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Personal debt is debt owed for which you personally are legally responsible. Personal debt can involve more than one party. In this case “personal” just means “non-business.”



Debts may be secured or unsecured, depending on whether some form of collateral has been put up. The source of personal debts varies from case to case, though the majority of personal debt in the UK is tied up in mortgages.



Personal debt can result in significant stress, reduced standard of living and even legal issues.



You can no longer be a director, shadow director or officer of a limited company. If your business is insolvent, assets must be carefully sold off for their true and accurate value to pay back debt.


You must declare your bankruptcy to anyone lending you more than £500.


All of your bank accounts will be frozen when you go bankrupt. For them to be released you must apply to your Trustee (usually an insolvency practitioner).


You can still open new bank accounts – but the majority of banks close down any accounts of bankrupt customers, so it can be difficult.

Debt Advice

When dealing with debt, there are often several available options or solutions. Some of these may be more formal, such as declaration of bankruptcy, or an IVA.

Individual Voluntary Arrangement (IVA)

Over a set time, normally 60 months, you make contributions to an Insolvency Practitioner (the Supervisor of the IVA) who then makes creditor repayments in accordance with the laws of The Insolvency Act 1986.


An IVA protects you from creditors who are owed sums at the date of the IVA and makes your debt more manageable.


The amount you pay back depends on your individual situation.


The amount you owe, expenditure, living arrangements and your income all need to be taken into account.


For an IVA to be initiated, over 75% of creditors must approve it.


In order for an IVA to be a viable option, you should:


  • Be insolvent and unable to pay back your debts as they fall due.
  • Owe money to two or more creditors
  • Have debts over £10,000
  • Have a surplus income every month or another way to make a contribution to the IVA (maybe from a third party).