Bankruptcy, IVAs or Other Routes?
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A Voluntary Arrangement is a proposal to creditors to pay off a proportion of the debts that are owed to them and they usually last up to 5 years. The concept of a Voluntary Arrangement is that creditors would receive a more beneficial payment, than would be likely in the event that the individual becomes bankrupt.
In order for a Voluntary Arrangement to become binding, it must be accepted by 75% (in value) of the creditors. It is a flexible procedure that creditors can accept, amend or reject. A proposal is drafted by the debtor, in practice ThorntonRones will draft it, setting out the debtors circumstances, assets and liabilities, and the manner in which it is proposed that the creditors are dealt with.
When the proposal is complete an application for an interim order will be made if needed but is no longer necessary in all cases, the interim order prohibits the commencement or continuation of any legal process against the debtor or his estate until the nominee considers the proposal to be both realistic and workable. A vote is held to decide on whether or not to accept the proposal. 75% in value of the creditors who are present or represented must vote for the proposal for it to be accepted.
Initially, ThorntonRones cannot be appointed to act as your Trustee in Bankruptcy, nor is there any need for you to be concerned about who is the Trustee.What is important is that you have satisfied yourself that this is the appropriate route for you to take.
You can make application to the court yourself under a debtor's petition or an application could be made by one of your creditors under a creditor's petition.Once an order is made the Official Receiver will be appointed to deal with the administration of your case. Depending upon the complexity and value of your case the Official Receiver may appoint an Insolvency Practitioner to deal with the case as Trustee in Bankruptcy.
You will not have any say in the appointment of the Insolvency Practitioner, and in practice, they could be situated anywhere in England or Wales, but your creditors can, whether they be ‘friendly’ or otherwise.The Official Receiver's (or the Trustee's) role is to realise your bankruptcy assets (if any), agree creditor claims, distribute any monies and investigate any matters arising that he considers appropriate. All future contact from creditors can be referred to the Official Receiver or Trustee.You will be automatically discharged after one year from the date of the Bankruptcy order or earlier if the Official Receiver has completed all his enquiries.
The Official Receiver or Trustee can apply to have the automatic discharge suspended if you are not cooperating.Any debts not paid from the recoveries made by the Official Receiver or Trustee will be written off. There is no restriction on the value of your assets or the level of your creditors or your income (as with a Debt Relief Order).
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