What Is An Insolvency Practitioner?

Insolvency Practitioners are accountants or insolvency specialists who work in an accounting firm. They deal with individuals and businesses facing financial difficulty, as well as those going through formal insolvency processes.

Let’s start the discussion on insolvency practitioners with a few basic definitions. Insolvency refers to the inability to pay debts, so an insolvency practitioner gives advice and helps people who are in debt, have financial distress, or are insolvent or bankrupt.

Individuals going through insolvency should seek a licensed practitioner to help them deal with the process of liquidation and bankruptcy. That’s where IVA Helpline comes in, and we’ll help you come up with the best solution for insolvency and set up an Individual Voluntary Arrangement (IVA) to help you get your finances back on track.

What Is An Insolvency Practitioner When It Comes To An IVA?

Your chosen licensed Insolvency Practitioner (IP) will assist with a number of important tasks surrounding an IVA. To begin with, they will analyse, in detail, your financial situation, as well as your employment, personal circumstances, the creditors you owe money to and how much you owe.

If your Insolvency Practitioner finds that you are not suitable for an Individual Voluntary Arrangement, they will ensure to discuss other ways for you to become free from debt that do not involve an IVA.

If you are deemed suitable for an IVA, your monthly outgoings will be examined in order to ensure you can pay the debt back, including how much each month you can spare from your expenditure in order to do so. There may be instances where they find that you are able to pay out a lump sum towards your debt, covering either part or the full amount.

An IP will then draw up a formal proposal which will detail how much of the total debt you can pay back, whether any lump sums will be paid and if there are monthly instalments, how much these will be each month.

The next job of your Insolvency Practitioner will be to make contact with your creditors after they have worked out a formal proposal for you.

Each creditor has one vote to cast regarding whether they agree or disagree with the proposal. At least 75% of the votes must agree to the proposal for it to go ahead. If they do, the IVA begins immediately.

Once the IVA is in place, by law, creditors are not allowed to add any interest or charges to your debts. Your Insolvency Practitioner will also tell you when you need to commence your monthly repayments, although these usually commence right away.

Now that your IVA is fully in place, creditors will not be able to contact you to request you make any payments to them. It should also be noted that while your IVA is in place, you should not attempt to make any payments to your creditors directly.

Your payments will be made by you directly to the IVA provider, who handles the payments to the creditors on your own behalf.

The Differences Between Bankruptcy and Insolvency

Many people believe that insolvency and bankruptcy are the same thing, but they aren’t. In fact, there are some key differences which differentiate them.

• Insolvency is the financial situation where an individual (or business) is unable to repay their debts on time.
• Bankruptcy is the legal process whereby an individual has been declared insolvent.

An insolvency procedure occurs when a less formal way to improve the financial situation has failed. In certain cases, insolvency may lead to bankruptcy if the situation does not improve the financial situation.

What Qualifications Does an Insolvency Practitioner Have?

The most critical qualification for an Insolvency Practitioner is the JIEB (Joint Insolvency Examination Board) set of examinations. Both examination papers must be passed before they are fully qualified.

Many IPs come from a legal or accountancy background. An insolvency practitioner will most likely have their Association of Chartered Certified Accountants (ACCA), Associate Chartered Accountants (ACA), or Chartered Institute of Management Accountants (CIMA) accreditation. These qualifications are not a necessity, nor are they enough to allow someone to operate as an insolvency practitioner.

Always check the credentials of your chosen insolvency practitioners on the UK Government’s list of accredited, licensed insolvency practitioners. You can also check their credentials with the Insolvency Practitioners Association (IPA) to ensure they are registered to operate in the UK.

Final Thoughts

Debt worries can be extremely overwhelming, but thankfully, there are some great options out there, such as an IVA, which an Insolvency Practitioner can help you navigate right from the very first step.

The only criteria you need to have is at least £6000 of unsecured debt, you owe to at least two creditors and have at least £70 a month to pay back to your creditors. If this sounds like you, contact us today for immediate professional advice.