We think you have liked this presentation. If you wish to download it, please recommend it to your friends in any social system. Share buttons are a little bit lower. Thank you!
Presentation is loading. Please wait.
Published byEmily Needs
Modified over 2 years ago
© Grant Thornton International. All rights reserved. Choosing the appropriate option for Personal Insolvency 11 10 18 Bank IVA and DRO screenshow.pptx
© Grant Thornton International. All rights reserved. Insolvency statistics 2nd Quarter of 2011 30,515 insolvencies in England and Wales –2.2% decrease on same period as last year 11,113 bankruptcies –25.8% decrease on same period as last year 12,143 IVAs –9.8% decrease on same period as last year 7,527 DROs –15.3% increase on same period as last year
© Grant Thornton International. All rights reserved. Bankruptcy Debtor's own petition = £700 –consists of deposit and court fee –possible exemption from court fee if in receipt of certain benefits Creditor's petition –effects of bankruptcy are the same –only likely where the debtor has significant assets Some debts survive bankruptcy Court fines –arrears of child maintenance –criminal court orders –student loans
© Grant Thornton International. All rights reserved. Assets All ‘property’ as defined in Insolvency Act 1986 ‘vests’ in the Trustee Property will include: –endowments –ISAs and Tessas –savings, bonds and shares –all cash assets
© Grant Thornton International. All rights reserved. Assets Certain key exemptions: –items for basic domestic needs –income for reasonable domestic needs (however where surplus income exceeds £20, an IPA/IPO will be sought and can run for a maximum of three years) –tools of trade (often a vehicle for getting to and from work) –pensions –compensation awards in respect of paid and suffering
© Grant Thornton International. All rights reserved. The home Bankrupt's equitable interest has to be realised within 3 years Can be done in a number of ways: –third party lump sum –spouse re-mortgage and purchase of bankrupt's interest –property sold voluntarily –forced sale of the property –Section 313 charge (if sale not cost-effective) Equitable interest: –less than £1000 – Official Receiver will wait for three years to try to realise –greater than £1000.00 – bankrupt's family has occupation rights for 12 months, after which creditors' interests take priority
© Grant Thornton International. All rights reserved. Effects of bankruptcy Order may not be advertised in the local press Will be published in the Gazette and in the online Insolvency Register Employment: –impact on profession (check contract, contact professional body, seek independent legal advice) –cannot act as a Company Director –self-employed individuals may have difficulty in obtaining trade credit
© Grant Thornton International. All rights reserved. Effects of bankruptcy Tax code change Bank accounts – operate at bank discretion Future credit – disclose bankrupt status if borrowing more than £500 Credit Reference agencies – record for six years from date of order Discharged in a maximum of 12 months (but note that an IPO/IPA will continue for agreed period) Bankruptcy Restriction Orders/Undertakings: –dishonesty/recklessness –extended restrictions for between 2-15 years
© Grant Thornton International. All rights reserved. Individual Voluntary Arrangements Background Statutory alternative to bankruptcy Repayment of a percentage of debt over a fixed period Legally binding arrangement All interest/charges are frozen Stay on all legal action by unsecured creditors - no contact/enforcement Possible to negotiate about how assets are realised (eg re-mortgage rather than sale of house) Incorporates ‘debt forgiveness’
© Grant Thornton International. All rights reserved. Individual Voluntary Arrangements Criteria Insolvent (unable to pay debts as and when they fall due) Unsecured debts –typically more than £15,000 –amounts owed to at least two unsecured creditors Ability to make offer to creditors –regular income –reasonable disposable earnings
© Grant Thornton International. All rights reserved. Individual Voluntary Arrangements What they involve Contributions Monthly amounts Potential for stepped payments during lifetime –no minimum monthly contribution –five year forecast with: child care costs benefit changes HP/finance payment End result achieves desired return to creditors
