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IVA or Bancruptcy - Please help

9 replies

nikkib1967 · 30/06/2010 09:39

Dear Mumsnet,
I need some advice have been to CAB. I am in debt due to ex not financially supporting me over the past years. I have no assessts thnakfully.I rent. I have two options IVA or Bancruptcy. I am struggling to come to terms with the word bancruptcy. I have about £30k in debt to bank loan and credit card. My new partner and I work full time in the public sector and are concerned that we could be both made redundant due to Government cuts.
If I go down the IVA route I will be paying £534 a month back over the next fibve years. Obviously bancruptcy is less. Is there any way i can reduce the costs down any further as I struggle to pay £500 a month and obviously there will be a 20% Vat rise in January.
I live in my fathers house - he is retired and lives abroad. I do not want to tell him if I go either route.Please help.
Thanks

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nikkib1967 · 30/06/2010 09:40

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NoahAndTheWhale · 30/06/2010 09:48

I have an IVA and chose to go this route rather than bancrupcy due to my profession.

Who have you been in contact with about your money problems? The payments on an IVA should be managable for you - you should have gone through a thorough income qnd expenditure listing so the payments you make need to be possible.

If your circumstances change then you are able to make smaller payments and the administrator of your IVA would deal with this for you.

I contacted CCCS, the consumer credit counselling service (I think) and they were very helpful.

Do you own your own house as this can be a deciding factor in which route to take? In both cases, your credit rating will suffer and will be poor for several years to come.

Hope this helps a bit.

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NoahAndTheWhale · 30/06/2010 09:50

Sorry didn't read your post properly - I see you are renting. Also want to say I have found the forums at mobeysavingexpert very useful - there is an IVA board there and if you post your query there I am sure someone would be able to help.

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nikkib1967 · 30/06/2010 10:07

Thank you for your help. I have gone through an income and expenditure listing with Citizens advice however over the past two weeks my parents have returned home for medical treatment and will be staying with us for indefinite so my utilities and food bills will increase.
I am going to have a look at that forum now and post this to them.
thank you again for your help.

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NoahAndTheWhale · 30/06/2010 10:08

This is the IVA board on moneysavingexpert.

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honeydragon · 30/06/2010 10:14

if you fail the iva you will lose the money you have put in totally and then they will tell you to go bankrupt, are you positive if you enter the iva that no matter what happens in 5 years you can meet that repayment?

Also if your debt is 30k ask them for an agreement direct = over 5 years you will have paid 31k through the iva you are considering this, the £524 is not correct, if you consider a iva do it through cccs as the fees are cost not profit.

I am very concerned about the iva info you have posted purely on the figures alone.

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Lougle · 30/06/2010 10:25

nikkib, I am struggling to see how you would need to pay £534 per month over 5 years.

That would mean that you were paying £(534 x 12 x 5) £32054 over the course of the IVA. Which means that in effect the only thing the IVA would do is freeze the interest on your debt. Debt management plans can do that without the repurcussions of an IVA.

Usually, IVAs are calculated on a pence per pound figure, but also use affordability. Often the minimum is around 25-40 pence in the pound. So a debt of £30000 in an IVA might be about £(30000x0.4/5/12) £200 per month.

If they are saying £534, then you probably have quite a high income on paper? What you would need to do is produce a 'statement of affairs', detailing all your income, and all your necessary expenditure.

IVAs are only more expensive than bankruptcy because they have a tighter description of necessary.

If you do go down the bankruptcy route, the procedure will be similar, in that you will still provide a SoA, but payments would only be for 3 years, if indeed you need to pay.

With no assets, you don't have anything to lose in BR, but it will make credit difficult to obtain.

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NoahAndTheWhale · 30/06/2010 10:32

We are paying less than that per month for a larger debt, thinking about it.

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Debs75 · 30/06/2010 10:48

Will the IVA stop all interest charges and unpaid fees being tacked on?
I did a debt management solution with the Council welfare service and they stopped all my interest being added on and lowered my monthly payments from £500 a month down to £50 a month. Some of the companies were not happy but as we are now unemplotyed they can't demand anymore.

Also are you doing it seperately?
Through CSA you can do a Debt Relief Order. You work out how much it would cost to pay all debts within the year and then when you can't manage that(obviously) it goes off to court and for a year they can't bother you or add interest/fees on. After a year they look at your circumstances again and if you are in the same boat they wipe it all off.

It costs you £90 to set up but the downside is you can only place £15,000 on an order but if you do it then it doesn't have to take in your dp's earnings if you choose to just do your debts. You can't have any assets and you can't be seen to have sold anything big off(car) unless it has gone on your debt.
Choose the debts with the most interest being added and if anything is in DP's name he could do one as well.
The only way you would have to pay it back after a year is if you came into a lot of money or had a high paying job

Hope this helps

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