Indebtedness within the Armed Services & within the Police
Serving members of the armed services and of the police are generally looked up to by the public at large as model citizens who provide valuable services. The public sees little of the private lives of people in these careers and have little appreciation of many of the pressures under which such public servants work and live. There is often a perception that soldiers, sailors, policemen, policewomen, members of the air force and indeed employees in all branches of the armed services and of police forces have secure well paid employment and do not have financial problems like the rest of society. Nothing could be further from the truth. The death of a spouse, divorce, poor health, the loss of overtime or simply living beyond one’s means can trigger a financial crisis which can be greater for people in these sectors than for the general public.
If you are currently a member of the armed services, you do not inevitably suffer a loss of your career if you are made bankrupt or go into an IVA. However, bankruptcy in particular can be viewed very seriously by the forces hierarchy and being adjudged insolvent could certainly damage your promotional prospects and at worst you could be dismissed from the service. A more benign view appears to be taken of serving members entering into an IVA instead of becoming bankrupt. Even so preserving your job is at the discretion of the forces hierarchy. If you are removed from the armed forces, re-admission is possible but improbable, even though you have restored your financial reputation. The ministry of defence does maintain a charitable fund to assist personnel who find themselves in financial distress and such assistance may be advisory or financial or sometimes the two.
Police forces across the country take similar views as the armed services do, in regard to entry of insolvent persons into the profession and to serving members becoming insolvent. While discharge from a police force is not mandatory for members who are bankrupt or in an IVA, police authorities will usually examine the circumstances in which the insolvent member finds him or herself and may in their discretion expel the insolvent member. If an insolvent member is expelled from the force, re-admission is again possible but unlikely. Some police forces also maintain benevolent funds which can provide advisory but not financial assistance.
Both organisations view an IVA less seriously than bankruptcy so it is not surprising that insolvent members tend to enter an IVA more often than they opt for bankruptcy. A serving member of the police or armed services who becomes insolvent may speak with the trustees of the benevolent fund and really should contemplate acquiring independent legal advice prior to making what could end up being a career threatening choice. A reputable insolvency practitioner will also give very useful guidance on each of the options available to members of both organisations. This kind of information should be furnished free of charge.
An IVA is a formal arrangement between you and your creditors to settle some of your unsecured debts during a restricted timeframe, usually five years, but it could be for a lesser time frame. It is always binding on all parties. At the end of the term, so long as you have honored the agreed terms and conditions, all of your unsecured liabilities are eliminated. Let’s try and reply to some of the simple concerns which may arise concerning an IVA.
Are all loans taken into account? Except for secured liabilities including your mortgage or your vehicle HP, all unsecured obligations have to be contained in your proposal for an IVA. Examples of unsecured liabilities are credit cards, personal loans, current accounts, store cards, borrowings from friends or family, defaults on utility debts such as telephone, gas or electricity, self assessment tax arrears and arrears on council tax or water charges. Must all lenders agree to accept an IVA proposal? No. They’ve got the legal right to vote for or against it or they may abstain. Of those which do vote, a minimum of 75%, by value, have to approve your proposal for an Iva to come into being. Lenders who do not vote will still be bound by the decision taken by the lenders who did vote and every authorized IVA is registered with the government. The Insolvency Act (1986) is the legislation relating to the formation and execution of IVAs.
How much does the debtor have to pay into an IVA? Only what the debtor can afford. An income and expenditure statement is prepared and monthly payment will usually be surplus of income over expenditure. Mortgage or rent and car HP payments as well as normal family living costs are some of the allowable expenses. This surplus is called disposable income or DI.
What administration expenses occur in an Individual Voluntary Arrangement and who pays? The fees and supervision expenses of the IVA are deducted from the monthly contributions that the borrower makes into the IVA. These charges are really paid out of the monies that would otherwise go to the creditors. Every IVA has to be administered by a accredited Insolvency Practitioner for its full timeframe.
Who can give guidance on an IVA? Many commercial companies give IVA services and provide preliminary advice at no cost on all of the choices such as IVAs, bankruptcy, debt management plans, debt consolidation and other such choices.
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