© Grant Thornton International. All rights reserved. Individual Voluntary Arrangements What they involve Lump sums Disposable income is low/non-existent Third party offer – family/friend Endowment Pension lump sum Compensation lump sum Savings
© Grant Thornton International. All rights reserved. Individual Voluntary Arrangements Protocols and equitable interest Came into force on 1 February 2008 Represents current best practice Result of input from all stakeholders in IVA process Introduced new approach to realising a client's equitable interest in property: –equitable interest to be calculated six months before IVA due to complete –if less than £5,000, any interest becomes an excluded asset and does not need to be realised –IVA would simply complete in final month of contract term
© Grant Thornton International. All rights reserved. Individual Voluntary Arrangements Protocols and equitable interest If equitable interest greater than £5,000, then the debtor is obliged to attempt to re-mortgage Re-mortgage criteria: –maximum 85% loan to value –re-mortgage must be repayment in nature –cannot have extension to existing mortgage term –increase in monthly mortgage payment cannot exceed 50% of the monthly IVA contribution amount
© Grant Thornton International. All rights reserved. Individual Voluntary Arrangements Protocols and equitable interest Re-mortgage subject to following terms –age (at retired age no re-mortgage expected) –affordability –multiples of earnings –market conditions –credit check
© Grant Thornton International. All rights reserved. Individual Voluntary Arrangements Protocols and equitable interest If debtor cannot secure a re-mortgage facility: –possible extension of IVA by 12 months –further 12 monthly payments to be made or –third party can make contribution or –debtor can put forward alternative
© Grant Thornton International. All rights reserved. Debt Relief Orders (DRO) Introduced in April 2009 Aimed at providing a solution for clients with: –low income –few assets Criteria: –debts of less than £15,000 –assets of less than £300 –a car worth less than £1,000 –less than £50 disposable income each month £90 fee - can be paid over six month instalment period
© Grant Thornton International. All rights reserved. Debt Relief Orders (DRO) Effects Essentially same as bankruptcy order If circumstances change during term, can be revoked Debtor's name will appear on the Individual Insolvency Register Credit file impaired Rent arrears must be included in the DRO
© Grant Thornton International. All rights reserved. Debt Relief Orders (DRO) Effects Debt Relief Restriction Order can be obtained: –places restrictions for a period of 2-15 years –failure to co operate with Official Receiver can give grounds Some debts survive DRO: –magistrates' court fines –child support and maintenance payments –student loans –debts incurred through fraud
© Grant Thornton International. All rights reserved. Contact Jane Lodge Manager M 07966 495690 E firstname.lastname@example.org Choosing the appropriate option
© Grant Thornton International. All rights reserved. Thank you for your attention Any questions?
BANKRUPTCY. Bankruptcy the purpose of bankruptcy is to permit or allow a person to get rid of their debts and have a fresh start while at the same time.
Bankruptcy What is it’s Effect?. Bankruptcy A legal process that relieves debtors of the responsibility of paying their debts or protects them while they.
Debt Relief Notices – What are they and how do I apply? Colette Bennett, Project Development Manager, Approved Intermediary Service Transition Unit, MABS.
This module gives an overview of some complex debt issues and some tools by which to deal with them. It draws from web sources – please note these down.
Chapter 7: Planned Borrowing. Objectives Discuss the elements of the planned use of credit. Establish your own debt limit. Understand the language of.
Bankruptcy A Resource Guide for Child Support Professionals 2.
Chapter 9-Section 2 Bankruptcy Choices. Bankruptcy A legal procedure to relieve a person of excessive debt. Voluntary bankruptcy-the individual asks.
Bankruptcy. What is Bankruptcy? Bankruptcy is a federal court process that can help you eliminate legal responsibility for many of your debts or repay.
Bankruptcy WHAT IS IT’S EFFECT?. Bankruptcy A legal process that relieves debtors of the responsibility of paying their debts or protects them while.
Micah Legal Aid Volunteer Training. Collection cases Bankruptcy Car Repossession Utility issues.
