Fiona Fearon from ASM Newry provides a practical approach in insolvency
Article featured in Business Eye May 2018 by Fiona Fearon, Insolvency Practitioner – Individuals.
Typical working day:
As a working mother of three young boys I usually feel like I have completed a day’s work before even arriving at the office! Due to the nature of my work I can honestly say that no two days are the same. Usually the day starts off with a review of my diary lines from my case management system to ensure all statutory deadlines are being met. I could be drafting Individual Voluntary Arrangement Proposals, corresponding with the Official Receiver in respect of Bankruptcy cases, meeting with people who are experiencing financial difficulty, corresponding with creditors including HMRC, corresponding with various professionals such as solicitors and estate agents.
Which sector are your clients mainly from?
I would say it’s the farming sector that is suffering the most right now. Smaller owner/managed businesses are also feeling the pressure. Then there are the property investors that can no longer weather the storm and are left with properties in negative equity. A very prevalent issue now for Northern Ireland’s fragile economy is Brexit. I have no doubt that NI will suffer more than any other UK region when we finally leave the European Union on 29th March 2019, a contributing factor being the withdrawal of EU funding. There is also the issue of tariffs being imposed on exports to the EU.
What is your specialism?
I specialise in personal insolvency which involves advising individuals on their financial difficulties and offering feasible options to help remedy their problems. These remedies may be in the form of either informal or formal options. The Official Receiver may appoint me in bankruptcy cases, in these instances I am an Officer of the Court acting on behalf of the bankrupt’s creditors.
If a person finds themselves “insolvent” what are their options?
First and foremost, do not bury your head in the sand, there are always options available. However, the longer you put off dealing with your debts the likelihood is that you will restrict your options. There are various options available depending on each set of circumstances, the level of debt and level of income.
Non formal options;
These are the cheapest options with the least disruption to the debtor and his/her family.
Approaching your creditors at the onset to agree a non formal debt payment plan can relieve immediate pressure, in some instances you may find creditors may write off a certain element of the debt. The payment plan of course must be adhered to and no further credit given.
In some circumstances informal options are not applicable, formal options then would have to be considered;
Individual Voluntary Arrangement (IVA)
In some circumstances an IVA is more appropriate, it is a legally binding agreement between you and your creditors to repay all or part of the debt either by monthly instalments, a one off lump sum payments or on the condition of a certain asset being realised. The IVA can last for up to five years and only covers unsecured debts. It should be noted that an IVA is a heavyweight financial document, failure to adhere to the terms may lead to bankruptcy.
This is often seen as the final option and may be made on the petition of either the creditor or the debtor. An application is made to Court and if approved the debtor is adjudicated bankrupt. All assets then vest in the Official Receiver, who may appoint a Trustee in Bankruptcy to realise the assets for the benefit of the bankruptcy creditors. It should be noted that bankruptcy does place restrictions on the debtor, e.g., you can’t borrow more than £500 without advising the lender you’re bankrupt, you are not permitted to act as a director of a company, etc..
How do you help a person in this situation?
Financial difficulty is clearly a stressful time for those who are experiencing it. Financial distress may occur in some circumstances due to factors which are out of our control, family illness for example. A face to face meeting with the individual I find is best at the onset, this enables me to gather all the facts in relation to the level of debt and income/assets available and assess all options. Doing so also helps the debtor to see things more clearly. I am here to find a way forward, that financial difficulty can happen to the very best of us and that there are options available. The main worry for an individual experiencing financial difficulty is the worry that their home may be at risk, this area would be discussed. After investigating all the circumstances, I would then assess which option is best suited to the debtor.
What measures can a person take to ensure they avoid insolvency?
Insolvency happens for a variety of reasons, but in general, live within your budget, properly assess risks when making financial decisions, don’t rely on false hopes and most importantly, don’t ignore it, deal with it sooner rather than later.
For further information or advice please contact
ASM CHARTERED ACCOUNTANTS
Tele: 028 3026 9933