Leonard
Kasler & Company
Personal Insolvency
(20 Things to know about
Individual Voluntary Arrangements)
1. There is an alternative to going
Bankrupt. It is called an Individual Voluntary Arrangement ("IVA")
2. Although bankruptcy may not carry the same stigma as it
did in yesteryear and, in particular, because of the recession in the early 1990’s,
there are still major disadvantages in being a bankrupt
2.1. One cannot be a company director
2.2. One cannot have a credit card
2.3. One has less chance of controlling ones own monies 
3. It is sometimes possible to persuade your creditors
that they will be better off, if you avoid bankruptcy by entering into an IVA
4. There is little incentive for a bankrupt to work hard
during his 2/3 years bankruptcy. He is financially restricted and he may be tempted to
work in return for untraceable cash.
5. In an IVA, the "financially challenged"
individual promises to work very hard for the benefit of his creditors but, in return, the
creditors must accept in full and final settlement only a percentage of their original
debt
6. A man might owe his creditors £100,000. They are all
clambering for repayment. He cannot pay them all right now. He needs time to make
repayments. Typically, they may accept £40,000 i.e. each of them get 40p in the £ over 3
years, rather than make him bankrupt and receive nothing
7. It is important to act sooner, rather than later.
Too many people leave it until the bailiffs have visited
their homes and taken away anything saleable, debtors have got Court Judgments and put
Charging Orders on their property and a Bankruptcy Petition is about to be issued
8. Make a list of secured and unsecured creditors.
9. The secured creditors will have a mortgage or charge on
property. Typically, a secured creditor will be a bank or building society
10. Make a list of all the creditors, stating their full
names, addresses and the amounts they are owed. If they are secured, describe the asset on
which they have a mortgage or charge
11. In order to push the IVA through, you will need the
votes of 75% in value of the creditors, attending a meeting
12. Look at the big value creditors first. Typically,
these will be the bank (to the extent that they are unsecured), the Inland Revenue,
Customs & Excise and equipment lessors
13. Smaller value creditors either will not take part, or
will vote in favour by proxy. You stand a good chance of carrying them with you.
14. Consider whether you can hold out realistic and
attractive proposals for the creditors. You will need to persuade them that, if they do
not put you into bankruptcy, you can get a much better return for them. Ignore assets that
you already own. Creditors will have the benefit of those in a bankruptcy. Be prepared to
show the creditors how you can earn money over, say, a 3 year period to give them
something which they would not otherwise have
15. The next stop is a Licensed Insolvency Practitioner
("LIP"). He, and only he (or she), can make the application on your behalf to
the Court and is supposed to forward only those proposals with a chance of succeeding
16. He will require an advance fee of anywhere between
£1,500-3,000
17. He will put together a proposal, in the appropriate
format, dealing with various aspects of the administration of the IVA, including the
frequency of your payments into it, his fees and certain other clauses
18. Unfortunately, some LIPs are more concerned with their
fees rather than the long term viability of the IVA. The debtor is not thinking clearly.
Not only is his business in difficulty, but very often, has matrimonial difficulties at
the same time and is very emotionally distressed 
19. Many LIPs do not explain clearly to the debtor those
tax liabilities which will fall within the IVA and those which are, or which will be, the
debtor’s full responsibility
20. The attitude of the Courts and LIPs to pension has
changed over the past few years and you will need to understand the position in this
respect
Get in touch
now!
Michael
Breeze
Leoanrd Kasler
& Company
Sunday, 13. October 2002