Why Bankruptcy is not all bad

Why Bankruptcy is Not All Bad.
I have been in the insolvency business for all my working life, firstly as a solicitor for 15 years, and then as a manager in a debt solutions company. I now run my own debt solutions business offering real solutions to those in debt. My motives are not driven by a BAM (best advice model) which has been engineered not to provide best advice but actually to drive the decision to the solution which provides the greatest financial reward for the solution provider, but for a genuine desire to ensure the correct solution is undertaken.
I have noticed a concerted drift by providers of solutions to push people to a debt management solution or an IVA . The reasons are obvious if one thinks about it. For a DM solution the provider may take the first two month’s contributions, on average £250 per month and then make a management charge of 17.5% per month. For this the company will take responsibility for liaising with creditors, and attempting to get them to accept reduced payments over an extended period of time, whilst also freezing interest. This is invariably successful, and for some people it is an appropriate solution where the debts can be dealt with in a short period of time. However, many debt management plans envisage payments being made for 10 -12 years to clear balances. The problem always however with this solution is that it relies on the goodwill of each creditor who may at any stage take or continue with action against the debtor.
For the IVA solution, the provider will ascertain what the debtor can afford and the IP’s fees will come out of contributions prior to these contributions being paid across to the creditors. Fees can routinely be £2500 for setting up the arrangement and around £5000 for monitoring it for the next five years. This is very remunerative for the IVA provider if the arrangement goes the full term. Many will say that this is irrelevant as the debtor is paying what they can afford and the creditors are happy to agree these fees to ensure compliance with the arrangement. I have a different view. During my time in this industry I saw a gradual creep in the amount that creditors demanded from debtors by way of monthly contributions before they would agree to an arrangement. The result of this was that many people desperate for any debt relief would agree to make monthly contributions into an IVA that were simply going to be unsustainable. One thing that must be remembered about an IVA is that unless all 60 payments are made, the IVA is not deemed to have completed, and if it fails you will still be in the position of owing creditors whatever was due, less those payments they did receive. The “rewards” of up to 75% of the debt written off only accrue when the arrangement has been completed, but on current figures only 60% ever complete and these figures will undoubtedly get worse.
My view is that whilst the above are viable solutions for some people on some occasions, many more people should consider bankruptcy as a viable alternative.
The attractive features of bankruptcy are that all qualifying debts are written off the moment the bankruptcy order is made. The fees are reasonable, being only £495 per person. Your affairs are taken over by the Official Receiver, so he will deal with all creditor claims. You will generally be discharged from your bankruptcy after only a year and maybe even before that if the affairs are very simple.
It is said by critics that bankruptcy has a stigma, and that the bankruptcy will be advertised in a local paper. That is true but I always say to my clients to think and see if they can recall ever seeing those adverts. None can! Others say that the home will be lost. If no equity exists in the house then it can be transferred back for as little as £250. If there is equity, the Official Receiver will require this to be taken out and paid to him. For many people of course who do not own a property, there will be no property consequences of a bankruptcy.
Finally as a bankrupt a person will not be able to act as a company director, and some professions such as the police and the armed forces take a dim view of bankruptcy, but for the vast majority of people, bankruptcy will have no other effect than to liberate them immediately from debt.

