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Understanding: Is An IVA A Government Approved Scheme ?

Individual Voluntary Arrangement (IVA) is a debt solution that has gained popularity among individuals facing financial challenges. It is often touted as a viable alternative to bankruptcy, offering a structured repayment plan that allows individuals to manage their debts more effectively. However, a common question that arises is whether an IVA is a government-approved scheme. In this article, we’ll delve into the details to provide clarity on the status of IVAs and their approval by government authorities.

What is an IVA? An Individual Voluntary Arrangement is a formal and legally binding agreement between an individual and their creditors. It allows individuals to repay their debts over a fixed period, usually five to six years, based on what they can reasonably afford. The arrangement is facilitated by a licensed insolvency practitioner who acts as a supervisor, overseeing the implementation of the IVA and ensuring compliance with its terms.

Government Oversight: While IVAs are not directly approved by the government, they are regulated by existing insolvency laws in the United Kingdom. The government sets the legal framework within which IVAs operate, ensuring that they adhere to specific guidelines and standards. The Insolvency Act 1986 and subsequent amendments outline the legal basis for IVAs, offering protection to both debtors and creditors involved in the arrangement.

Licensed Insolvency Practitioners: One of the critical components of an IVA is the involvement of a licensed insolvency practitioner (IP). These professionals are regulated by recognized professional bodies, such as the Institute of Chartered Accountants in England and Wales (ICAEW) or the Insolvency Practitioners Association (IPA). Government-approved regulatory bodies oversee these organisations, ensuring that IPs adhere to strict ethical and professional standards.

Approval Process: To initiate an IVA, a licensed insolvency practitioner assesses the individual’s financial situation and proposes a repayment plan to creditors. Creditors then vote on whether to accept or reject the proposed arrangement. For an IVA to be approved, it requires the support of a significant majority of creditors, representing at least 75% of the total debt value. Once approved, the IVA becomes legally binding on all parties involved.

Benefits of an IVA: The government’s indirect approval of IVAs lies in the recognition of their benefits in helping individuals overcome financial difficulties without resorting to bankruptcy. IVAs offer several advantages, including:

Debt Repayment: Individuals can repay a portion of their debts through affordable monthly payments.
Legal Protection: Once approved, creditors are bound by the terms of the IVA, preventing legal actions and harassment against the debtor.
Asset Preservation: Unlike bankruptcy, which may lead to the sale of assets, an IVA allows individuals to retain ownership of their assets, including their home.

Conclusion: While an IVA itself is not a government-approved scheme, it operates within the legal framework established by the government. The regulatory oversight provided by licensed insolvency practitioners and adherence to insolvency laws ensure that IVAs are legitimate and effective solutions for individuals facing financial challenges. Before considering an IVA, it is essential to seek professional advice and thoroughly understand the implications and obligations associated with this debt management option.

How Much Debt Does An IVA Write Off ?

Introduction: In the realm of financial challenges, Individual Voluntary Arrangements (IVAs) have emerged as a viable solution for individuals grappling with overwhelming debt. An IVA acts as a lifeline for those drowning in financial distress, offering a structured approach to managing and ultimately alleviating debt burdens. One of the burning questions surrounding IVAs is just how much debt they can write off. Let’s delve into the specifics to shed light on this crucial aspect of debt relief.

What is an IVA? An Individual Voluntary Arrangement is a formal agreement between a debtor and their creditors. It provides a legal framework for repaying a portion of the debt over a fixed period, typically five to six years. During this time, the debtor makes affordable monthly payments to an insolvency practitioner, who then distributes the funds among the creditors. Once the agreed-upon period expires, any remaining debt covered by the IVA is legally written off, offering the debtor a fresh financial start.

The Debt-Writing Mechanism: The amount of debt an IVA can write off varies depending on several factors, including the debtor’s financial situation, the total debt amount, and the agreed-upon terms of the arrangement. IVAs are tailored to individual circumstances, ensuring that the monthly payments are realistic and affordable for the debtor.

During the IVA term, creditors are bound by the agreement and cannot pursue legal action or demand additional payments beyond what has been established. This freeze on interest and charges, combined with a structured repayment plan, allows debtors to regain control of their finances without the constant pressure of escalating debts.

Common Types of Debt Covered: IVAs are particularly effective in dealing with unsecured debts, such as credit card debt balances, personal loans, and overdrafts. These types of debts are often the primary contributors to financial distress, and an IVA provides a systematic approach to managing and eventually eliminating them.

