However you must understand that personal insolvency, of most kinds, is a matter of public record in England and Wales, appearing on the Individual Insolvency Register (IIR).
The appearance of your name on the IIR may cause some anxiety, as this public record can affect your chances of receiving a loan or credit card. It can also impact your ability to rent accommodation or get employment.
It is, therefore, essential to understand its effects and how long your name will remain on the Individual Insolvency Register. In this guide, we look at this and other useful facts about personal insolvencies and the IIR.
What is Insolvency?
Insolvency comes about when an individual or business is unable to service their debts as they fall due for payment. Individual insolvency, including sole traders, takes the personal insolvency route. There are three main types of personal insolvency in England and Wales, including:
- Bankruptcy: The trustees take control of the insolvent person’s assets through court-approved processes. The trustees sell the assets to pay the debts. The process usually takes a year, after which the debts are discharged. You are then free of those debts.
- Individual Voluntary Arrangement: An IVA is an agreement between the creditors and the debtor, who agrees to pay an agreed amount over a specified period.
- Debt Relief Order: This form of debt relief is designed for those with low income and few assets. There is a ceiling on the amount of debt that will qualify for a DRO so this form of debt relief is not for everyone.
A licensed financial adviser or insolvency practitioner can walk you through the various options and explain the pros and cons of each.
Understanding the Individual Insolvency Register
The Individual Insolvency Register is an online record of all individuals in England and Wales who are currently undergoing certain insolvency proceedings. Everyone who is undergoing a bankruptcy process or who has an IVA will appear on the IIR, as will those operating under a Debt Relief Order.
The Individual Insolvency Register aims to make financial transactions as transparent as possible. Those who may be affected by current or future financial issues, like lenders, have a right to know. That’s why anyone can access the IIR at no cost to search for details of the people who may appear on the list.
Financial institutions and lenders use this information when assessing credit applications. Employers may also use it if you work or apply for work in a regulated industry, and landlords may check if you apply to rent their premises.
The Secretary of State for the Department for Business and Trade (DBT) appoints the Insolvency Service, a government agency, to manage the IIR.
If you are currently undergoing an insolvency process, your entry on the Insolvency Register will typically include details such as:
- Your full name
- Last known address
- Date of birth
- Gender
- Occupation (in some cases)
- The type of insolvency (bankruptcy, IVA or DRO)
- Key dates, such as when the order was made or the IVA approved
The purpose of this information is to avoid mistaken identity.
As well as being recorded on the IIR, bankruptcy is also published and remains permanently in The Gazette, a publication of official notices. An IVA does not appear in The Gazette. Instead, it is entered on what is often referred to as the IVA Register, which is simply the IVA section of the Individual Insolvency Register.
The Effect of Appearing on the Individual Insolvency Register
The IIR is a public record, meaning anyone can access it. The people most likely to access the records are those working for companies where you may have applied for a loan or credit. Landlords may also check the register to confirm whether you have financial problems that could affect your ability to pay your rent.
If you work in a field like accounting or in some government positions, prospective employers may also check your records. It is, therefore, possible that the retention of your name on the IIR could negatively impact your ability to find employment, obtain housing, or secure credit.
How an IVA Can Alleviate Your Debt Problem
People quite frequently get themselves into a debt cycle from which they cannot escape. They find themselves juggling payments and dreading month-end, when creditors contact them for payment arrangements. Some people can see no way out. In such situations, an IVA may be the remedy.
An IVA is a bankruptcy escape route, one in which you agree to make reasonable payments in return for a moratorium on certain types of legal action by included creditors.
What Is an Individual Voluntary Arrangement?
An IVA is a formal debt solution agreed between an individual and their creditors. The contract is a binding legal agreement in which the debtor agrees to make monthly payments on an amount owed to the creditors. The agreement will typically consolidate the debt, which is then paid over a period of five or six years.
An insolvency practitioner arranges the contract and collects the monthly payment from the debtor for distribution to the participating creditors. The IVA is an attractive option for people who would prefer to avoid bankruptcy and can afford a reasonable repayment amount.
The IVA Process
An Insolvency Practitioner (IP) can help you with advice on your options. Discuss your problem with a financial adviser to find out whether you qualify. If you have a regular income and can afford reasonable monthly payments, the IP will help you to draw up a proposal for debt repayment.
You will need a record of your income and living expenses before you approach the IP. Don’t be tempted to leave out any expenses like rental, insurance, or utilities, as the payments you propose must be affordable. Unless they are, you will battle to make payments and could find it impossible to pay as agreed. If you fail to pay, you will be in breach and risk a resumption of legal action.
Your IP will take your proposal to the creditors for approval. If the creditors to whom you owe 75% of the debt accept the proposal, it is binding on all the creditors. Once the creditors sign off on the proposal, you have a binding contract, and your name is entered on the IIR.
Once the IVA starts operating, your creditors will not pursue legal action included in the arrangement. They will stop phoning you and they will no longer charge any interest or charges on the debts covered, as those are normally frozen from the date that the IVA goes live.
One of the main benefits of an IVA arrangement is that creditors included in the agreement will write off any unpaid debt at the end of the repayment period. An IVA will also usually help you keep important assets (for example your home), which might be more at risk in bankruptcy, although you may still have to release equity or make agreed contributions from certain assets.
