Personal insolvency is becoming more common as general debt levels rise. We no longer see credit or finance agreements as a last resort when we have no money; instead, we use credit straight away to allow us some breathing time before we need to hand any money over. The difficulty – and the insolvency – comes when we no longer have the cash to pay our bills. Loans, credit cards and store cards can charge particularly high interest rates, and it doesn't take long for even a reasonable balance to get out of control.

How did I get to the brink of insolvency?

Whilst living on loans, finance agreements and credit may work for you whilst there's enough money coming in, it can take very little for your financial situation to get worse. You or your partner may be made redundant; you may not get the salary rise you were expecting; interest rates may go up, making your mortgage and loan repayments more expensive; you may split up from your spouse or partner, creating a drop in income, or you may be ill and have to live on sickness pay rather than full pay. Any one of these circumstances can cause you to fall behind with your payments, creating personal debt that's very hard to turn round. When the debt reaches a certain level and you have no hope of paying it back, you need to start looking at insolvency solutions.

How can I avoid insolvency?

The most drastic solution to avoiding insolvency is to declare yourself bankrupt. You may also find that your creditors may try to file for bankruptcy against you if they think there is no other way to retrieve their money. Bankruptcy, however, should be avoided if at all possible. Whilst the law has changed to allow personal debts to be discharged in just one year as opposed to three years, bankruptcy still leaves a huge stain on your credit record, removes all control you have over your assets and income, and may prevent you from taking up certain professional or community positions.

There is a real alternative to bankruptcy: the Individual Voluntary Arrangement, or IVA. This arrangement lasts for five years, but allows you to keep control of your property and your cash, paying a single monthly amount to an administrator who then divides it between your creditors in pre-agreed amounts. It can help you to come back from insolvency without having the stigma of bankruptcy attached to you.

Varden Nuttall has been established for over 15 years and is dedicated to helping people in financial difficulty find an insolvency solution through an Individual Voluntary Arrangement (IVA). Employing 90 people, including trained and skilled IVA administrators, we are one of the largest IVA companies in the UK and handle over 3% of all IVA applications. To find out more about the company, or to make an appointment to talk about putting an IVA in place, call us today on 0800 031 9802 or fill in our online enquiry form.