Approaching the decision to invoke bankruptcy can be a very difficult thing. Independent Voluntary Arrangements under the Insolvency Act 1986 can act as a contract, which binds all parties and prevents any action being taken out against you.

If you are facing a financial struggle to make ends meet then bankruptcy may be a viable option. Creditors promote the idea of a “bad stigma” being attached to bankruptcy, when in fact this is a notion that’s fading fast as more people realise that bankruptcy can be the most suitable debt solution for them depending on their circumstances:

• If you have no assets.

• Live in a rented property or with family/friends.

• If your occupation is not affected.

You are able to keep the tools of your trade, and if you have a car worth £2500 or less you can keep that too. You can keep all clothing, bedding, furniture and household goods. The official receiver/trustee will take control of all your other assets on the making of the bankruptcy order. He or she, or any insolvency practitioner who is appointed as trustee, will dispose of them and use the money to pay the fees, costs and expenses of the bankruptcy and then your creditors.

In most cases, first-time bankrupts can be discharged within 12 months, and in some cases as early as 7 months providing none of your creditors object. As soon as you are discharged you can start to rebuild your credit rating again and all of the bankruptcy restrictions are lifted.

• If you have not paid within 14 days notice of obtaining a ‘Charge for payment’.

• If you have not paid within 14 days notice of receiving a summary warrant against you to recover rates, Council Tax, other taxes etc.

• If you have not paid within 21 days notice of being served a Statutory Demand for Payment.

This situation is termed Apparently Insolvent.