When it Gets Tough

Individuals in financial difficulties

What is insolvency?

Insolvency is a condition of financial difficulty, and can apply to an individual or company. It is an umbrella term under which fall many different procedures, such as bankruptcy, as set out by the Insolvency Act 1986.

If a person cannot pay their debts, they are considered insolvent and may need to be declared bankrupt. However, bankruptcy is usually a last resort, and it can be preferable to enter into a voluntary arrangement with creditors to negotiate more affordable repayments. This can be done with the help of a professional advisor such as an insolvency practitioner.

An insolvency practitioner (IP) is a licensed individual in a position of legal responsibility. An IP’s work is closely monitored and regulated to ensure it meets legal and professional standards, and the IPs themselves must satisfy the regulator that they are honest, qualified and competent. Under UK law, many types of insolvency procedures must be dealt with by an IP, including bankruptcy, liquidation, administration and voluntary arrangements.

If you would like further information on insolvency or ways to improve your finances, please email mail@harris-lipman.co.uk or call (020) 8446 9000.

 

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