Since my own bankruptcy in 2006, the overall quality of bankruptcy advice has improved. An awareness of bankruptcy has increased among both the public and organisations. Some organisations have invested in training to ensure their staff have the knowledge and skill to advise on bankruptcy matters. That is positive, however the picture is not all good. In light of recent news regarding improper actions from unscrupulous individuals and companies, I thought it would be a good time to refresh on the topic of obtaining advice.
Since the onset of the debt crisis, the number of debt advisers has increased exponentially. Some saw a business opportunity, whilst others needed a job and fulfilled employment opportunities. Some advisers take their role seriously, others do not. Some have experience, training and qualifications whilst others do not.
So, how do you go about finding a reputable organisation that can provide you with quality advice to see you through bankruptcy? In my opinion, it would help you to understand the nature of bankruptcy. You can then decide what you want from the advice you receive and set about finding your adviser.
During the period of my bankruptcy I remember researching for days. I also sought advice from a solicitor. Even then, questions remained. My partner at the time needed questions answering and so did I. Bankruptcy can be full of uncertainty, but by seeking credible advice you can greatly reduce that uncertainty. Hence, an adviser that can provide support throughout the period of the bankruptcy would be a great asset.
In my opinion, appropriate support does not come in the fashion of a two hour phone call to complete the forms. It takes time to digest the information you are given. It will take your own research too. There are three main stages in the bankruptcy process: deciding on going bankrupt, the bankruptcy process and finally post discharge recovery. You will have many questions at all stages and will need advice on all stages. Expect a good adviser to coach you through each. You will need clear explanations, documentation and open communication lines for support. Please be aware that this level of advice may cost you.
Once you have decided what you want from the advice you seek, you can choose an adviser. Make some phone calls; enquire about the service on offer and the credentials of the adviser. Also check the credentials of the organisation that the adviser may work for. The service should be provided under a supply of service contract if you are paying a fee. It should detail the adviser’s responsibilities under the contract. Remember, you will have obligations too.
Credentials will vary. Considering bankruptcy is a legal matter you should seek someone suitably qualified. If during any stage of the advice you are informed that there are complex or contentious matters, it is advisable to speak with a solicitor. The law society’s find a solicitor may help. A licensed insolvency practitioner are the insolvency professionals that have to be qualified and receive regular training. They are formally appointed to posts such as bankruptcy trustee, are regulated and should know the bankruptcy regime very well.
There are also insolvency advisers who are qualified but are not licensed insolvency practitioners. As always, before paying for advice ask for their qualifications and experience in writing. My opinion would be to stay clear of any adviser that does not hold an insolvency qualification.
It’s worth mentioning that there are advisers who do not hold qualifications but have been extensively trained. Some of the charities and larger debt advice companies will employ the services of a training company or insolvency professionals to oversee the training. Without a bankruptcy adviser being tested, it is difficult to know their level of knowledge.
There are a number of qualifications out there, which I will detail at a later date. One example is the Certificate of Proficiency in Personal Insolvency. This is the qualification that I attained. It tests a candidates knowledge on insolvency matters including IVAs and bankruptcy. Candidates are also expected to have knowledge of informal solutions such as a debt management plan. It is issued by the Insolvency Practitioners Association. You should ensure that your adviser holds a suitable qualification and keeps up to date with legislation.
All bankruptcy advisers should hold a consumer credit license. You can check this by searching the consumer credit register.
I hope the information here explains some of the expectations you should have from the provider of your bankruptcy advice. This is an important topic, one which I will return to shortly.
It has been brought to my attention that, on Wednesday the 6th March, Cheshire Police raided the offices of Debt Help Direct Ltd. The Manchester Evening News reported that the Economic Fraud unit raided the firm’s office near Wilmslow. The company is suspected of stealing cash from clients. The company’s website has been shut down.
If you have utilized the services of this company, my advice would be to contact Cheshire Police.
It is often the case that individuals in debt are vulnerable and open to this kind of abuse. Seeking help is a positive step and nuisance companies only serve to cause harm as well as discredit the insolvency and debt advice professions. There are a number of steps that you can take to minimise the chances of encountering bad advice or, worse, the criminal behaviour of the unscrupulous.
