to employment? Are you looking for a fresh start in business? Do you want to retire or would you like to save your business?
You have plenty of options when you face insolvency.
You can learn about Individual Voluntary Agreements (IVA).
You can learn about Bankruptcy.
You can learn about Debt Management Plans.
Whichever option you choose, your best bet is to look online and find a place that will connect you with people who offer quality advice over the telephone.
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.
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.
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.
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.