Steve Thatcher

Sure signs of a debt problem

Many people struggle with debt and only take advice when they have anguished for months over where to seek a remedy. In the meantime they may have missed the triggers that would have warned them of an impending debt problem and as a consequence they may have built up more problems than simply owing a bundle of debt.
The sure signs of a debt problem
The following is a list of the typical progression that an individual will experience from debt free to debt meltdown. If you are reading this and recognise any of the stages then you need to pick up the phone to Help With Debt whose link is attached.
· Stage 1: Debt instigator (e.g. unemployment, lost orders, death, cash flow, redundancy, sickness, marital breakdown etc.)
· Stage 2: First missed payment and initial creditor pressure.
· Stage 3: 'Robbing Peter to pay Paul' – the loan to service debt principal
· Stage 4: Multiple debts coupled with increasing creditor calls.
· Stage 5: Contact with creditor - promise to repay (agreement to pay whatever they ask just to make the calls stop)
· Stage 6: The breaking of promises to leading to an escalation of calls and letters
· Stage 7: Individual responses, e.g. depression, frustration, anger, denial
· Stage 8: Legal pressure - letters from solicitors, court summons, court orders often leading to bailiffs action and then again agreeing to unrealistic repayments.
· Stage 9: Financial meltdown.
· Stage 10: Priority creditors pressure as even most essential payments are missed leading to bailiffs action, disconnection of utility supplies, loss of home.
· Stage 11: Final degeneration being mental breakdown. marital breakdown, domestic violence, deterioration of physical health.

If you recognise the above check this link for a solution. http://steves-helpwithdebt.blogspot.com/2008/10/some-debt-management-advice.html

http://www.helpwithdebt.org/

Some debt management advice

In my role within Help With Debt we are always asked to explain what a debt management plan entails and what its benefits are. For those reading this blog who are unsure below are my top ten reasons for considering a DMP:-
10 reasons to do a debt management plan with Help With Debt

1. Continuing to struggle with payments you cannot afford, will cause stress. This may lead to ill health and marital or family problems. When you see the post piled on the doorstep, or see the answer phone bleeping, do you worry and stress. By engaging us these calls and letters will stop.
2. One call to us will mean that we can take away all the pressure that has been building for weeks or month.
3. You can increase or decrease your payments to suit your budget. Unlike an IVA it can be flexible to meet your personal circumstances.
4. You can propose this solution with as little as two creditors. As long as you have debts you cannot service in full we have the debt solution for you.
5. You can have a debt management plan with debts at any level. Most people will have at least three thousands pounds in debt. You can owe up to any level, but the greater the amount you owe, may mean other solutions are more applicable.
6. A Debt Management plan can be done with Help With Debt for as little as £100 per month. We believe that everybody is entitled to a debt solution. Most of our clients pay between £150 and £250 a month.
7. Your property will not be at risk. If your plan is agreed and maintained then no further action will be taken. Contrast this position to an IVA or bankruptcy.
8. In the majority of cases interest can be frozen and charges kept off.
9. It is an alternative to going bankrupt for those people that might be unable to continue in a profession such as a solicitor or accountant.
10. You can cease it at any time and consider another debt solution, such as an IVA or bankruptcy.

For more information visit http://www.helpwithdebt.org/

How to beat a statutory demand

I blogged earlier on my company's web page about a little known section in the consumer credit act that can be utilised to prevent or curtail collection activity from Debt Collection Agencies. I am re-printing the blog here.
How to beat a statutory demand
Now before we go much further this is not a guarantee, but we have found that there is a solution that puts the Debt collection agency on the back foot, when they send a stat. demand to you through the post.
Peoples first reaction when they get the demand is to panic. They see the words bankruptcy and a deadline of 21 days and they can’t think what to do. Our first reaction is to advise that in all probability the demand will not result in a petition for bankruptcy being issued at all. The statutory demand is being used by collection agencies as a debt collection tactic. If the debt has been incurred and there is no obvious dispute it may seem that there is no way out.
We may have the answer. It is using Section 77 of the Consumer Credit Act which obliges the creditor or the collection agency to provide a copy of the signed credit agreement, prior to having the right to collect the debt. They have twelve days in which to do so failing which the debt cannot be proceeded to be collected and any attempt to do so will be a breach of the Consumer Credit Act.
We have considerable experience and success in helping people stave off demands by using this tactic.

The statutory demand is being used now as a debt collection tactic and not because the DCA has any intention of following up with a bankruptcy petition.

For anyone interested in utilising this procedure, follow the attached link. http://www.helpwithdebt.org/

Welcome to my blog

I already blog on my company's website but I have so much to say and so much information to impart that I thought I'd start here as well.
So check out http://www.helpwithdebtuk.com/ for total debt solution advice in the UK.