Credit and Its Use.
Chapter 21 Creditors’ Rights and Bankruptcy Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior.
Copyright © 2004 by Nelson, a division of Thomson Canada Limited CANADIAN BUSINESS AND THE LAW Second Edition by Dorothy Duplessis Steven Enman Shannon.
Laws Protecting Debtors/Creditors and Bankruptcy Unit C Basic Business Law Objective 6.02 Part D.
Charity Bank Jaishree Mistry Lending Manager, London & South.
Bankruptcy 04/09. Bankruptcy What is it? A legal process performed under the Bankruptcy and Insolvency Act. Because of your inability to pay your debts,
Bankruptcy A Resource Guide for Child Support Professionals ERICSA May 2011.
McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 20 Creditors’ Rights and Bankruptcy.
Laws Protecting Debtors/Creditors and Bankruptcy Unit C Basic Business Law Objective 6.02.
Using Credit. Terms to know Credit Creditor Revolving Charge Account Installment Account Vehicle leasing Cash loan Collateral Cosigner Home equity loan.
Credit. credit is money loaned in exchange for your promise to pay it back later with interest. interest is a amount of money paid to use someone else’s.
Business Law – week 7 Secured Transactions Bankruptcy Law Quiz Introduction to Employment Law Next Week.
Learning About Credit Advantages and Disadvantages.
Credit basics Advanced Level.
Copyright, 1996 © Dale Carnegie & Associates, Inc. GETTING OUT OF DEBT MINI-LESSON INDIANA DEPARTMENT OF FINANCIAL INSTITUTIONS CONSUMER EDUCATION.
Bad Credit? Tough Luck!?. stops people from getting mortgages, stops people from getting mortgages, car loans and credit cards car loans and credit cards.
P A R T P A R T Credit Introduction to Credit and Secured Transactions Security Interests in Personal Property Bankruptcy 6 McGraw-Hill/Irwin Business.
. Welcome To Debt Solutions. The Goat, The Wolf and The Cabbage.
30-1 Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin.
Creditors’ Rights and Bankruptcy Chapter 16. Secured Transactions Article 9 of UCC A transaction in which the payment of a debt is secured by collateral.
BANKRUPTCY. VOCAB ▫Bankrupt – a person or company with insufficient assets to cover their debt ▫Bankruptcy – a state of being legally released from the.
CHAPTER FOUR – SOURCES OF FINANCE. SOURCES OF FINANCE Internal Sources Refers to funds that are generated from within the firm itself – from owner’s.
Econ – Chapter 13 – Outline #1. I. Savings and Financial System = An economic system must be able to produce capital if it is to satisfy the wants and.
Section 9 Other Deductions From Pay
Going Into Debt $$$. Americans & Credit Credit allows people to own homes, improve their communities and purchase other items instead of waiting. Credit.
Obtain Finance. Types Finance Secured Finance – Finance is given in return for security over an asset – The security is a guarantee that lender has first.
Going Into Debt Chapter 4. Americans and Credit Chapter 4, Section 1.
Law Reform In Plain English Insolvency and Trustee Service August 2007.
Presentation/Webinar Know your lenders… the right equity release.
Using Credit Chapter 25, pgs
Teens Credit- Day 3 Independent Living December 2, /09.
Hardship Issues Kay Boey Consumer Credit Legal Service (WA) Inc September 2011 This presentation is for information only. You must seek legal advice in.
Unit 3 Economics Practical Economics: Credit, Debt, Loans, & Investing.
College lesson four about credit.
Personal Finance Test Review. Post Test Review A. Credit is the ability to obtain goods/services before payment is made based on the trust that payment.
Bankruptcy. What is Bankruptcy? Bankruptcy is a legal proceeding in which a person who cannot pay his or her bills can get a fresh start by canceling.
© 2017 SlidePlayer.com Inc. All rights reserved.