Update as at 12 March 2008
My summary is a little late this week, due to having been in Dublin for a long weekend watching my beloved Wales win the Triple Crown. It is a while since I was last in Dublin, and I had quite forgotten what a lovely city it is, and how British it still feels with a very European edge. As I can never leave work alone when I am away, I popped into their version of the Citizen’s Advice Bureau to find that there is practically no debt advisory information at all. Debt solutions are generally worked out with creditors on an informal basis - with no legal protection - and bankruptcy is extremely cumbersome and expensive, with a 12 year discharge period, and whilst there were over 47,000 bankruptcies in the UK in 2005, in the Irish Republic there were only 9! Maybe they are just a little better at paying their creditors over there!
Back at base we have actually had our first rejected IVA for over 6 months, which I am absolutely smarting over as it is a lump sum offer from a good remortgage which is giving creditors nearly 60p in the £ returned within three months. One particular creditor has refused to accept the offer on the basis that her husband’s equity has not been included, however they have not been married that long and the debts were incurred before they were in a relationship. These people are honest and hardworking, and were prepared to increase their exposure to secured lending in order to make a very sensible offer of repayment to their creditors, which is vastly reduced under bankruptcy proceedings. My client will now most likely proceed with the remortgage, and retain the money to hand over to the Trustee once she has petitioned for her bankruptcy, thus resulting in over £6,000 being paid to the government in fees and charges, and perhaps another £8,000 being paid to a Trustee for the task of agreeing and paying creditor claims. Does this actually make any sense to anybody?
I have also been meeting again with many mortgage brokers this week, who are reporting that this is the flattest they have seen the housing and lending markets for a number of years. People coming out of fixed rate deals are being shocked at the level their mortgage payments are going up by, and a client of mine who bought a property two years ago at almost 100% LTV has seen an increase in payments of over £250, and cannot mortgage due to a lack of equity. It is fair to say that most people, including insolvency practitioners, did not see this credit crunch coming two years ago, and creditors simply have to be flexible when it comes to variation applications, from people who continue to strive to repay as much as they can.
This week we have also seen the suggestion that bankruptcy advertsing be stopped - or limited to just the London Gazette, which only sad people like me actually read! I have mixed feelings on this point. Firstly, if we go back to the reasons why bankruptcy was actually publically advertised in the first place then there clearly is no need to draw creditors attention to the fact given our sophisticated modern day communication systems. Secondly, I feel that the majority of people I see actually want to pay their creditors back, and will still feel a stigma about bankruptcy proceedings whether they are advertised or not. I have not read the budget in any great depth today, but my thoughts are that the provisions reported in the Telegraph the other day have been miscontrued, and actually relate to lesser forms of advertising used by IPs such as the payment of dividends and the calling of annual meetings, and in any case such new provisions are not anticipated to be introduced until 2009.
With the storms we have encountered over the last couple of days, it has made me think about the risks people in debt take in being underinsured - for buildings, contents and even life insurance. Have you ever really costed how much it would take to replace every item of furniture, electrical appliance, and item of clothing in your house. According to my husband, replacing my clothing would equate to more than the national debt - but this could easily run into £40,000 or £50,000. Contents and life insurance are relatively cheap, so I would urge all readers to relook at their policies and make sure that you have ample cover - taking advice from an IFA if necessary.
Hope the weather in your area is better than in South Wales, where the fir trees in my garden look as if they are about to fall into my conservatory.
