What is an Insolvency Practitioner?

When someone is insolvent, it means that they cannot pay back their debts. Insolvency Practitioners (IP) take control of your finances either through and IVA or bankruptcy and ensure that each creditor receives a fair proportion of the estate.

Insolvency practitioners

IP's will examine your estate - your total worth including your salary - and from that they will work out how much money your creditors will receive from it. You'll be left with a sum of money which should cover reasonable living expenses.

Asking for Help from an IP

Experts say that there are several signs, which you should look out for to monitor your debt. If you're falling behind on mortgage repayments, for example, this is a clear sign that you need to consider getting some advice before the situation worsens. If you increasingly have to use your credit cards just to pay for basic items in order to get by, this is another sign that you need to get back in control of your finances.

If you have to take credit from lenders you wouldn't normally use, such as payday loan companies or you're borrowing money from family and friends to pay off debts, these are both signs that you should consider seeking professional advice. The final and most obvious sign of serious problems is if you're borrowing from one creditor to pay off another, this is a recipe for disaster as the interest can only pile up.

What to do?

The first thing to think about is where you could cut back on your spending. Then you can spend more money on paying off your debts. If you're already over stretched financially, speaking to an insolvency practitioner or debt adviser might be the answer. Sadly, we all too often hide from things which scare us, and this can make matters worse so acting pro-actively, being honest with lenders, and contacting people who can help is the only positive step forward.

Many insolvency practitioners offer an initial consultation free of charge, but they will then charge you for future help, which is usually taken form the money owed to the creditors. All professional insolvency practitioners are licensed and insured by law and they are registered with several bodies such as the Institute of Charted Accountants. They are also able to empathise and understand how you must be feeling, but with plenty of experience working with those in the same position as you, they know how to help too.

Meeting a Practitioner

Being as honest as possible is essential and you must not feel embarrassed or hold back, you can even cry in front of your insolvency practitioner if you need to. They are warm human beings and they are there to get you through your problem. You can guarantee they have had clients in worse situations and they are highly sympathetic. Be completely honest with them, and your practitioner will be able to help you effectively, so open up and explain the situation. They will ask you a series of questions to get a good idea of what the current issues are and tell you if your house might be repossessed. They will also assess other similar risks associated with poor debt management.

What to be warey of!

If your Insolvency Practitioner has convinced you that an IVA is the correct direction you should take ensure that you are confident you will be able to live on the allowance for the next 5 years. An IVA is fairly inflexible so, should you struggle with repayments or your circumstances change to such a degree that you cannot maintain your repayments then your IP will make you bankrupt and all that money paid into your IVA will be lost.