The first golden rule if you’ve got big debt problems…

The first golden rule if you have major debt problems is:

‘you should first look at personal bankruptcy because if you’re really in a lot of trouble with money, it’s almost always the best option’.

But I hear you say ‘isn’t this is the opposite of what you’d expect?  And what most debt advisers will tell you?

Yes, that’s right, so why do I say this?

  • In three quarters of cases all you lose is your unsecured debts: you lose no assets, not even your home;
  • It costs less than a thousand pounds to go bankrupt, far less than almost all of the other solutions you may have available;
  • You’re in bankruptcy for just twelve months – it will pass very quickly indeed.  Compare this to how long you have been juggling your finances.  IVAs, often recommended by debt advisers, insolvency practitioners and their ‘finders’ are typically for 5 years – can you see forward this far? Can you guarantee you’ll complete the IVA?
  • Often bankruptcy is far less risky a solution than your other options for dealing with your debts because you can learn how the process works, you can assess the outcome before you go into it – that’s because there are far fewer areas for compromise or negotiation than other solutions you may be thinking about;
  • There are no messy negotiations with your creditors – if you petition yourself, your bankruptcy is simply imposed on them, your creditors don’t get a choice.  They do in other solutions;
  • In just one quarter of cases – Insolvency Service figures, not ours, the Official Receiver takes a share of your ‘surplus income’.  He does this for 3 years.  Compare this with a typical IVA – 100% of cases, 5 years.  But, and it’s very important you note this, in a bankruptcy no one can make you work as long or as hard as you did before.  If you want to take some time out to re-assess where you want to take your life, you can.  You can take a lower paid job that’s less stressful.  You can reduce your income for the year of your bankruptcy, avoid an ‘income payments order’ – and once you’re discharged, it’s too late for the Official Receiver to seek any money from you, you’ll keep all the money you earn for yourself.  It’s a case of one year of ‘pain’ for ‘later gain’.  Generally only those who don’t bother learning how ‘income payments’ work in practice end up paying them, so learn about them!
  • If you are lucky enough to enjoy a windfall, say a legacy or a lottery win, you’ll only have to pay it into the bankruptcy – that is to say you can’t keep it – if you became entitled to it in the year of your bankruptcy.  Become entitled after you’ve been discharged and you keep it all!  Compare this with IVAs – 5 years-  and DMPs -unlimited.  I presume you’ve not got a crystal ball?  The point is that by petitioning for your own bankruptcy can mean you actually protecting your family’s wealth!
  • Bankruptcy, unlike IVAs and DMPs, are a catalyst for change – you are likely to live your life differently and ditch any bad habits in a bankruptcy;

Come back here next week for golden rule number 2!

The first golden rule if you've got big debt problems…

The first golden rule if you have major debt problems is:

‘you should first look at personal bankruptcy because if you’re really in a lot of trouble with money, it’s almost always the best option’.

But I hear you say ‘isn’t this is the opposite of what you’d expect?  And what most debt advisers will tell you?

Yes, that’s right, so why do I say this?

