Insolvency is not a state of affairs that any of us wish to find ourselves in. But sometimes it is a sad inevitability. Being unable to pay your debts can lead to intense financial worry and even severe mental health issues if the problem is left to fester. That’s where an insolvency practitioner (or IP) steps in – to save a business or individual from the brink of financial ruin.
What is an insolvency practitioner?
Insolvency practitioners work on behalf of insolvent businesses or individuals. They are often appointed to find a solution to incredibly difficult financial problems when the insolvent business or person in question can’t sort the problem themselves.
If you’re currently experiencing financial distress then you might be interested in finding a licensed insolvency practitioner to salvage your finances. But what do they actually do and at what point do you need to think about contacting them?
The role of an insolvency practitioner
An insolvency practitioner deals with the competing interests of the business or individual in question to assess the options available and decide upon the best course of action. This will revolve primarily around finding the funds to reimburse creditors, as it is the creditors the IP is technically working on behalf of.
If the IP cannot settle the insolvency through strategic means they will move on to liquidating assets to make up the debts to the creditors. They might also take it upon themselves to collect money owed to the insolvent party if that is still an option.
Once the requisite funds have been found, the IP will make an agreement on the creditor’s claim and funds will be distributed accordingly. If the funds can’t be found then the party might need to declare bankruptcy.
How to become an insolvency practitioner
Given the typically large insolvency practitioner salary and the fact that it’s a job that allows you to help people in financial distress, it’s quite a desirable profession. To become an IP, most start in accountancy though you don’t actually need an accountancy qualification to work as an IP.
What you will need, however, is to pass the pair of papers set by the Joint Insolvency Examination Board (JIEB). These are in-depth exams that test the applicant’s knowledge of insolvency law and ask them to apply this knowledge to real-world scenarios. They are notoriously difficult to pass, which underlines how well-qualified a licensed IP has to be to take your financial future into their hands.
When to contact an insolvency practitioner?
When all other avenues have been explored and financial distress levels become untenable, an IP should be contacted to step in and form a plan of action. It is worth noting, however, that an IP could also be more helpful if brought onboard earlier, as the earlier you realise there is a problem, the more recovery options will be available to you. Sometimes, when an insolvency practitioner is contacted it can be a case of too little, too late.
Find an insolvency practitioner
If you have an accountant, it’s likely they will forward you to an IP they trust but you should never take a recommendation at face value, even if it’s from somebody you trust. There is a complete government database of licensed insolvency practitioners on the official UK government website that will let you either find an IP based on your location or verify the credentials of an IP that has been recommended to you.
We can help
If you’re interested in finding out more about insolvency practitioners, or any other aspect of your business finances, then get in touch with our financial experts at GoCardless. Find out how GoCardless can help you with ad hoc payments or recurring payments.