DEBT RECOVERY SOLICITOR - BANKRUPTCY - IVA



Computerised collection

Historically lawyers have not been very efficient at taking action against those who owe money. All that has now changed and a debt recovery solicitor is now a high tech practitioner with an armoury of dedicated computer programs specifically designed to initiate and progress claims from the first letter before action right through to obtaining judgement in the courts and subsequently enforcing the judgement. Our lawyers situated throughout the UK are able to deal with the following matters :-

  • letters before action
  • court proceedings
  • statutory demands
  • tracing debtors
  • enforcement of judgment
  • winding up limited companies
  • bankruptcy of individuals
  • advising on independent voluntary arrangements IVA

Bankruptcy - Liquidation

Bankruptcy or liquidation in the case of a limited company is generally considered as a last resort (along with an IVA) by a debt recovery solicitor not out of sympathy for the debtor but because the vigilant creditor is often more likely to get paid if there is no bankruptcy. Once the order is granted all unsecured creditors are placed in a similar position and the value of any liquidated assets are thereafter shared between them but only after the trustee is paid his often not insubstantial fees, various government departments are paid and the secured creditors receive their money. The person who instigates the legal action also has substantial expenses with no guarantee that either the original money owing or the subsequent expenses will be paid. The process is started by a creditor obtaining a substantial judgement and thereafter making application to the court for an order. Once the order is granted the Trustee takes control of all matters, collects in any assets, pays himself and thereafter distributes the assets amongst the creditors however some creditors are treated preferentially and the unsecured creditor is last on the list. The order of payment is as follows :-

  1. the liquidator's or trustee's costs
  2. PAYE
  3. VAT
  4. DSS contributions
  5. occupational pension contributions
  6. wages arrears
  7. secured creditors
  8. unsecured creditors

IVA - Individual Voluntary Arrangement

Rather than bankruptcy a debt recovery solicitor or an accountant will sometimes recomend a client to enter into an IVA which is an ‘individual voluntary arrangement’ that is legally binding and is usually entered into when a debtor owes more money than can be comfortably serviced at normal rates of repayment. It is a formal arrangement with creditors whereby reduced monthly payments are accepted towards the total amount owing in order to pay off a percentage of the overall sum which is usually accepted as full settlement over a period of 5 years. IVAs are set up by licensed insolvency practitioners who charge a fee for management of the account. Once agreement between all parties has been reached an application for a court order is made and when granted no creditors can to take legal action. An IVA will only be granted if creditors holding more than 25% of the amount owing approve. Once granted the licensed insolvency practitioners role becomes that of a supervisor in monitoring progress and ensuring that the terms and conditions are properly adhered to.