The IVA also offers you the peace of mind of a single consolidated payment made to the IP. The payment plan has a defined end date, after which you will be debt-free in respect of the debts included in the arrangement.
How Long Will Your Name Stay on the Individual Insolvency Register?
Understandably, people are anxious about how long they will stay on the Individual Insolvency Register. After all, it’s a public record and is available for all to see.
Your name will remain on the IIR for the duration of your insolvency procedure and is normally removed three months after it has ended. For an IVA, that means your details stay on the register while the IVA is in place, and for three months after it has been completed, terminated or otherwise brought to an end.
If you have the funds to settle the IVA early and your creditors agree, the arrangement can complete sooner, and your entry should then be removed three months after the IVA’s formal completion date.
You do not have to apply to remove your name from the IIR. It should happen automatically three months after you have fulfilled your contractual obligations and the insolvency has been marked as ended on the register.
In the case of bankruptcy, your details usually remain on the IIR for the period until you are discharged (often 12 months from the bankruptcy order), and then for a further three months before removal. For a DRO, details are also kept on the register until the end of the 12-month pause and then for three more months.
If, during the term of your IVA, you receive additional income, you may be able to pay off your IVA agreement faster if the terms allow it and creditors agree. Since you’ve discharged your obligations early, your insolvency will end sooner and your name should drop from the Insolvency Register three months after the IVA has been marked complete.
Failure to Meet Your Monthly Payment Commitments
If, however, you fail to meet a payment obligation and your IVA fails, your creditors could resume enforcement action and, in some cases, may petition for your bankruptcy.
With bankruptcy or a DRO, serious misconduct can lead to a bankruptcy restrictions order/undertaking (BRO/BRU) or a debt relief restrictions order/undertaking (DRRO/DRRU). These restriction orders mean your details can remain on the IIR for longer than the standard period, so it is crucial that you cooperate fully and are honest with your IP or the Official Receiver.
It is, therefore, crucial that you discuss any payment difficulties with your IP as soon as possible. Sometimes the IP can approach creditors about reasonable payment changes if you are faced with changed life circumstances, such as losing your job. The creditors do not have to agree to the changes, but if they do, you’ll be in a much better position than you would otherwise be.
What to Do if Your Name Doesn’t Automatically Come off the IIR
If your name is still on the IIR three months after the completion of your IVA, ask your IP to confirm whether you have discharged all your obligations and that completion has been properly recorded. If three months have passed since the IVA (or other insolvency) was shown as completed or discharged, you can contact the Insolvency Service to query the situation.
If you face problems with the removal of your name from the register, you may have to provide proof of the contractual discharge. A Certificate of Discharge or, in the case of an IVA, a Certificate of Completion provides proof that you have discharged your obligations.
Proof of Discharge After Bankruptcy
You will not automatically receive a Certificate of Discharge when your bankruptcy runs its course. You can, however, request one if you require it. If you were declared bankrupt by the court, you will have to apply to that court for the certificate, there is a fee to pay.
If you applied for bankruptcy online, you can request a Certificate of Discharge online at no cost. Alternatively, ask the Insolvency Service to issue a confirmation letter.
IVA Certificate of Completion
The Insolvency Practitioner should present you with a Certificate of Completion when you have completed all the agreed payments on your IVA. The letter is a legal document certifying that all debts in the IVA are paid or written off.
Your name should be removed from the IIR around three months after the IVA has been marked as completed. The insolvency will remain on your credit record for six years from the date it began (the date of the bankruptcy order, DRO approval or IVA approval).
Rebuilding Your Credit After the IVA
Now that your name has been removed from the IIR, you’ll want to start rebuilding your financial reputation. The insolvency will continue to affect your credit score for a while, but there are some practical steps you can take to show creditors that you have the will to become a reliable borrower.
Regularly Check Your Credit Reports
Check your credit reports with the three leading agencies, Experian, Equifax, and TransUnion. Ensure that all the details are correct. Your IVA should be marked as “completed,” and there should be no debts on the report that were settled through the IVA. Contact the credit reference agency if you find any errors.
Open a Basic Bank Account
Open or continue using a basic bank account with no overdraft or credit facilities. Use the account to receive wages and pay your bills without risking getting back into debt.
Be responsible: pay direct debits on time and avoid returned payments. You’re building a reputation for financial discipline.
Borrow Responsibly
Once your credit record starts to improve, consider small, manageable forms of credit, such as a credit-builder card or a short-term mobile contract. Use them carefully, keep balances low, and pay them in full every month. Steady, on-time payments will gradually increase your credit score.
Build Positive Financial Habits
Demonstrate financial stability by paying your rent, utilities, and council tax on time. Keep savings for emergencies so you don’t have to borrow to keep your car running or pay for dental work, etc.
Focus on the Long-Term Goal
It takes a while to recover and rebuild your credit after insolvency. Practice consistency and patience. Know that every positive step counts. Your credit score will recover with time, putting you in a stronger position to apply for credit or a loan again.
Contact My Debt Plan today on 0161 464 0870, to speak to one of our friendly team of experts about any of your debt queries.