  • In three quarters of cases all you lose is your unsecured debts: you lose no assets, not even your home;
  • It costs less than a thousand pounds to go bankrupt, far less than almost all of the other solutions you may have available;
  • You’re in bankruptcy for just twelve months – it will pass very quickly indeed.  Compare this to how long you have been juggling your finances.  IVAs, often recommended by debt advisers, insolvency practitioners and their ‘finders’ are typically for 5 years – can you see forward this far? Can you guarantee you’ll complete the IVA?
  • Often bankruptcy is far less risky a solution than your other options for dealing with your debts because you can learn how the process works, you can assess the outcome before you go into it – that’s because there are far fewer areas for compromise or negotiation than other solutions you may be thinking about;
  • There are no messy negotiations with your creditors – if you petition yourself, your bankruptcy is simply imposed on them, your creditors don’t get a choice.  They do in other solutions;
  • In just one quarter of cases – Insolvency Service figures, not ours, the Official Receiver takes a share of your ‘surplus income’.  He does this for 3 years.  Compare this with a typical IVA – 100% of cases, 5 years.  But, and it’s very important you note this, in a bankruptcy no one can make you work as long or as hard as you did before.  If you want to take some time out to re-assess where you want to take your life, you can.  You can take a lower paid job that’s less stressful.  You can reduce your income for the year of your bankruptcy, avoid an ‘income payments order’ – and once you’re discharged, it’s too late for the Official Receiver to seek any money from you, you’ll keep all the money you earn for yourself.  It’s a case of one year of ‘pain’ for ‘later gain’.  Generally only those who don’t bother learning how ‘income payments’ work in practice end up paying them, so learn about them!
  • If you are lucky enough to enjoy a windfall, say a legacy or a lottery win, you’ll only have to pay it into the bankruptcy – that is to say you can’t keep it – if you became entitled to it in the year of your bankruptcy.  Become entitled after you’ve been discharged and you keep it all!  Compare this with IVAs – 5 years-  and DMPs -unlimited.  I presume you’ve not got a crystal ball?  The point is that by petitioning for your own bankruptcy can mean you actually protecting your family’s wealth!
  • Bankruptcy, unlike IVAs and DMPs, are a catalyst for change – you are likely to live your life differently and ditch any bad habits in a bankruptcy;

Come back here next week for golden rule number 2!

Business Resuscitation Opportunities 16 January 2013

Who do you know who may be interested in these?

Travel insurance (01/01)

Travel insurance quoting and back office mechanism with health scoring and fully SEO ready website for sale. It integrates the whole process from quotation through into your own accountancy, reporting and claim management functions, with no human input. The mechanism can support quoting in an unlimited number of domain names with a white labelling facility and multi-layer mark-up. Ideal purchaser could be a major insurance company, underwriter or broker. Offers in excess of £250k sought, with ongoing share of income in return for continuing support.

Kip’s eco-consortium! (01/02)

Kip is looking to raise money for several environmental projects including:

UK tidal energy – investors up to 60m Euros
Indian wind farm – investors up to $300m

Consortium being put together.

Band seeks funding (01/03)

Band who play major international music festivals and venues, established for 20 years and with a new line up, whose music has been used on several films and computer games, seeks £100k to fund completion of its latest album and show production. Could suit a sponsor looking to develop its own brands in the Asian markets, or just an investor.

Successor solicitor practice sought (01/04)

Retiring solicitor specialising in residential and commercial property in the Black Country and wider West Midlands seeks successor firm to take on his caseload, consultancy arrangement sought.

Digital signage (01/05)

East Mids based digital signage company seeks multi million pound backer to support the business through the procurement of large contracts with blue chip customers.

Interior fit out business (01/06)

Profitable, expanding commercial and retail interior fit out business is looking to merge or acquire similar business of about the same size -three quarters of a million turnover.

Non food retail (01/07)

An experienced venture capital company is looking to acquire distressed retailers, turnover £10m-£50m, before they go into administration. Substantial discount to net asset value expected.

Dealer offers car parts and other items for sale (01/08)

Brand new Toyota / Daihatsu parts – Market Value £0.8m, OIRO £75k
Folding canvas bags for external markets- 74,000 pieces for £12k
Internal domestic doors – 3,500 pieces for £28k
Ladies sandals and shoes – £1.25 to £2.50 per item

As usual, if you or anyone you know is interested in any of these opportunities, just e-mail me at paul@midlandsbusinessrecovery.co.uk. Click here to do so.

If you don’t yet know how my Business Resuscitation Programme works, give me a call, I’ll be glad to explain it. Or if you know of a business that is struggling, why on earth wouldn’t they try finding a solution through my Business Resuscitation work?

Paul Brindley
Midlands Business Recovery

‘The local insolvency practice offering real solutions’