Filter news by:
Bankruptcies and IVAs may be falling, but hundreds of thousands face serious indebtedness
5 August 2011
"The number of bankruptcies and IVAs may be falling compared to this time last year, but there is little doubt that many hundreds of thousands of individuals are living in a twilight world of serious indebtedness outside of the statutory personal insolvency framework. For them, formal personal insolvency solutions may well not be on their agendas - they either struggle on, limping from one financial crisis to the next or they bury their heads in the sand and invite creditors to do their worst; often in the full knowledge that creditors won't make them bankrupt because there would be little prospect of the creditor even covering the costs of initiating the process - typically in the region of £2,000."
"Many thousands of indebted individuals do end up in less formal, non-statutory, solutions like Debt Management Plans, which rely on creditor forbearance on a voluntary basis as agreements reached are not legally binding. These plans are often supervised - in a professional way - by debt management companies as well as the not-for-profit sector, and work for many individuals although often only for a while. However, as soon as one creditor breaks ranks and, for example, seeks to put a charging order on a debtor's property the temptation is for everyone else to rush in. The process becomes little more than a race to the bottom, where constructive multi - creditor solutions go out of the window."
Comment from Charles Turner, partner at FRP Advisory LLP.
For further information, please contact us using the online form below.