While IVAs do not cover secured debts, like mortgages or car loans, successfully addressing unsecured debts can significantly alleviate financial strain, making it more manageable for individuals to meet their other financial obligations.

Factors Influencing Debt Write-Off: The percentage of debt written off through an IVA depends on the debtor’s financial circumstances and the creditors’ willingness to accept the proposed terms. Typically, debtors aim to repay a percentage of their total debt, often ranging from 25% to 50%, with the remaining balance being legally written off at the end of the agreed-upon term.

Negotiation Skills: The success of an IVA in writing off a significant portion of debt also relies on the negotiation skills of the insolvency practitioner representing the debtor. Skilled negotiators can work with creditors to secure favorable terms, maximizing the debt relief for the individual seeking financial recovery.

Conclusion: Individual Voluntary Arrangements offer a lifeline to those drowning in debt, providing a structured and legal framework for repayment. The amount of debt that an IVA can write off is contingent on various factors, including the debtor’s financial situation, the total debt amount, and the negotiated terms. While there is no one-size-fits-all answer, the potential for substantial debt relief makes IVAs an attractive option for individuals seeking a fresh financial start. It’s crucial for individuals considering an IVA to seek professional advice to navigate the complexities of the process and ensure the best possible outcome for their unique circumstances.

How To Find The Best IVA Company UK

In the intricate landscape of IVA’s and Debt Management, finding the right Individual Voluntary Arrangement (IVA) company is crucial. Making an informed choice can significantly impact your financial future. This article serves as a compass, guiding you through the process of identifying the best IVA company tailored to your needs.

Research and Reviews: Start your journey by delving into online research. Visit reputable financial websites and forums where individuals share their experiences with different IVA companies. Pay attention to reviews, testimonials, and ratings to gauge customer satisfaction and the company’s track record.
Seek Recommendations: Personal referrals can provide valuable insights. Reach out to friends, family, or colleagues who may have encountered financial challenges and sought the assistance of an IVA company. Their firsthand experiences can offer practical perspectives and help you narrow down your options.
Check Accreditation and Regulatory Compliance: Before committing to any IVA company, ensure they are accredited and compliant with relevant financial regulations. Look for certifications from recognized industry bodies, such as the Insolvency Practitioners Association (IPA) or Financial Conduct Authority (FCA). This assures you that the company adheres to ethical standards.
Verify Experience and Expertise: An IVA involves intricate negotiations with creditors and a deep understanding of financial laws. Choose a company with a proven track record and substantial experience in managing IVAs. Inquire about the expertise of their professionals and their success rates in facilitating favourable arrangements for clients.
Transparency in Fees and Terms: Scrutinise the fee structure and terms of service. A reputable IVA company should be transparent about their charges and provide a clear breakdown of costs. Avoid companies that have hidden fees or unclear terms that could lead to financial surprises down the road.
Client-Centric Approach: Opt for an IVA company that prioritises a client-centric approach. During initial consultations, assess their willingness to understand your unique financial situation. A company that takes the time to comprehend your challenges is more likely to tailor an IVA solution that aligns with your needs.
Communication and Support: Effective communication is pivotal throughout the IVA process. Evaluate the responsiveness and support system of the company. A reliable IVA company should offer clear channels of communication and be accessible to address your concerns and queries promptly.

Conclusion: Finding the best IVA company is a pivotal step toward reclaiming financial stability. By conducting thorough research, seeking recommendations, and prioritising transparency and expertise, you can navigate the complexities of debt management with confidence. Remember, the right IVA company is not just a service provider but a partner in your journey toward financial recovery.

Including Council Tax Into An IVA

Can council tax be included into an IVA

Yes, for individuals struggling with debt in the UK, the prospect of including council tax payments in an Individual Voluntary Arrangement (IVA) can provide a lifeline. An IVA is a formal and legally binding agreement between an individual and their creditors to repay a portion of their debts over an agreed period. While council tax is a priority debt, it can still be included in an IVA, offering a structured path to financial recovery.

Understanding Council Tax Arrears

Council tax is a local tax levied by local authorities in the UK to fund essential public services such as rubbish collection, street cleaning, and local schools. Falling behind on council tax payments can have serious consequences, including legal action and additional charges. Including council tax in an IVA can be a strategic move to address arrears and establish a manageable repayment plan.

