Technical Bite

In this edition of technical bite we explore the main formal insolvency options available to insolvent individuals.  We stress the importance of an individual seeking professional advice on all of the options available (including less formal procedures if applicable) to ensure that they find the most appropriate procedure for their circumstances.  We are always willing to provide an initial consultation free of charge and without obligation to assist an individual in finding the right solution for them.


Bankruptcy is a formal insolvency procedure for an individual who is unable to pay their debts.  In most cases the individual is released from bankruptcy after a year but any assets owned are likely to be included (subject to some exceptions).  An individual may be required to make contributions from their income for up to three years if they are able to do so.  The procedure has now been simplified so that debtors apply online but the procedure remains a Court based one for a creditor who seeks a bankruptcy order against an individual.

Debt Relief Orders (DRO)

A formal insolvency procedure for individuals who owe less than £20,000 and have minimal assets.  The procedure does involve some restrictions on individuals and there are specific criteria to fulfil in order to be granted an order.

Individual Voluntary Arrangement (IVA)

An agreement between an individual and his/her creditors which is overseen by an Insolvency Practitioner.  The agreement may include assets and/or contributions from an individual’s income and commonly run for a five year period.  IVAs offer a full and final settlement deal for individuals and creditors and avoids the individual having to enter into bankruptcy.  This usually results in less stigma for the individual and a better deal for the creditors.

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