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Sole Trader /Partnership

sole-trader-main-imageIf you are struggling to pay your debts agreeing an affordable payment plan with those you owe money to is a sensible way forward.  There are two ways you can do this through an informal or formal arrangement.

Informal Agreement

An informal agreement involves either yourself or a third party such as Walsh Taylor agreeing a plan with your creditors,

it tends to be used when the amount owed is low, there are only a few creditors and debt can be paid back in full over a relatively short period of time.  It does not however provide you with the protection of a formal agreement.
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Individual Voluntary Agreement (IVA)

An IVA  is a formal agreement and is effectively a contract between you and the your creditors.  

It ring fences any historic debt allowing you to continue to trade as a sole trader or partnership and to make contributions towards the debt at an agreed and affordable level over a set timescale.

To be approved an IVA requires the agreement of 75% (in value) of creditors which vote upon it.  It also allows for the orderly realisation of assets by the debtor.

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Partnership Voluntary Agreement (PVA)

This is a contract between the insolvent partnership and their creditors.

It means they can continue to trade and make contributions to the creditors from ongoing profits, or realise their assets for the benefit of creditors.

A PVA will only deal with the liabilities and assets of the partnership, so if individual partners have personal assets and liabilities they may also need to enter into an IVA.

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Bankruptcy

Anyone can be declared bankrupt, including individual members of a partnership,

and although it has negative connotations it can be the best choice in some individual insolvency cases.

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