The rising tide of insolvency in the UK is causing the government to call for some drastic measures to be put in place in order to ease the mounting pressure on the courts. The number of bankruptcy applications currently awaiting court approval is causing such a backlog that there are ongoing discussions surrounding a proposal to introduce a ‘self-service’ system for online insolvency. In some places, the wait between the initial application to the court and a bankruptcy order being granted is as long as three months. Anything that can be done to alleviate the stress of this procedure is beneficial, as bankruptcy is the most severe debt solution on the market. However, a move that could promote the concept of bankruptcy as a quick-fix for those facing mounting debt could be ultimately damaging.

Bankruptcy should always be your last resort when searching for a debt solution. A specialist debt advisor would always suggest that you weigh up all of the potential avenues of debt help at your disposal before settling on any in one particular. This is doubly important when serious debt problems are prompting you to consider bankruptcy as a possible solution. Bankruptcy can cost you your home and any other valuable assets that may be used to repay your creditors. After taking a reasonable amount of your salary to cover your cost of living, the rest could go towards an Income Payments Order. The implications are long-lasting in other ways too. A record of insolvency can also hamper any future career plans and damage your credit rating to the point where you struggle to secure credit, make down payments or even attain a mortgage.

Although filling in a bankruptcy petition online can seem like a discreet way of managing a potentially embarrassing situation, it’s important to remember that bankruptcies are still listed in local newspapers and the London Gazette. The stigma of insolvency will mean different things to different people but it is definitely something to consider. When faced with mounting debt pressure, you might feel that all of these consequences are necessary evils and would be worth facing to be debt free. Do bear in that your student loan, any outstanding fines and some other debts aren’t actually covered by a bankruptcy petition. It’s also worth remembering that there are other options on the market and that bankruptcy is not an easy way out of bad debt.

An IVA, or Individual Voluntary Agreement, is a far more accessible and less severe debt solution. It will allow you to keep your home, repay a reasonable, affordable amount each month and after a given period, usually 60 months, any remaining debt will be written off.  There are, of course, other debt solutions out there. To be sure you are taking the right option, it’s essential to get specialist debt advice. Contact Debtsolver for free debt help whenever you find yourself facing debt problems.

Although insolvency is not as severe as it once was, it is still the debt solution of last resort. At one time, the bankruptcy term was five years and the effect of the order on your credit rating was even more long lasting. Now, in an effort to minimise the stress of the process, the term is usually complete within 12 months. In some cases, an Income Payment Order could be put in place to garnish your salary in further service of your outstanding debt but this is only in severe cases. There’s even a government proposal in place to allow individuals to petition for their own bankruptcy online. The aim of this proposal is to minimise the waiting period between making an initial petition and having your time in court, as in some areas of the UK, this can be as long as three months.

This obviously points to an increased number of people facing the threat of insolvency. However, even with insolvency affecting far more Brits than ever before, there is still a certain stigma surrounding the entire bankruptcy process. Your bankruptcy order is a matter of public record. As such, the details of your insolvency will be published in your local paper. It is understandable that the effect of the bankruptcy order should be recorded in your credit report. It’s only natural that any effort to secure credit in excess of £500 should require that you inform the lender of your insolvency. Also, if you were to approach a business to carry out works, it is understandable to expect that they be totally honest with you about any history of liquidation. It’s also understandable that the stigma surrounding it might put you off.

Even though there is less stigma surrounding insolvency, since a greater number of people understand the causes that can lead you there, bankruptcy is something that will always have that connotation. It is no way something to be celebrated, neither is it a quick fix or something to be taken lightly. It is the most severe debt solution on the market and should only be considered as a last resort, as it can cost your home and other assets and place limitations on your career choices. You should seek specialist debt advice about the alternative options that are open to you. An IVA would definitely be preferable as it’s a private agreement between you and your creditors. So, there’s no stigma about your peer group knowing your financial circumstances. The term is usually 5 years but after this time, the remainder of your debt is written off and your assets are safe from liquidation.

In the tradition of ITV’s “I’m a Celebrity… Get me out of here!”, 2009 saw the bankruptcy of jungle escapee and celebrity chef John Burton Race. Having appeared on the hit television show in 2007, he joined not-so-exclusive group of “I’m a Celebrity…” contestants who have failed to avoid the financial poisoned chalice that follows the programme. As we look back on the past year, financial hardships and the impact of recession have featured heavily and with retrospect, we can see where things went wrong and highlight what we’ll do differently in the future. For many though, 2009 will be entirely summed up by the headlines that forecast financial doom and gloom. If we take the example of John Burton Race, as someone who found bankruptcy to be a solution to their debt problem, we can look at the things that he might have done differently. After all, bankruptcy is the most severe debt solution on the market and although it may be the solution best suited to some circumstances, there are alternatives.

