Insolvency Around the World

INSOLVENCY WORLD AROUND THE Insolvency doesn't always mean BANKRUPTCY! Find out what different countries do to help people who can't repay their debts. Every insolvency case is customised to make sure it's right for the individual's situation - so this infographic shows how it USUALLY works. UNITED STATES OF AMERICA In the States, most cases are filed under the three main chapters of the Bankruptey Code: CHAPTER 13 of the Bankruptcy Code Also called a wage earmer's plan. It lets somcone keep their property and pay their debts over time. CНАРТER 7 of the Bankruptcy Code Involves selling someone's 'non-exempt property and handing the proceeds out to their lenders. CHAPTER 11 of the Bankruptcy Code Usually for corporations or partnerships, so it's not covered here. UP-FRONT COST CНАPТER 7 CHAPTER 13 $306 (£200) $281 (£185) ** NORMAL DURATION ** CНАPТER 7 3- 6 MONTHS 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 CHAPTER 13 36 - 60 MONTHS 036 9 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 ** MONTHLY PAYMENTS** NO YES X CHAPTER 7 CHAPTER 13 ** RISK OF LOSING HOUSE ** CHAPTER 13 as long as payments are made YES CHAPTER 7 NO AUSTRALIA There are three insolvency options in Australia: BANKRUPTCY DEBT AGREEMENT Means the person's property can be sold - and the proceeds handed out to their lenders. A formal agreement someone can reach with their lenders. It's only for people who meet income, asset and debt 'thresholds'. PERSONAL INSOLVENCY AGREEMENT An agreement someone can make with their lenders to settle their debts. There are no 'thresholds' involved. NORMAL DURATION ** BANKRUPTCY 3 Years DEBT AGREEMENT Depends - hump-sum Agreements also exist PERSONAL INSOLVENCY AGREEMENT Depends - lump-sum Agreements also exist ** MONTHLY PAYMENTS YES BANKRUPTOCY YES DEBT AGREEMENT if income is high enough Usually YES PERSONAL INSOLVENCY AGREEMENT Only if required in terms of agreement ** RISK OF LOSING HOUSE YES BANKRUPTOCY YES DEBT AGREEMENT subject to terms of agreement YES PERSONAL INSOLVENCY AGREEMENT subject to terms of agreement REPUBLIC OF IRELAND Bankruptcy in the Republic of Ireland is known for being severe - but a new Bill proposes some new changes 'to provide for a more enlightened, less punitive and costly approach to bankruptcy. Today, though. UP-FRONT COST NORMAL DURATION €650 (£555) 12 Years MONTHLY PAYMENTS f possible RISK OF YES YES LOSING HOUSE ENGLAND & WALES There are three kinds of insolvency in England & Wales: IVA DRO (Individual Voluntary Arrangement) (Debt Reliet Order) An agreement somcone makes with their unsecured lenders. They'll probably make 60 monthly payments - and keep their home. Involves just one up front payment. Only for people with not much in the way of income, assets or debts. BANKRUPTCY A bit like a DRO, but avnilable to more people - and theyll have to make monthly payments if they can afford to. UP-FRONT COST IVA BANKRUPTCY £700 There may be an assessment fee DRO £90 + Insolvency Practice fes ** NORMAL DURATION ** IVA 5 YEARS DRO 1 YEAR BANKRUPTCY 1 YEAR ** MONTHLY PAYMENTS YES NO IVA DRO Always (unless it's a lump sum IVA) Never YES BANKRUPTCY if possible ** RISK OF LOSING HOUSE ** IVA DRO NO NO X Unlikely, although homeowners may have to release equity DROS aven't available to homeowners YES BANKRUPTCY SCOTLAND In Scotland, Protected Trust Deeds give people a way to avoid bankruptcy. TRUST DEED BANKRUPTCY (Sequestration) A legally binding agreement someone can make with their unsecured lenders. They'll Usually over faster, but can cost the individual their home. probably make 36 monthly payments - and keep their home. UP-FRONT COST TRUST DEED BANKRUPTCY £200 03 ** NORMAL DURATION ** TRUST DEED 3 YEARS BANKRUPTCY 1 YEAR ** MONTHLY PAYMENTS YES YES BANKRUPTOCY if possible TRUST DEED Always (except for lump-sum Trust Deeds) ** RISK OF LOSING HOUSE ** TRUST DEED BANKRUPTCY NO YES Unlikely, although homeowners may have to release equity ****** PROS OF INSOLVENCY * When someone can't repay what they owe, insolvency can be the only way for them to get some or all of their debt written off. * It can also protect them against legal action from their lenders while they're going through the process. ****** CONS OF INSOLVENCY * Entering insolvency is a big commitment, it'l damage the individual's credit rating and can stop them from borrowing money and holding some jobs. * Theyll have to stick to the rules to get the benefits of insolvency – and be 'discharged from it at the end. ****** Created by www.dacscotland.co.uk Sources: www.bis gov.uk/insolvency www.itsa.gov.au www.uscourts.gov www.dacscotland.co.uk www.courts.ie