Personal Insolvency

When a person cannot pay their debts, they are seen as personally insolvent. How someone deals with this will depend on how debt is owed, and the path they take as a debt solution.

Insolvency is a broad term as it encompasses several forms of debt. Understanding how to tackle insolvency, whether you yourself feel you have to declare insolvency, or a creditor has presented a bankruptcy petition, is necessary for your long-term financial status.

Hillcrest Finance can provide anyone with personal insolvency advice. Our licensed Insolvency Practitioners look at individual cases and help create proactive plans.

Personal Insolvency advice

Insolvency will always be treated differently for each person as it tends to work on a case by case basis. One of the biggest hurdles for anyone who is insolvent would be knowing what the next steps are, i.e. can debts be paid off/ what limitations are going to be in place/ should I petition myself rather than creditors grouping together?

Understanding those intricacies and utilising appropriate solutions is something a skilled practitioner can help with. If you feel you want a proactive and positive approach for what is typically a stressful time, get in touch with Hillcrest Finance today.

How does personal insolvency work?

Personal insolvency happens when it is clear that a person’s liabilities/debts outstrip their assets, and there are no clear means to pay debts back. When someone owes a creditor anything  and can’t pay it, a creditor can go to a local court and officially request that bankruptcy is declared.

In this instance, a creditor typically has to pay fees for an application and double-check against records that the person they want to declare doesn’t already have bankruptcy petitions in their name. If someone knows they have to declare bankruptcy, they can go directly to the court to provide some security against creditors.

Are there different types of personal insolvency?

Yes. People tend to think of insolvency as an interchangeable term for bankruptcy, but there are other forms of personal insolvency someone can have, namely:

The specific avenue for insolvency will depend on factors such as how much is owed, what the chances of paying debts back are, how favourable a debt management plan is, and how welcoming creditors would be to receiving back a specific amount as opposed to forcing their debtor into bankruptcy and getting less money back.

Navigating these avenues to determine insolvency can seem tricky, but Hillcrest Finance’s licensed Insolvency Practitioners will find a path which is suited to the individual.

Advantages of personal insolvency

Insolvency can help when:

  • You want some level of protection from creditors
  • You want to be free from mounting debts
  • You want to pay debt back at a reduced rate
  • You know that you can only pay back so much

Disadvantages of personal insolvency

Insolvency can cause issues as :

  • It will affect your credit score for a long time
  • It may be imposed on you by surprise
  • It will affect your assets and put many at risk
  • It places restrictions on you
  • It does not write off all debts

Is it true you have to pay to declare yourself insolvent?

It will depend on whether you or a creditor is declaring. If you are insolvent and want to declare as such, you will have to pay £680 towards an application in court. If a creditor is taking a bankruptcy order to court to declare you as insolvent, they have to pay their application.

Can I borrow money while insolvent?

Lenders see insolvency/bankruptcy as carrying a high risk. Anyone who is insolvent and wants to borrow has to declare it to the person they will be borrowing anything over £500 from.

Will I have to give up my house and car if I’m insolvent?

Again, the status of assets will depend on the type of insolvency procedure you’ve been advised on. That’s why it helps to talk with a practitioner who can look at the situation and provide the best course of action with your interests in mind.

Practical advice to deal with personal insolvency

If you’d like to know more about how to handle insolvency, be it through personal declaration or via a creditor, you’ll want advice which looks at your particular situation.

Call our advisors on 0141 478 0862. Lines are open weekdays from 8 am.

Get in touch with us about Personal Insolvency today