The IVA Process and Council Tax

Assessment of Financial Situation

Before including council tax in an IVA, individuals undergo a thorough assessment of their financial situation. This includes a detailed examination of income, expenses, assets, and debts. The appointed Insolvency Practitioner (IP) works closely with the individual to create a realistic repayment plan that considers all outstanding debts, including council tax.

Negotiation with Creditors

The Insolvency Practitioner then engages in negotiations with creditors, seeking their approval for the proposed IVA. This includes presenting the case for including council tax in the arrangement. Creditors may agree to the IVA if they believe it offers a more favourable outcome than alternative debt recovery methods.

Setting up the IVA

Once creditors approve the IVA proposal, a formal agreement is established, outlining the terms and conditions of the arrangement. This legally binding document includes details on the agreed monthly payments, the duration of the IVA, and the distribution of funds to creditors, including the portion allocated for council tax.

Regular Payments and Monitoring

Individuals in an IVA are required to make regular monthly payments as per the agreed-upon schedule. The IP monitors the payments and ensures that the funds are distributed to creditors accordingly. Including council tax in the IVA provides a structured framework for addressing this priority debt alongside other financial obligations.

Benefits of Including Council Tax in an IVA

Legal Protection

Once an IVA is in place, individuals benefit from legal protection against further action from creditors, including local authorities pursuing council tax arrears.

Structured Repayment Plan

Including council tax in the IVA allows individuals to create a structured and affordable repayment plan, making it easier to manage multiple debts.

Avoiding Legal Action

By proactively addressing council tax arrears through an IVA, individuals can avoid the potential legal consequences associated with non-payment of this priority debt.

Conclusion

Including council tax in an IVA offers a strategic and legally sound approach to managing debt in the UK. Through careful assessment, negotiation with creditors, and the establishment of a structured repayment plan, individuals can address council tax arrears while working towards overall financial recovery. Seeking the guidance of a reputable Insolvency Practitioner is essential to navigate the complexities of the IVA process and achieve a sustainable path towards a debt-free future.

Qualifying For An IVA Criteria

To qualify for an IVA (Individual Voluntary Arrangement), you must meet certain criteria:

You must have at least two debts that you are struggling to repay.
You must owe a minimum of £6,000 in total to your creditors.
You must have a regular income that allows you to make monthly payments towards your debts.
You must be a resident of England, Wales or Northern Ireland.
You must be insolvent, meaning that your debts exceed your assets and you are unable to pay your debts as they fall due.

If you meet these criteria, you can contact an Insolvency Practitioner (IP) who will assess your financial situation and advise you on whether an IVA is suitable for you. The IP will also help you to set up the IVA and will act as a supervisor throughout its duration.

What If I Am A Homeowner?

Yes, you can do an IVA if you are a homeowner. However, being a homeowner may affect the terms of your IVA, and it is important to understand how it could impact you before entering into the arrangement.

If you have equity in your home, meaning that its value exceeds the amount of your outstanding mortgage, you may be required to release some of that equity to pay off your creditors as part of the IVA agreement. This could be done by remortgaging or by selling your home, but it is important to note that you will usually be allowed to keep a certain amount of equity to ensure that you have a reasonable standard of living.

It is also important to note that if you are in arrears on your mortgage payments, an IVA may not be the best option for you. In this case, you should seek professional advice from an Insolvency Practitioner or a debt advisor to explore alternative debt solutions that may better suit your circumstances.

Can I Do An IVA If I Am Unemployed

To qualify for an IVA, you must have a regular income that is sufficient to make monthly payments towards your debts. If you are unemployed, you may not have a regular income, which could make it difficult to meet this requirement. However, if you have other sources of income, such as from a pension or benefits, this may be sufficient to meet the criteria.

It is also important to note that an IVA is a legally binding agreement that requires you to make regular payments towards your debts for a period of typically five to six years. If you are unemployed, there is a risk that you may not be able to make these payments consistently over the duration of the IVA, which could lead to its failure.

What If I Live Abroad

It may be possible to do an IVA if you live abroad, but it would depend on your individual circumstances and the terms of the IVA agreement.

To qualify for an IVA, you must owe at least £6,000 to two or more creditors and be a resident of England, Wales or Northern Ireland. If you live abroad, you may not meet the residency requirement, which could make it difficult to enter into an IVA in the UK.

However, it is still possible to enter into an IVA if you are a UK citizen and have debts with UK creditors, even if you live abroad. In this case, you would need to work with an Insolvency Practitioner who is licensed to act in the UK and can help you set up an IVA remotely.