Always ensure that your adviser is:
- suitably qualified
- appropriately licensed
- a member of a recognised professional body
You can check the Office of Fair Trading’s consumer credit register to ensure they hold a consumer credit license. You can ask your adviser for proof of qualification or check with the issuer of that qualification. Recognised professional bodies also usually have registers that can be checked.
Regarding your solution, there are also steps that can be taken.
- once recommended a solution, ensure it is the correct one. Obtain a second opinion.
- if in a debt management plan, ensure that you receive statements and check that your creditors are being paid.
- check that any IVA(individual voluntary arrangement) is recorded in the insolvency register. An IVA must be arranged by a licensed insolvency practitioner.
You may have read in the news about the Bank of Ireland’s plan to increase some of their tracker mortgage rates. A little naughty considering that this product is supposed to track the Bank of England base rate, which has not changed since March 2009. Although this has been brought to the attention of the Financial Services Authority, it has sent other alarm bells ringing. Not all mortgages track the base rate and, to state the obvious, mortgage interest rates can rise if they are not fixed.
Go back a couple of years and there was a property boom. It had never been so easy to buy a property. Whilst this may have been perceived as the norm, it may turn out to be a demise for many.
Interest rates have never been so low. What happens when they increase? At some point they may. Look back in time at the official bank rate. The base rate is currently at 0.5%, previously it has been much higher.
An increase in the base rate ultimately leads to an increase in mortgage rates. However, mortgage rates can also move independent of the base rate. This can be unexpected. My worry is that such an increase may be the last straw for individuals currently struggling. For those on the brink of bankruptcy, it is a particular worry.
To protect yourself there are a number of actions that you can take.
- Understand the financial implications for you if your mortgage interest rate does increase. There are a number of calculators, such as the BBC mortgage calculator, that may help. Identify how much of a cushion you have for rate increases.
- Understand the circumstances that may cause an increase in your mortgage rates.
- Establish how high your rates can go. Some are capped for example.
- Ensure that you have the most suitable mortgage product for you and your family.
If you have any concerns then you should contact your mortgage adviser. Considering a mortgage is probably one of your biggest costs, it’s not something you want to get wrong.
Today, The Co-operative Bank have withdrawn their basic bank account offering to undischarged bankrupts. This is a blow and a disappointment. The Co-operative bank provided me with a bank account following my bankruptcy. It was a great help and a relief.
It is already well known that the availability of high street banking products, to an undischarged bankrupt, is very limited. Many of the banks cite the potential for future claims from a trustee as the reason. Whilst the trustee is still dealing with the estate and the bankrupt’s affairs remain under investigation the banks want to avoid the potential for such claims.
So why is this happening now? The Co-operative Bank have been great in the past. Unfortunately it is costly for a bank. As such, it is reported that the Co-op can no longer support such a large share of undischarged bankrupts whilst other banks are not.
There is now little choice in respect of banking. However, there are alternatives. Through the Post Office you can open an account to be in receipt of benefits. Although it cannot be used as a bank account for transactions such as receiving your wages, it is a means of receiving benefits. There is one basic bank account offered by Barclays. You can apply for this by contacting Barclays directly. A popular alternative is a guaranteed bank account. Although there is a small monthly fee, you are guaranteed to be accepted for one. Following discharge from bankruptcy there is a much greater number of products on offer.
Last year a consultation was launched by the government to investigate how bankrupts can be offered a greater choice of banking facilities.
For more information go to the bank accounts page.
You may well have noticed some changes to the website since your last visit. Due to the growth of the website and planned changes I have improved the link menu to make it slightly easier to navigate. The most popular pages are also in easier reach.
With bankruptcy being so personal in nature it has always been a goal of mine to offer a more personal perspective through this website. As such I have increased the prominence of this section of the site. The experiences of others as well as my own journey through bankruptcy can now be accessed much more easily through the blog.
If you have any suggestions or feedback about the website then please get in touch.