Personal Insolvency

Personal insolvency refers to a situation where an individual is unable to pay their debts as they become due. It typically arises when an individual’s income and assets are not sufficient to cover their debts, and they are no longer able to make repayments on their outstanding debts.

There are two main types of personal insolvency:

1. Bankruptcy: This is a formal legal process where an individual’s assets are liquidated to pay off their debts.

2. Individual Voluntary Arrangement (IVA): This is a formal agreement between an individual and their creditors, which sets out a plan for repaying their debts over a period of time.

Personal insolvency can have serious consequences, including damage to an individual’s credit rating and restrictions on their ability to obtain credit or hold certain types of employment. It is important to seek professional advice if you are struggling with debt to understand your options and to determine the best course of action for your specific situation.

There are two main types of personal insolvency:

1. Bankruptcy: This is a formal legal process where an individual’s assets are liquidated to pay off their debts. Bankruptcy is typically initiated by the individual themselves or by one or more of their creditors. Once a bankruptcy order is made, a receiver is appointed to manage the individual’s assets and distribute the proceeds to their creditors. The bankruptcy process usually lasts for a year, after which time the individual is discharged from their debts, although certain debts may not be discharged.

2. Individual Voluntary Arrangement (IVA): This is a formal agreement between an individual and their creditors, which sets out a plan for repaying their debts over a period of time. The individual makes payments to an insolvency practitioner, who distributes the funds to their creditors according to the terms of the IVA. IVAs typically last for a period of five years, after which time any remaining debts are discharged.

Personal insolvency can have a significant impact on an individual’s credit rating. A credit rating is a measure of an individual’s creditworthiness, and it is used by lenders to assess the risk of lending money to them. The impact of personal insolvency on an individual’s credit rating can vary depending on the specific circumstances of the case, but generally, it can affect both your credit score and your credit history.

Personal insolvency is likely to have a negative impact on an individual’s credit score, which A lower credit score can make it more difficult to obtain credit in the future or may result in higher interest rates and fees.

Bankruptcy can also remain on an individual’s credit report for up to ten years, while an IVA can remain on their credit report for up to six years. This can make it more difficult for the individual to obtain credit in the future, as lenders may view them as a higher risk.

It’s important to note that while personal insolvency can have a significant impact on an individual’s credit rating, it is not necessarily permanent. With time and responsible financial behaviour, an individual can improve their credit rating and demonstrate their creditworthiness to lenders.

If you are struggling with personal insolvency, an insolvency practitioner can help you understand your options and navigate the process. Insolvency Practitioners are licensed professionals who are experienced in managing personal insolvency cases, such as our team at Exodus Insolvency. We can provide advice on the different types of personal insolvency and help you determine which option is best for your specific situation.

We can provide advice on debt consolidation and other strategies for managing your debt or help you develop a financial plan that takes into account your income, assets, and debts. We can also help you navigate the legal requirements and paperwork associated with personal insolvency.

Whether or not you will lose your house in personal insolvency proceedings depends on several factors, including the type of personal insolvency proceeding you are going through and the value of your home.

In a bankruptcy process, your assets, including your house, may be sold to pay off your creditors. However, if you have little equity in your home or it is your primary residence, you may be able to keep it.

In an IVA, you may be able to keep your home if you are able to continue making your mortgage payments. Your creditors will typically expect you to use any equity in your home to pay off your debts, but you may be able to negotiate a payment plan that allows you to keep your home.