Welcome to our general questions and answers section. Each month we update the answers to reflect the latest changes These questions and answers came from real people like you. We hope you find them helpful and informative.
Please let us know if you encounter any problems or have suggestions. To send a comment, go to our contact page and click on the email address link, please use the word FAQ in your comment.
If you don't find the answer to your general question below please call our assistance line at 0845 833 0234 for any individual and personalised debt related questions that you may have - we are only too happy to help you.
frequently asked questions regarding 'Helping a friend'
- I have a friend who seems to be struggling with his finances what should I do?
- My colleague is receiving lots of calls from credit firms chasing money should I get involved?
- My sister is being advised to enter an IVA, is this correct advice?
- Will my best friend loose her house if she goes bankrupt
- Why should I help someone with money problems?
- My son lost his job and has been unable to make any payments on his IVA, what will happen to him?
Questions we are asked 'When people have already received advice' from another company or advisor
- What is an IVA?
- How long will the IVA last?
- I have just started an IVA what will happen to the equity in my home?
- I’m in an IVA and struggling to make the payments now my situation has changed what should I do?
- I have paid nearly £7,000 into an IVA over the last 12 months and my creditors have not yet received any payments why?
- Is Debt Consolidation the answer?
- What is a Debt Management Programme
- I have been approached by a company offering to improve my credit rating, how will they do this?
The questions people often ask us about bankruptcy
- How long will my bankruptcy last?
- What will it cost to make myself bankrupt?
- Will I loose my home?
- What are the restrictions of bankruptcy?
- Will I have to appear in court?
- Will I be able to get credit?
- Can I get a bank account?
- What will happen to my car?
- Will everyone know about my bankruptcy?
- How much will it cost me to discover the options available to me?
[Answers to the ' Help a friend' frequently asked questions]
I have a friend who seems to be struggling with his finances what should I do?
A: It is imperative that they seek advice, the problem will not go away although most people try to bury their heads in the sand. The earlier advice is sought the sooner a solution can be found starting them on the road to being debt free.(back to top)
My colleague is receiving lots of calls from credit firms chasing money should I get involved?
A: Debt is one of the most worrying situations to find yourself in, it’s like a monster that sits on your shoulder distracting you from seeing the light at the end of the tunnel. Often it takes an outsider to put things back in perspective and a little advice is all someone needs to send them in the right direction. (back to top)
My sister is being advised to enter an IVA, is this correct advice?
A: Obviously, it depends on your sister’s circumstances and the amount she owes but before committing to an arrangement that will last for at least 5 years she should consider all the options available to her. It maybe that bankruptcy is a better option. (back to top)
Will my best friend loose her house if she goes bankrupt?
A: No, it is very rare for someone to loose their home and only then because they don’t follow procedures. (back to top) .
Why should I help someone with money problems?
A: When you see someone that you care about struggling with financial difficulties it makes you want to help but most of us are not in a position to offer financial assistance. Why not do the next best thing and put them in touch with someone who can go through their options and come up with a course of action to enable them to be debt free as soon as possible.(back to top)
My son lost his job and has been unable to make any payments on his IVA, what will happen to him?
A: There are a number of options available to him, he may be able to approach his creditors to amend his proposals but now his circumstances have changed bankruptcy may be the better option. The most important advice you can give your son is to seek help in order to explore his options and retake control of his finances.. (back to top)
[Answers to the 'You have already had advice' questions]
What is an IVA?
A: In Individual Voluntary Arrangement (IVA) is a formal and legally binding agreement between you and your creditors. The terms of your proposal to creditors may vary. 75% of your creditors must agree to the proposal at a creditor’s meeting and once the arrangement is approved, all of the creditors are bound by its terms under the Insolvency Act 1986. Creditors can suggest changes, however you must agree these in order for them to be implemented.
Payments are made by you, to a supervisor usually on a monthly basis and, a dividend is paid out to creditors in full and final settlement of their debts. Basically the arrangement should offer your creditors a larger repayment than they would otherwise expect to get if you were made bankrupt, particularly as you are asking them to wait a significant period of time before they receive the agreed payment. (back to top)
How long will the IVA last?
A: IVA’s are normally 5 years in duration but they can be extended to give time for assets to be dealt with. (back to top)
I have just started an IVA what will happen to the equity in my home?