It is important to note that if you do enter into an IVA while living abroad, you will need to make regular payments towards your debts and communicate with your Insolvency Practitioner regularly. This may be more difficult to do if you are in a different time zone or if you do not have access to reliable communication channels.

Is It Possible To Do A Joint IVA ?

A joint IVA is suitable for couples or business partners who have joint debts and are struggling to repay them.

Yes, it is possible to apply for a joint IVA (Individual Voluntary Arrangement) with another person. A joint IVA is suitable for couples or business partners who have joint debts and are struggling to repay them.

A joint IVA allows both parties to consolidate their debts into one affordable monthly payment, which is distributed among their creditors. The terms of the IVA agreement are binding on both parties, and they are jointly responsible for fulfilling the obligations of the IVA.

It is important to note that both parties need to meet the eligibility criteria for an IVA, and their financial circumstances will be assessed together to determine the suitability of a joint IVA. You should consult with an IVA advisor to see if a joint IVA is the right solution for your situation.

To apply for a joint IVA (Individual Voluntary Arrangement), you will need to follow these steps:

Seek Professional Advice: Contact an IVA company who can advise you on the suitability of a joint IVA. They will assess your financial circumstances and determine if a joint IVA is the right solution for your situation.
Gather Information: Collect all the necessary information, including your personal and financial details, and those of your joint applicant (if applicable), such as debts, assets, income, and expenditure.
Discuss the Terms: If a joint IVA is deemed suitable, the IVA company will discuss the terms of the IVA with you and your joint applicant, including the monthly repayment amount and the duration of the IVA.
Create a Proposal: The Insolvency Practitioner will create a proposal outlining the terms of the joint IVA and present it to your creditors for approval.
Agree with the Creditors: If the creditors agree to the terms of the IVA proposal, it becomes legally binding on all parties, and you will make regular payments to the IP for distribution to your creditors.
Fulfil the Obligations: You and your joint applicant will be responsible for fulfilling the obligations of the IVA, which may include making monthly payments, providing regular financial information to the IP, and adhering to other conditions outlined in the IVA.

It is important to note that a joint IVA is a significant financial commitment, and failure to adhere to the terms of the IVA could result in bankruptcy. Therefore, it is crucial to consult with a Debt advisor before making any decisions about entering into a joint IVA

Is An IVA Better Than Bankruptcy

Whether an Individual Voluntary Arrangement (IVA) is better than bankruptcy depends on your specific financial circumstances and goals.

An IVA is a legally binding agreement between you and your creditors to pay off your debts over a set period of time. It allows you to avoid bankruptcy and keep your assets, such as your home, provided you keep up with the payments. IVAs typically last for five to six years and any remaining debt is written off at the end of the term.

Bankruptcy, on the other hand, is a legal process that can be a quicker way to get rid of your debts, but it can also come with more severe consequences. Bankruptcy can lead to the loss of assets, including your home, and can affect your credit rating for several years.

So, if your main concern is protecting your assets and avoiding the long-term impact on your credit rating, an IVA may be a better option. However, if you have few or no assets to protect and need a fresh start as soon as possible, bankruptcy may be a better option.

It’s important to note that both options come with advantages and disadvantages, and you should seek professional advice from a debt advisor or insolvency practitioner to help you decide which option is best for you.

What If I Am A Homeowner?

On the one hand, bankruptcy can provide relief from debt and stop any legal action against you, including repossession or foreclosure proceedings on your home. However, depending on the value of your home and the amount of equity you have in it, you may be required to sell it as part of the bankruptcy process to pay off your creditors.

Additionally, bankruptcy can have a significant impact on your credit score and remain on your credit report for up to ten years, which can make it more difficult to obtain credit or loans in the future.

If you’re considering bankruptcy and are a homeowner, you may want to explore other options such as an Individual Voluntary Arrangement (IVA) or a Debt Management Plan (DMP) before making a final decision.

An IVA may allow you to keep your home and make manageable payments towards your debts over a set period of time. A DMP can also help you repay your debts over time, but without the legal protection of an IVA or bankruptcy.

How Long Does Bankruptcy Take To Clear My Debts?

Bankruptcy usually lasts for a period of 12 months, after which most of your unsecured debts are discharged. However, it’s important to note that some debts, such as student loans, court fines, and child support payments, are not typically included in bankruptcy and will still need to be repaid.

During the 12-month period of bankruptcy, a trustee will be appointed to manage your finances and sell any assets that are not protected by law to repay your creditors. Any remaining debts will be written off at the end of the 12-month period, allowing you to start afresh.

