Regular readers will have seen the recent rise in personal insolvency statistics and the issue is brought home at this time of year when we might flex the plastic to buy a loved one just one more special present.
The number of remedies available to address personal finances is summarised as Debt Management Plans (DMP), Individual Voluntary Arrangements (IVA), Bankruptcy, Administration Orders and Debt Relief Orders (DRO). We’ll have a quick look at two remedies here…Administration Orders and DROs.
Personal Administration Orders are less spoken about and are quite different from their corporate big brother. Here individuals apply to Court and ask for a scheme to manage their unsecured debts which must be less than £5,000. This is often useful for individuals who have aggregated a number of small County Court Judgements (CCJ). The Court can make what is known as a Master Order to combine all of the CCJs so that the individual can make one affordable payment, subject to circumstances.
The DRO is gaining in momentum as a remedy for individuals and recent legislative changes mean that this method is available to those who owe less than £20,000 in unsecured debt. You must also have assets of less than £1,000 and have a surplus monthly income of up to £50. There are some restrictions with a DRO including not being able to borrow more than £500 without disclosing your circumstances and not being involved in the running or management of a business, again without disclosing your circumstances.
Readers should note that recent legislation has removed the Fast Track IVA…which was a remedy available to those in Bankruptcy.
If you wish to discuss personal financial circumstances and how any of the above remedies might affect you, please contact us for a free consultation.