The Roles of the Insolvency Practitioner - Bankruptcy and IVAs

In order to offer you, the consumer, the best possible debt solution, we refer all cases to a licensed Insolvency Practitioner.

Initially, a member of the 1Stop Money team will inform you of all the available solutions, including re-mortgage, debt-consolidation, debt management, bankruptcy and IVAs. The 1Stop broker will then look at your circumstances and level of debt before presenting the case to the Insolvency Practitioner. Many Insolvency Practitioners were previously Accountants or Lawyers who have passed additional examinations in order to qualify as an Insolvency Practitioner.

IVA

An IVA can only be administered by a licensed Insolvency Practitioner or IP. At each stage of the IVA process, the Insolvency Practitioner's role changes.

Stage 1 - Nominee

If an IVA is considered appropriate, the Insolvency Practitioner will become the Nominee. The Nominee's role is to advise the debtor on drafting a proposal to the creditors. In practice, the proposal is generally a standard document which is then modified to each debtor's particular circumstance. Common terms will include:

•  -   An analysis of the debtor's income and expenditure. From this, the debtor's disposable income is calculated and this will become the amount that will be paid into the IVA periodically (usually monthly). The period is usually five years, but can be any length. The proposal will usually state that if the disposable income increases during the term of the IVA, the amount to be paid will also increase proportionately.
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•  -   A background history explaining how the financial difficulties of the individual become escalated.
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•  -   Details of any assets that are to be included or excluded, such as how the marital home will be dealt with, pension schemes, share save schemes, vehicles, etc.
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•  -   The possibilty of future meetings of the creditors in the event that circumstances change, to modify the terms of the IVA.
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•  -   Restrictions on obtaining credit are requested. Debts incurred after the approval of an IVA could result in a bankruptcy petition from a creditor -  causing the IVA to fail.
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Stage 2 - Chairman

The Chairman will hold the meeting of creditors and negotiate with the debtor and creditors to approve the proposal. It is common for creditors to ask for modifications to the proposal at the meeting. Common modifications put forward by major banks include restricting the debtor from obtaining credit, ensuring payments increase if the debtor's income increases, specifying a minimum return such as 40 pence in the pound, and insisting that the Supervisor fails the IVA if the debtor misses 3 or more payments and petitions for the debtor's bankruptcy.

Stage 3 - Supervisor

If the IVA is approved, the Insolvency Practitioner becomes the Supervisor of the IVA. This involves reporting annually to the creditors, debtor and the court. It also involves monitoring that the debtor is complying with the terms of the arrangement, agreeing creditor claims, making payments to creditors and generally ensuring that the arrangement progresses in accordance with the terms of the proposal.

The debtor must comply with all  requests from the Supervisor, which may include regularly providing bank statements, accounts and/or wage slips. 

Bankruptcy

When a bankruptcy petition is filed, an Official Receiver is appointed to protect your assets. They act as trustee of your bankruptcy affairs if you have no assets.

If you do have assets, an Insolvency Practitioner will be appointed to act as trustee and sell your assets to pay your creditors. As such, the Insolvency Practitioner will act out all roles of the Official Receiver, including filing for any income payment orders, monitoring your income etc. You must inform them of any changes to your circumstances.

For more information on IVAs, filing for bankruptcy or alternative debt solutions, please click on the relevant links below.

What is bankruptcy?

What is an IVA?

The bankruptcy process

The IVA Process

IVA Extraction 

Debt Management

Debt Consolidation

Trust Deeds (Scottish Residents Only)

Alternatively, to discuss bankruptcy, IVA's or any other debt solutions, please call 1Stop Money on 0800 012 4039 or fill in the online form and a 1Stop Money broker will contact you as soon as possible.

1Stop Money  - your first stop for finding the debt solution you need.