It’s important to note that bankruptcy can have long-lasting effects on your credit score and financial history. The bankruptcy will remain on your credit report for a period of six years from the date it was declared, which can make it more difficult to obtain credit or loans in the future.

5 Signs You Might Be Facing Bankruptcy

Here in the UK, debt is a national crisis affecting people from all walks of life. And when debt really gets out of control, declaring bankruptcy is often the only viable option for dealing with them. On the plus side, bankruptcy and other forms of personal insolvency, such as IVAs and DROs, don’t carry the stigma that they once did.

If bankruptcy turns out to be the best way to manage your debts, there’ll be some difficult times ahead – but you could walk away from your money problems just 12 months after your Bankruptcy Order is made. This article looks at 5 common warning signs that bankruptcy might be just around the corner.

You’re relying on credit to make ends meet

In recent years, static wage and salary levels combined with rising living costs have left many people trapped in a vicious circle of never-ending debt. And if you’re spending more than you earn each month, you’ve got problems. Whether you’re relying on credit cards, bank overdrafts, payday loans or even all three, the situation won’t go away on its own, so it’s time to seek expert help.

Your credit cards are always maxed out

Thanks to irresponsible lending practices that the FCA is trying to stamp out, many people have ended up with combined credit card limits that out-strip their annual incomes several times over. And if temptation proves too much, you could find yourself with a mountain of debt and no realistic way of paying it off.

A key warning sign is only ever paying the minimum payment because that’s all you can afford. You might feel that by doing this you’re keeping your head above water, but in reality, you could be heading for serious trouble.

You’re avoiding your creditors

If you’re leaving bills and reminders unopened, avoiding creditor phone calls and not answering the front door bell, then things have got out of hand. You need to stop sticking your head in the sand and hoping the problem will go away on its own. As soon as bankruptcy, or any other form of personal insolvency, is put in place, your creditors will be legally obliged to leave you alone. So, the sooner you take action to tackle your debts, the sooner the harassment will stop. The ball’s in your court.

You’re worrying excessively about your debts

Everyone worries about money every now and again. But your debts shouldn’t be keeping you awake at night, giving you nightmares or distracting you from work or other activities. It’s a sad fact that being in debt is often linked with the development or worsening of mental health problems such as anxiety and depression, which can have serious long-term consequences for your health.

So if you’re feeling overwhelmed by your debts, or your money problems are dominating your life, it’s crucial to seek professional debt advice straightaway. Trained debt advisers are fully aware of the health problems that debts can cause. They’ll discuss your situation with you in confidence and can refer you to appropriate support services if required.

You receive a repossession notice

You probably know that your home can be repossessed if you don’t keep up with your mortgage payments, or repayments of any other loan that’s secured on it. But did you know that your unsecured creditors, such as credit card providers and payday loan companies, can also take steps to repossess your home or other assets?

This can happen under the following circumstances:

Your creditor takes out a County Court Judgement (CCJ) against you and then applies for a charging order to enforce it, and
The charging order is made final (it’s a two stage process) and you don’t comply with the terms and conditions required by the court, and
You’ve missed payments that the court ordered you to pay on the CCJ.

If you’ve had a charging order made against you, this means that the court has ordered the amount of your unsecured debts to be secured against the value of your home or another asset. In most cases, your creditors will happily wait for you to sell the asset in question before collecting what’s owed to them. But under the circumstances described above, they can try to make you sell the asset immediately.

Receiving a charging order is itself a sign that your debts are severe, but a repossession order takes things to a wholly different level. It’s imperative to consult a qualified debt counsellor or licensed insolvency practitioner for advice as soon as possible.

3 Ways To Clear Your Debts Yourself

If you can no longer afford to meet your credit commitments, you need to act fast to get things under control. There’s no use burying your head in the sand, as the problem won’t go away on its own. However, the good news is that are plenty of options available to help you clear your debts.

What’s the best debt solution for me?
The right solution for you will depend on your individual circumstances. For example, the size and type of your debts, whether you own your home and how much (if anything) you can afford to repay your creditors.
There’s a huge amount of information out there about the different debt management solutions and how they work, and it’s easy to feel confused or overwhelmed. That’s where speaking to a qualified debt adviser can help.

Three of the most common debt solutions that might be available to you are:
1. Debt management. This might be a suitable choice if you owe unsecured debts such as credit cards and payday loans that total more than £3,000 and you’re able to pay your creditors at least £100 a month. It might take you a while to pay off your debts, but we may be able to get your creditors to freeze interest and charges on your accounts, relieving some of the pressure. Debt management is also an informal solution that offers more flexibility than some other options.

