If you have incurred several credit card debts and have personal guarantees which you are unable to pay as and when they fall due then, the obvious option is bankruptcy. We find that in some cases Directors of companies have utilised the support of personal credit cards to fund the ongoing trading of their company in the hope that things will get better.
Another option is an individual voluntary agreement (‘IVA’) with your creditors — similar to a CVA , except that the contract is between the individual who owns the business, and all of their creditors. At least 75% by value of the creditors who vote at a meeting must agree to it. Secured creditors will still be able to enforce their security. As with a CVA, a licensed insolvency practitioner must be appointed to supervise the process.
Our view is always to keep control of your circumstances. It is always to seek independent advice before you are placed in a situation where a creditor tries to force you into bankruptcy. It can sometimes be possible, however, to reach a voluntary arrangement even after a bankruptcy order has been made and to have the order cancelled.
If you owe less than £15,000, the total value of your assets (excluding any car worth less than £1,000) is no more than £300, and your disposable income (after tax, national insurance contributions and normal household expenses) is no more than £50 per month, you may be able to apply to the court (online) for a debt relief order – although there are other conditions too. This stops creditors from enforcing their rights against you for (usually) a year, while you try to sort your affairs out.