A: As part of your arrangement you will have to re-mortgage in year 4 to realise the equity for your creditors? Alternatively you can arrange a mortgage now and use the funds to pay your arrangement in full and final settlement . (back to top)
I’m in an IVA and struggling to make the payments now my situation has changed what should I do?
A: It may be that bankruptcy is now a better option for you. Since 1st April 2004 there have been considerable changes to the law concerning Bankruptcy in England. Previously, Bankruptcy would typically last for a period of between 2 and 3 years but now the majority of bankruptcies will be discharged within 12 months. (back to top)
I have paid nearly £7,000 into an IVA over the last 12 months and my creditors have not yet received any payments why?
A: Although there are normally no up front fees with an IVA your arrangement will have allowed for fees to be taken by the Insolvency Practitioner and these are normally taken before a dividend is paid to your creditors. (back to top)
Is Debt Consolidation the answer?
A: Debt Consolidation is simply swapping a number of small loans and debts for one bigger one usually secured on your home. This may be the solution for you if your problems are not severe or if your income has gone down and with careful budgeting you can now afford the new payments. However before considering this option, be careful that you are not jumping from the frying pan and into the fire. (back to top)
What is a Debt Management Programme
A: This is an informal arrangement with your unsecured creditors to pay back the amount owed over a period of time. However your creditors are not obliged to accept this arrangement or freeze interest or to accept reduced repayment arrangements and unless they do repaying the same debt over a longer period of time will result in an increase in the total amount you have to repay. (back to top)
I have been approached by a company offering to improve my credit rating, how will they do this?
A: There are lots of companies out there offering to improve credit rating but unfortunately in most cases once a judgment or default has been registered it will be on your credit file for six years regardless of whether you enter into an arrangement with your creditors or become bankrupt. (back to top)
Answers to the 'Bankruptcy' related frequently asked questions
How long will my bankruptcy last?
A: Since the 1st April 2004 there have been considerable changes to the laws concerning Bankruptcy in England. Previously, Bankruptcy would typically last for a period of between 2 and 3 years but now the majority of bankruptcies will be discharged within 12 months. You could be debt free within 12 months (back to top)
What will it cost to make myself bankrupt?
A: The court fee of £150 (this may be wavered if you are on benefit) plus the deposit of £310 towards the cost of administering your bankruptcy. However, if you are already in an IVA it maybe that the supervisor holds enough funds to pay for your bankruptcy. (back to top)
Will I loose my home?
A: It is very rare for a person to loose their home because of bankruptcy. Even if you have equity in your property it is nearly always possible to re-finance and purchase the Official Receiver’s interest. It is advisable to do this as soon as possible before the property increases in value. In the few cases where someone has lost their home this is normally because they haven’t followed procedures. (back to top)
What are the restrictions of bankruptcy?
A: There are certain restrictions once a person becomes a bankrupt these include not being allowed to be a company director, licensee, member of parliament, or charity trustee. You will also not be allowed to enter the Royal Enclosure at Ascot but these restrictions will not affect most people. (back to top)
Will I have to appear in court?
A: No, your paperwork will be filed into your local court and it is this that appears before the judge for his signature. You will then be issued with a bankruptcy order and an official receiver will be appointed to administer your case. Often you will not even have to attend an interview in person with the Official Receiver but a 10 minute telephone call is all that is required to finalise the bankruptcy. (back to top)
Will I be able to get credit?
A: You cannot obtain credit for over £500 without advising the lender of your bankruptcy. Although there are no restrictions on obtaining credit in an IVA in practice it is very difficult . (back to top)
Can I get a bank account?
A: Your present bank account will be frozen but once your bankruptcy order has been issued you will be able to open a new account. There are now a number of banks offering facilities to bankrupts. (back to top)
What will happen to my car?
A: Your car is exempt from bankruptcy unless it is a high value vehicle. (back to top)
Will everyone know about my bankruptcy?
A: No, it will appear in the evening paper once under public notices but who reads these!!! (back to top)
How much will it cost me to discover the options available to me?
A: Nothing, our initial consultation is free and we will discuss your personal situation and come up with an individual solution specific to you. (back to top)
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