General Advice for Individual Members of the Public

• There were a record 350 bankruptcies a day throughout 2008.
• The number of Companies and individuals going bust increased by 20%.
• The Insolvency Service said 19,000 people went bankrupt in the last 3 months of 2008.
• A total of 128,000 were made bankrupt in the UK .
• Nick O’Reilly, president of insolvency professionals trade body R3, said:

“ For 2009 we believe this number will exceed 430 a day. The outlook is bleak for the next 2 years.”

Why has this happened?

Everyone concerned must accept their share of responsibility. It didn’t happen by accident!

Banks and other major lending institutions were only too eager to lend. Consumers were equally keen to borrow. Credit cards are easily obtained. Borrowers overstretched their commitments.

It’s a well known saying that 'love makes the world go round' but in the world of commerce its more appropriate to accept that the world revolves on credit!. Removing access to credit brings it to a halt, as the last six months have proven. The next few years will not be any easier.

We are now in a situation whereby banks are demanding payment of unsecured borrowings and panicking where borrowings have been pledged against equities, which have slumped in value.

When it becomes obvious that you are unable to meet your financial obligations without extending borrowings, it is essential that you do not panic. The statistics contained within the above bullet points merely illustrate that you are not on your own.

Get your priorities in the correct order

• Ensure that secured debts against your home are paid.
• Be business like: Write down a monthly Income & Expenditure.
• Cost essentials, mortgage, rent, heating, electricity, food, council tax etc.
• Be prepared to make sacrifices where can savings be made

In 2002 an Enterprise Bill was introduced to discuss how changes could be made to the then current bankruptcy laws. A White Paper was produced under the heading, "Productivity and Enterprise: Insolvency" - a second chance.

These changes were introduced via the Enterprise Act on the 1st April 2004. It is possible that because of relaxing the law, it may have made it easier and more acceptable to consider bankruptcy as an option to relieve the financial pressure and, the very real mental strain which is often experienced by individuals.

What other options are available?

An Individual Voluntary Arrangement.

This is an arrangement brokered with your unsecured creditors. It normally lasts for 5 years if you are unable to repay the full amount.

At the end of 5 years, whatever is still owed is written off.

This process is dealt with by one of our Insolvency Practitioners and is protected by County Court procedure. This ensures that creditors cannot change their minds.

New changes in legislation introduced in April 2009 enable a debtor to approach their County Court for an "Administration Order". Debts must not exceed £15,000 and one debt must be a County Court Judgment. The current maximum is £5000.