What is personal insolvency?
A person is insolvent if they have too few assets to pay their debts and financial liabilities.
What are the options for an insolvent individual?
Bankruptcy is a process, started by a court order, to realise and distribute an insolvent individual’s assets among their creditors.
Individual voluntary arrangement
- An individual voluntary arrangement (IVA) is an agreement between an insolvent individual and their creditors that either compromises their debts, or creates a framework to settle them.
Other debt management procedures
Debt relief order
A debt relief order (DRO) will prevent creditors from enforcing their debts against an insolvent individual for a year, after which they will be discharged from liability for those debts.
Debt management plan
A debt management plan (DMP) is an informal, unregulated agreement between an individual and some or all of their creditors, under which they agree to repay what they owe (or an agreed lesser sum) over time.