Insolvency Terms & Debt Terms

The IVA team has extensive commercial experience in business and personal insolvency procedures. We undergo professional training helping us to ensure that the highest standards of practice are maintained at all times.

Administration order

If one or more of your creditors has obtained a court judgement against you, the county court may make an administration order. Administration is a court-based procedure whereby you make regular payments to the court to pay towards your creditors. Your total debts must not be more than £5,000 and you should have enough regular income to make weekly or monthly repayments. You do not have to pay a fee for an administration order but the court will take a small percentage from the money you pay towards its costs. If you do not pay regularly, the order could be cancelled and you may become subject to the same restrictions as someone who is bankrupt. If your circumstances change and you cannot pay as ordered, you can apply to the court to change the order. The court which made the order will tell you what to do. Details of administration orders are available at your local county court

Informal Arrangement

If you know that you cannot pay all your debts, you could consider writing to your individual creditors to see if you can reach some compromise. Include a timetable of when you will repay them. The disadvantage with an informal arrangement is that is it not legally binding so your creditors could ignore it later and ask you to pay in full. Your local Citizens Advice Bureau can advise and help you make this kind of arrangement

When can you make an Individual Voluntary Arrangement?

It is better and cheaper for you to set up an individual voluntary arrangement before you become bankrupt but you can propose one afterwards. The IVA can be set-up within 6-8 weeks.

Insolvent (defenition)

The position of not being able to pay your debts as they fall due or having an excess of liabilities over assets (negative equity).

For more information on Insolvency Click Here

County Court Summons

Meaning - A creditor has tried to recover their debt from you but without success. You may have offered an informal deal but now their patience is wearing thin.

You may have tried to stave payment off claiming the debt is invalid or issued a counterclaim. They have issued an action to commence recovering their money in the County Court

What can I do, what should I do? - You have time to pay the claim of the creditor.  Try to offer a payment deal sensibly before the action will be heard in the court.  Try to do a deal or pay the debt. If you cannot pay it look at IVA page.  If you cannot pay it you could be insolvent.

You can dispute the claim if it can be proven the debt is not correct. Look, carefully, at the forms for detailed instructions on how to defend the claim.

County Court Judgment

Meaning - Having pressed for payment the creditor has now got the court to agree that there is a valid claim for the money.  You have 30 days from the date of the Judgment to pay in full plus any costs incurred. Otherwise the Judgment will be registered at the courts and with credit reference agencies.

Remember an outstanding Judgment is proof of your insolvency and allows a creditor to issue a bankruptcy petition.  There were over 100,000 CCJ’s issued against businesses in 2006 in the UK, so they are quite a common tool to tackle late payment offenders.

What can I do, what should I do? - If possible always try to pay the debt within 30 days of Judgment.  This will ensure that the Judgment is "set aside" and will not be registered with credit reference agencies.  If you cannot pay it then this of course further proves insolvency. If it is registered then getting credit in future becomes much more difficult.

If you are under real cashflow pressure but are attempting to trade out call the creditor/ their solicitor or the bailiff and try to agree a phased payment.  Often they will agree but they may use the non-payment to push for further action such as distraint or winding up.

You may be surprised at how long a time you can spread payment through this type of deal. Think about it, the creditor just wants paid, even at £50 per week this is better than bankruptcy because they will, inevitably, lose the whole amount in your bankruptcy.

Limitations Act 1980

If the 'debtor has made no payment to, or acknowledged in writing, the debt for a period of six years then that debt can not be pursued through the courts once the debtor has informed the creditor that he will not be paying the debt because it is statute barred

Warrant

Meaning - As the creditor has not been paid under the judgment the creditor can apply to the court for a warrant of execution.  If the debtor is in another area the court can forward this to the local court.  A notice of warrant will be issued to the debtor.  If payment is not made a bailiff of the court can be sent to collect payment or seize goods.

What can I do, what should I do? - As always a deal can be struck with the creditor and or the bailiff to repay over time.  You have demonstrated an inability to pay the debt and are offering to settle in a period to be agreed.  For small debts this is often acceptable to the creditor.

Statutory Demand

Meaning - Usually this action is taken after a creditor has obtained a Judgment.  It is a formal demand for payment of an undisputed debt (over £750) - the debt must be paid within 21 days of the demand being issued.

Failure to pay a statutory demand can lead to a winding up petition being issued.  In any event, the creditor has to pay to issue this document/action and it is now becoming much more serious.

What can I do, what should I do?

If you cannot pay the debt, talk immediately to a turnaround practitioner, review the contents of this website and make a plan for survival - such as an IVA, or urgent refinancing.  Or if the business is simply not viable talk to an insolvency practitioner.

Walking Possession

Meaning - A bailiff (for the County Court) or Sheriff (for the High Court) has visited your premises and obtained entry under a distraint notice.  He /she has asked for payment of the proven debt.  If you have not paid this plus the court and his costs he can "take possession" of the goods, equipment, fixtures, stock etc on the premises.

Effectively if you do not reach a deal or pay in full he can remove and sell the assets in 5 days.  To sell the assets after they are covered in this way is a criminal offence.  If the bailiff has obtained a walking possession he can force entry to recover the goods after the 5 day period.

What can I do, what should I do? - Unknown to most people unless in debt; Sheriffs and bailiffs are an unusual breed.  They will rely upon ancient laws to obtain entry to your property - such as open doors and windows.  But they cannot force entry. Simply: your best defence is to close and lock all doors and windows where they can gain access !

It is also not usually possible for the bailiff to possess or remove goods that do not belong to your or your company - if you have a debenture the goods therefore are charged to a bank.  Whilst this is not possession bailiffs do not (usually!) want to get embroiled in arguments with high street banks. If the goods are subject to HP then they cannot be taken.

In reality isn’t this is just deferring the inevitable? You are probably insolvent if a bailiff is calling.

Once walking possession is in place it is STILL possible to do a deal with the bailiff to keep the goods whilst making regular payments - default and he may remove them without notice.