2. Individual Voluntary Arrangement (IVA). You could consider an IVA if you owe more than £8,000 in unsecured debts to multiple creditors and can afford to pay your creditors at least £100 a month. Unlike debt management, an IVA is legally binding and you must stick with it for five or six years. On the plus side, you’re unlikely to lose your home if you own your property and you’ll have legal protection from your creditors. Best of all, any leftover debts within the IVA will be cancelled when it ends – helping you clear your debts once and for all. Read more.

3. Bankruptcy. Forget the old-fashioned stigma around bankruptcy. Times have
changed and it’s now potentially a viable option for anyone with serious debts and little or no assets or income with which to repay them. Yes, there are still restrictions and implications that you’ll need to consider very carefully before going ahead. But if, like many bankrupts, you end up being discharged after 12 months, you could be leaving most or all of your debts behind in just a year’s time. And of course, our team will be on hand to support you every step of the way, from helping with the paperwork to offering advice on your court appearance.

Of course, there are many other ways of dealing with debt. These include:
 An Administration Order
 A Debt Relief Order (DRO)
 Consolidating your debts
 Full and final settlements
 Token payments (a temporary measure).

How do I get started?
Simply get in touch with NationalDebtLine. who will be able to provide you with further guidance. Once you’ve decided how to clear your debts, their expert advisers will implement your chosen solution and offer ongoing help and support.

IVA And Your Credit Rating

If you’re already having debt problems, the chances are your credit rating has already been adversely affected. However, your choice of debt solution could make a difference to your future credit applications, so it’s important to bear this in mind if, for example, you want to apply for a mortgage at some point.

What information appears on your credit file?

If you choose an informal Debt Management plan vs an IVA, it’s possible that this won’t appear on your credit file at all. However, your creditors might ask for a note to be added about your plan. In a way, this could work in your favour as it shows that you’re taking positive action and are committed to paying off your debts.

On the other hand, if the plan isn’t marked on your credit file, you could continue to accrue adverse payment information on the debts you’re paying off. This is because you’ll be paying a lower amount each month than shown in the original credit agreement, which could be recorded as missed payments on your credit file. If this happens and the debts end up defaulting, this information will stay on your file for six years from the date of default.

For an IVA, Bankruptcy and other forms of personal insolvency, the start date will always be marked on your credit file. When your insolvency period comes to an end, another record will be added. These records will both be removed six years after the start date, unless there are unusual circumstances such as a Bankruptcy Restrictions Order.

What happens during the six year period?

During the six years that adverse information appears on your credit file, you’ll find it harder and more expensive to obtain credit. If you’ve been made insolvent, you may also be subject to restrictions around applying for credit during the initial period when your bankruptcy, IVA or DRO is in place.

In any case, it’s a good idea to get your existing debts completely cleared before you even think about applying for more credit. If you’re in an IVA plan, this means waiting until the arrangement or plan has completely finished – which could take six years or more anyway.

What happens after the six year period?

Once the adverse information has dropped off your credit file, you may find it easier and less expensive to obtain credit. However, some lenders will require you to disclose whether you’ve ever been declared bankrupt or insolvent, so you’ll need to be honest about this.

And if you apply to lenders to whom you’ve previously been in debt, you may find they won’t lend to you, as they could still have details of your debts on file.

Regarding mortgage applications, it’s important to note that all forms of personal insolvency could affect your chances of obtaining a mortgage – not just bankruptcy. Your best bet is to speak to a mortgage broker who specialises in helping people with poor credit histories, as they’ll be able to recommend suitable lenders to approach.

When can I start to repair my credit rating?

You can start repairing your credit rating as soon as any restrictions around applying for credit have been lifted. In the case of bankruptcy or a DRO, this could be just 12 months after the order is made against you. However, as already noted, it will be another five years before this information is removed from your credit file, so you may find there’s nothing you can do for the time being.

On the other hand, if you can find a provider that’s willing to lend to you (and your old debts have been wiped out by the DRO or Bankruptcy Order) – go ahead. The sooner you can start building up positive credit information, the better. Start small with a credit card that’s designed for people with poor credit histories. Use it sensibly for small transactions and pay off the balance in full every month. In time, you could try applying for a mobile phone contract or pay-monthly car insurance policy. But be very careful not to over-stretch yourself!