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What happens when you fail in an IVA?

(16 Posts)
WhatShouldWeDo Tue 05-Jul-11 21:24:12

We had debts pilled high last year & ended up speaking to a company that arranged an IVA for us (we paid them)

It soon became apparent that we couldn't afford it & it was leaving us in a worse situation each month than before we entered it so we failed.

That was in Oct last year & we have heard nothing from the IVA company since then, we haven't contacted them because I couldn't face dealing with it all but now we are a little bit more stable I am wondering if I should contact the IVA company or what to do for the best.

PLease don't have a go at me about being useless with money & commitments, we went through a really horrible few years with loss & illness & have only just started to get back on track.

WhatShouldWeDo Tue 05-Jul-11 21:26:27

I've namechanged btw.

I'm concerned that our financial mess could have an impact on work & I know a few ladies at work are MN'ers.

5inthebed Tue 05-Jul-11 21:30:45

If you cannot afford the IVA then the IVA company make you bankrupt.

It should be in your IVA agreement somewhere.

Sorry you're not managing it, you should really speak to them and ask to reduce the repayments if you can;t manage what they have proposed.

5inthebed Tue 05-Jul-11 21:31:33

Just saw they've not contacted you since October, very strange. Perhaps best to contact them.

cremeeggsbenedict Tue 05-Jul-11 21:39:27

Normally the terms of failure of an IVA are set out in the original arrangement. The standard terms are that if you default a petition will be presented for your bankruptcy by the supervisor of the IVA.

The supervisor may not petition if you haven't paid in enough contributions as to cover the costs of the petition. It's quite expensive so he probably doesn't want to be out of pocket. That said, if he hasn't got your address right he may have had you made bankrupt without you knowing - look up your name on the Insolvency Service website and it will tell you if a bankruptcy order has been made against you.

Bankruptcy isn't inevitable though. You can have the supervisor of the IVA arrange a meeting with your creditors whereby you agree to reduce your contributions to a level you can afford. Though if you have no assets worth protecting it may be worthwhile going bankrupt, it wipes out all your debts and lets you start again.

It's hard to explain what might happen without knowing any information about your position (and I appreciate that you probably don't want to share too much on here) but giving the supervisor a call and finding out their position. Knowing what's going on is infinitely better than not.

PM if you want more information about IVA/bankruptcy - it's my specialist subject!

WhatShouldWeDo Tue 05-Jul-11 21:40:37

We asked them to lower the payment just before Oct but they told us to stop paying the gas & electric (which we did over christmas & we are now paying them a higher amount to catch up)

It's was a nightmare because we really couldn't afford it & we had only called them for advice. I now know we should have called cccs.

WhatShouldWeDo Tue 05-Jul-11 21:48:27

Thank you creme all very helpfull.

We have looked at the Insolvency service website & we are just showing as in an IVA..

So if the Iva company do not raise the petition (we only paid for just under a year) what happens to the debt?

I'm nervous of bankruptcy because of my employment, I'd be ok now but if I ever had to take a step down I would not be able to perform that role because bankruptcy would stop me being eligible.

cremeeggsbenedict Tue 05-Jul-11 21:53:04

Your debts will still stand if you don't pay into the IVA or are made bankrupt - unfortunately they won't just go away. Who is your IVA with? I can't imagine they're particularly reputable if you haven't heard from them since October - they have a duty to your creditors to ensure you make payments or are accountable for the failure to do so. They have to report to creditors on every anniversary of your arrangement, so at some point they will be in touch if someone has dropped the ball wrt you - please call them!

Are you sure that your job won't allow you to be bankrupt if you step down? I have dealt with bankruptcies of people who are chartered accountants or similar and have been allowed to carry on in their profession after making a representation to their licensing body.

Bankruptcy lasts a year, maximum, so if you foresee yourself staying where you are jobwise for 12 months is it not worth looking into to relieve the strain of being in debt?

WhatShouldWeDo Tue 05-Jul-11 22:03:48

Thank you again creme you have been very imformative.

It's all quite scary but I do think a phone call needs to be made <<gulp>>

5inthebed Wed 06-Jul-11 07:38:30

They told you to stop paying your gas and electricity shock. Thats not very professional of them.

Hope yiou manage to get somewhere with your phone call today.

cremeeggsbenedict Wed 06-Jul-11 08:45:49

Good luck calling them today! I hope you get some answers and know what's happening at the moment/next.

maiT Wed 06-Jul-11 23:26:04

Hi cremeeggs, we are in a similar situation (actually worse than WhatShouldWeDo). How can i contact you to get more advice?

LewisAlexander Thu 07-Jul-11 03:03:03

Message deleted by Mumsnet.

cremeeggsbenedict Thu 07-Jul-11 09:12:53

LewisAlexander - shame on you! These people are asking for help and you are advertising and giving completely useless advice. You should know, as an debt management vulture firm, that if an IVA fails the supervisor will have a duty to petition for the debtor's bankruptcy, and that DMAs are a little late when a legal, formal arrangement has been drawn up between the debtor and their creditors. Your post has been reported to MNHQ as advertising under the guise of giving advice is in very poor taste!

maiT - I have PM'd you. Feel free to email back and w'll chat.

WSWD - I hope it went well with the supervisor and you know what the next steps are, or have some idea about your options - do come back and let us know if you need assistance/explanations.

WhatShouldWeDo Fri 08-Jul-11 17:30:44

Thank you for reporting Lewiss post creme although I didn't see it it sounds like it was crass.

maiT are you also in a failed iva? PM me if you don't want to post details on the thread, it's all so stressful isn't it?

LaurieFairyCake Fri 08-Jul-11 18:03:19

If you have paid a company for an IVA then they are dodgy, money grabbing ass-munchies angry

You don't need to pay. What will likely have happened is that they won't have paid one pence to your creditors - these companies keep the first 2-3 thousand for them before they pay anything to your creditors. It's likely that money has now been lost sad

Contact the Consumer Credit Counselling Service - they have an IVA seperate part (can't remember the name of it) which will NOT charge you to set it up and run it.

The company you're with should have made you bankrupt - the fact it failed and they haven't contacted you means there probably isn't enough cash for them to do it.

They will be sheisters. Please contact the CCCS.

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