Food for Thought

June 4th, 2008

It has been a while since my last blog and due to a heavy diary of late I have been away from the forum and site for a short term. 

Firstly I thought I would talk about the Debt Debate, It was a well organised and controversial eventdiscussing IVA v Bankruptcy. 

I felt the answer to this question was as I expected, this being that it is purely down to the individual circumstances of the debtor. 

Both IVA and Bankruptcy are great solutions, but which one is best can only be decided by the debtor themselves. It was made clear, however that the debtors do not always get the option of having the choice and the clear picture is that debtors should investigate all options available. 

The same point erupted again, however that there are still no figures published on the failure rates of IVA’s. Each year figures are published on the number of IVA’s and Bankruptcies, but there is no indication of how many IVA’s fail each year and result in Bankruptcy giving a true picture on the outcome of IVA’s as a solution. 

In all cases I deal with and at the events and debates I attend there is always finger pointing.We are a blame culture and always hear talk of irresponsible borrowing on the part of the debtors and irresponsible lending on the part of the creditors. 

Insolvency professionals, the Insolvency service, the media all talk about the creditors and the debtors, However I feel there is a party to insolvency proceedings who invariable gets overlooked, that party being the Spouse or Partner of the debtor. 

If you look at IVA’s and Debt Management the joint income and joint expenditure is taking into consideration.  What happens where the debt is only in one name and that person has a low income, well this seems to be overlooked. I have seen IVA cases where the debtor only earns £400 per month, but having to pay £600 into an IVA leaving not only the partner or spouse to brunt all the monthly living costs, but contribute towards the IVA also. 

In Bankruptcy the calculations for disposable income will take into consideration a fair breakdown of the income against joint expenditure, allowing the non bankrupt spouse to enter contributions rather than full income. 

I still feel however the non Bankrupt spouse is shifted to one side, especially when dealing with the matrimonial or jointly owned home.The trustee will make their calculations for the Bankrupts beneficial interest in the property and offer this to the spouse, however in a number of cases we see it is to late and no provisions have been made for the spouse or partner to afford this. 

This lack of information could result in the loss of the home.

I think people worry about the rights of the debtor or creditor who obviously are effected by the situation, but I think more thought should be given to those who find themselves caught up in these proceedings where clearly there is no fault or finger to be pointed.  

Help those to Help you!

April 4th, 2008

The basis of my blog this week is advice for those of you seeking advice. For those of you who find yourselves in financial difficulty, being able to seek sound advice for the way forward Is a godsend. I only wish the resources that are available now were available when I went through Bankruptcy. 

The advice I wish to give is to be honest with your advisors. 

Those giving you advice can only do so if they have all the facts, give them all the information and let them tell you the best course of action. 

This week I had to walk away from a case due to being mislead on the information I was given by a client. I understood the reason behind the misleading information, it was out of desperation and fear, however the truly sad thing was that if I was given the correct information from the outset I could have dealt with the problem a very different way and obtained the result they wanted, but by the time they confessed the truth to me it was too late. 

Honesty is the best policy when it comes to insolvency it is a chance to put your hands in the air and admit there is a problem, that way a solution can be sought.

As the old saying goes “there is more than one way to skin a cat” and the same is true in this industry and by disclosing all the details to your advisors this will enable them to advise the best way forward armed with all the variables. 

I know of one of the experts on the forum who attended court with a client for an assisted Bankruptcy, he had prepared all the paperwork with her and put in countless hours going through her details. 

After arriving at the court she confessed that she had not been completely honest with him and that she owned a bungalow she had not mentioned and that the bungalow was unencumbered. 

The good news this week was I finally managed a settlement with the Customs and Revenue for a case I have been negotiating for over 12 months for 12.5p in the £1 a triumph and huge weight from my clients mind.

My Story.

April 3rd, 2008

I thought I would do a short(ish) story on my history for you to get to know what I have been through and what drew me to this industry.

This story will form the basis of a new Blog I am setting up which I plan to update with real life client situations for you to relate your own situations to.

After working for one of the major banks as a business advisor, I involved myself in a friend’s ailing business, Changing the business format and then direction turning the business in to a profitable chain.

At this point I saw a skill in turning around troubled businesses, and purchased my second ailing company.
The company had a loyal database of customers, but the owner of this business had drained the company’s resources to develop a manufacturing arm to the business.
The company was a distribution business within the communications arena.
It had a turnover of £1,500,000, however was carrying debts in excess of £250,000.
Although the stock was valued at £120,000 it had been slow moving as the materials were small parts of bigger objects and without purchasing further materials to make up the larger saleable stock items the current stock had no real value.

I contacted each of the company’s creditors explaining my plans and intentions for the company and after meeting with each one I put the company into a Company Voluntary Arrangement (CVA).

The CVA was approved at 96% in favour to pay back £125,000 over five years.
With this I relocated the centre of operations from London to the West Country and overnight cut the company’s overheads by half.

The company traded for four years successfully and along the way enabled me to pick up two further struggling companies a metal fabrication company and a manufacturing business.

The group of companies now had a strong turnover and were running smoothly until our largest customer went into liquidation owing all of the company’s considerable money.

It was at this point I should too have entered my companies into creditors voluntary liquidation, however I truly thought I would be able to trade on and replace the customer I had lost, unfortunately not only did I have the CVA, but I had now incurred serious debts due to the loss of this customer, as well as a loss in turnover and the all important cashflow for the business.
I managed to stretch out the inevitable for a year before a creditor finally petitioned for the company to be wound up, at this point the supervisor of the arrangement failed the CVA.

Unfortunately due to my keeping the company running for a further twelve months I had increased the level of indebtedness to the creditors, an offence under the companies act , resulting in my being banned from being a Director.

With the loans for the companies subject to personal guarantees I saw no alternative, but to declare myself Bankrupt.

I involved myself in the insolvency industry as I had enjoyed the turning around of the companies in the early stages, but I had also now been through Bankruptcy personally.
I wanted to help people who were going through what I had just been through and give them the benefit of my hindsight.

There were very few Bankruptcy Specialists available at this point and when I was struggling, each company I tried to seek advice from tried to sell me an IVA.
I studied the Bankruptcy rules and regulations, the Insolvency Acts and then went to work for a company giving Insolvency and Debt advice.

Since starting in this industry I have adored what I do, stopping someone from losing their home or helping them to clear overwhelming debts and seeing the transformation from someone who is at one of the lowest points of their life to someone who is happy and in control again is the best job satisfaction there is.

I started England, Jackman & Spacey with my business partner two years ago, I am currently structuring a deal to purchase the business from my partner and grow the business to the next level and in July 2009 will be able to convert the partnership to a company when my Directors ban finally ends and closing another chapter in my life.

By posting as an expert on the forum I hope to help those of you in financial difficulty by answering your questions and calming your fears of the process, remember I’ve been where you are and I know how you feel.
You should never feel you are asking a stupid question as no question is considered stupid and that’s what we are here for.