Celebrity chef John Burton Race filed a personal bankruptcy application only two months after his ex-wife Kim was made bankrupt by a creditor application to the High Court for an outstanding debt of £15,000. The couple had owned the Michelin starred restaurant, The New Angel in Dartmouth, which he was ordered by a Judge to liquidate, along with other assets, including the family home and his entire collection of 42 vintage cars. On the 27th of November 2007, while John was still competing with his fellow celebrities in the Australian Outback for the ITV programme, Kim closed the restaurant.

Although John Burton Race was forced to sell the restaurant by the court, it was actually bought by his friend, the millionaire owner of LastMinute.com, Clive Jacobs. This allowed Race to remain at the restaurant as head chef. According to reports from the Insolvency Service, Burton Race declared himself bankrupt in March and as a result, his assets have now been frozen and his creditors will now have to apply to his Insolvency Practitioner in order to be paid. The bankruptcy application does get your creditors off your back in this way, making them direct all correspondence to your Insolvency Practitioner. However, as highlighted by the case of Burton Race, it can also cost you all of your most valuable assets, which are taken to service your debt. If it could’ve been avoided, John would’ve been far better advised to go for an IVA in order to solve his mounting debt problems.

The Individual Voluntary Arrangement would probably have been a better option for Kim too, as she was petitioned for bankruptcy due to an outstanding debt of £15,000, the threshold of unsecured debt required to apply for an IVA. The total debt value also has to be divided between at least three creditors. With an IVA, you’ll not usually have to pay back all of your debts as your creditors will write off a percentage of them. In order to have it accepted, 75% of your creditors will need to be in favour but this percentage is defined in terms of value rather than by creditor headcount. As a homeowner, you’re home will not be at risk as long as you stick to the repayment plan that you’ll draw up with your Insolvency Practitioner. You may need to give up some of the equity in your property to service your debt but your assets are far safer than they would be with bankruptcy.

Talking to one of the specialist debt advisors at Debtsolver, at the earliest sign of impending debt problems, would have helped to safeguard Burton Race’s assets from bankruptcy and liquidation. If you are worried about your financial situation, talk to Debtsolver for impartial debt help and a solution to your personal debt problem.

Kerry Katona has been perpetually dogged by debt since being declared bankrupt in 2008. This was because she didn’t pay her taxes and ran up a huge debt with Her Majesty’s Revenue and Customs. She did try to tackle this debt, cutting it from £417,000 down to a far more modest £82,000. So, how could Kerry have dodged bankruptcy? Paying her tax would’ve been a good start. There are sure to be underlying cause, rather than the root of the issue though.

Kerry Katona left girl group Atomic Kitten in 2001 and pretty much fell of the Celeb radar. However, full blown celebrity status returned in 2004, thanks to a winning run on ITV’s I’m A Celebrity… Get Me Out of Here. Since then, Kerry has rarely left the tabloids. As a result, her earnings have remained relatively substantial. As the face of frozen food, Iceland reportedly paid her £750,000 a year and her column in OK! Magazine brought in a further £400,000. Then there are the incidentals; £250,000 for a fitness DVD, £100,000 for reality show My Fair Kerry and £1million for her autobiography, “Too Much Too Young.” Again, with such an income, how could Kerry have dodged bankruptcy? Well, passing up on the opportunity to purchase a £1.5m luxury home in Cheshire, a £115,000 Lamborghini, a £90,000 Range Rover and a £70,000 Porsche Cayenne GTS would probably have helped.

Not content with a squandered fortune, Kerry Katona now intends to lose further pounds at a fitness camp in the New Year. The fickle finger of fame has prompted this determination to lose weight in the wake of a decidedly unflattering picture. Although she had liposuction last year, Kerry now feels that the time is right to fight the flab, sometime after the Christmas. Putting her weight gain down to comfort eating as a result of her bankruptcy, Kerry has admitted to evenings spent gorging in front of the TV. By her own admission, bankruptcy has left her unable to afford electricity though, so food might not be keeping in the fridge anymore but how’s she powering that telly?

So, how could she have dodged bankruptcy? Well, there are various debt solutions out there that would’ve helped. For example, an IVA is an excellent alternative to bankruptcy. It will normally result in a significant proportion of your debt being written off and the remainder being repaid over a period of 60 months. Your assets are also secure, providing you maintain the repayment schedule. Bankruptcy can cost you your home and other assets in servicing your debt. Also, unlike bankruptcy, an IVA is not published in local papers and the London Gazette, not that this would be a particular attraction to Kerry. Likewise, IVAs don’t have as severe an effect on your career so may not maintain the media profile to which she has become accustomed. All in all, Kerry could’ve dodged bankruptcy with an IVA but it would have required an earlier approach to a specialist debt advisor who could’ve gone through her options. If only she’d spoken to Debtsolver. Then again, would a life without controversy and stigma be worth reading about in the tabloids?