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The Two Types of Insolvency

April 29th, 2012 | No Comments | Posted in Legal Services

The legal term “insolvent” is a frequently misunderstood word because it encompasses two separate concepts which are uniquely different from one another. Although there are many financial states and conditions which are intentionally designed to be vague so that there is some wiggle room for financial freedom, the status of a company or corporation being insolvent is clearly designated and defined by the United Kingdom’s Insolvency Act 1986. This act clearly defines the true state of when a company or corporation is actually insolvent and also supplies the legal processes and jurisdiction of the law as well. Unfortunately, because of the complexity of this act as well as the legal term itself, the terms “insolvent” and “insolvency” are widely confused by the general public and sometimes even by the companies who find themselves in such a financial position. Understanding the two different types of insolvency can be quite beneficial in realizing what necessary processes and actions a company must undergo when they actually become insolvent.

When a company is insolvent it simply means that they theoretically are not acquiring enough funds to properly pay their due bills. The term used in this sense is quite general and very corporal. The two states of insolvency are known as cash flow and balance sheet and both terms are unique from one another. Cash flow insolvency is when a company just does not have the actual cash or credit to pay off their debts while balance sheet insolvency means that their umbrella value exceeds the amount of the debt they need to pay off. It is indeed possible for a company to be cash flow insolvent but not balance sheet insolvent and vice versa as well. When a company or corporation facing these dire situations understands the difference between the two types of insolvency they can have a lot more financial freedom to make effective plans to pay off their debt.

Claims on PPI Rising Across the UK Under New Rules

September 15th, 2010 | No Comments | Posted in Legal Services, Uncategorized

As if the economic situation in the United Kingdom were not dire enough at present, word has come that there are a huge number of people now suffering from being sold Payment Protection Insurance, known by the abbreviation of PPI, in a way that did not make it clear to them what they were purchasing or how they might go about getting it back. This ended up with a huge number of folks in the UK having PPI and having no idea that they had been paying it out to a lender, as a result. This made their payments on the loans they were able to borrow much higher when they could have opted out if they had known what they were getting into in the first place. These poor practices by banks and other lenders have included a number of very well known firms such as Capital One, Egg, Lloyds TSB and even Alliance and Leicester. In all, the official estimates place the number of people who would today be eligible to make PPI claims at somewhere around 3 million UK citizens thanks to new rules set up by the Financial Services Authority of the UK that have gone to battle to protect the rights of consumers not to be tricked into making purchases that were not fully explained to them.

What is truly immense is that in all the total amount of compensations that are calculated by the FSA as being possible for UK consumers to get via their claims stands at £2 billion right now. Consumers who want to be able to get their claim to go through without any sort of hassle are going to need to act quickly to make sure that they have their claims placed by a professional group that deals with PPI issues if they want to be able to get back their money. Those interested should know that often the total amount they are owed by these banks and other lenders ranges anywhere from a few hundred pounds to well over £5,000 or even more for those who have borrowed quite a bit in recent years.