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IVA v Bankruptcy

lonestarfan
lonestarfan Posts: 1,232 Forumite
Tenth Anniversary 1,000 Posts Combo Breaker
in Bankruptcy & living with it
A friend of mine is getting divorced and has negative equity in the house which is for sale and he has huge debts. He is sorting out an IVA, which in my opinion has taken months. Why is an IVA better for him than bankruptcy? As far as I can see there is no money at all to be divided between him and his wife. He will have to pay monthly maintenance to his wife on divorce I would imagine. I was wondering if his outgoings are deemed to be less if he is a bankrupt and therefore he will have to pay his wife more maintainance. Is he allowed to keep any money from his paid employment to house himself?
Many thank
I'd like to be able to understand his situation and suggest where he goes for help if I understood a bit more.
Many thanks.

Comments

  • tigerfeet2006
    tigerfeet2006 Posts: 14,030 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Tell him to go to one of the debt charities and get free impartial advice from them. If he hasn't got a house or a job that will be in danger then an IVA is not always ideal.

    128-shiny-tick.png
    The aim is to find non-profit debt counselling help, in other words a one-on-one session with someone paid to help you, not to make money out of you. Be careful not to confuse this with ‘free help’: many commercial companies say they’re free as you’re not charged directly, but you’ll still pay somehow.
    Stop debt collectors harrassing you for 30 days
    These non profit agencies are also the ideal people to go to if you're being harassed and bullied for payments by debt collection agencies.
    An agreement between the Government and Credit Services Association, the body that represents debt collecting agents (see its Code of Practice), gives new power that guarantees debt collectors won't contact you for at least 30 days, provided you've sought debt help.
    The debt counselling service will inform collectors, who'll then give you a month's breathing space to get yourself on better footing.
    The places we'd suggest contacting are:
    Christians Against Poverty

    ChristiansAgainstPoverty.pngDebt counselling agency, which specialises in helping those who are emotionally struggling too. The religious focus is why they do it, not how they do it. Citizens Advice Bureau

    citAdvise.pngFull debt and consumer advice service with many bureau having specialist caseworkers to deal with any type of debt including repossessions and negotiation with creditors. Community Legal Advice (includes Housing Duty Scheme)

    commLegalAd.pngLegal advice on a wide range of issues, including debt (usually for those on benefits or a low income). The Housing Duty Scheme gives free advice by phone or at around 100 courts across England and Wales if you are in danger of eviction or repossession.
    • Link: Community Legal Advice
    • Tel: 0845 345 4345 (or text 'legalaid' and name to 80010 to get a call back)
    • Opening times: M-F 9am-6:30pm, Sa 9am-12:30pm.
    Consumer Credit Counselling Service

    cccs.pngA full debt help service in England, Scotland, Wales and Northern Ireland. Online support is also available via its Debt Remedy tool.
    • Link: CCCS
    • Tel: 0800 138 1111
    • Opening Times: M-F 8am-8pm
    Debt Advice Foundation

    daf_logo80.jpgA debt advice and education charity offering one to one advice. National Debtline

    NatDebtline.pngA full debt help service in England, Scotland and Wales. Online advice is also available via its My Money Steps tool. Northern Irish residents

    80_nireland.jpg Two free, confidential and independent schemes in Northern Ireland are: advice4debtNI, a government funded service offering phone and email advice and AdviceNI, local centers that offer face to face advice and the ability to chat online to an advisor via its 'beattherecession' scheme. Payplan

    payplan.jpg Free debt advice and solutions for those in financial difficulty.
    • Link: Payplan
    • Tel: 0808 280 2816
    • Opening Times: M-F 8am-9pm, Sa 9am-3pm
    Local agencies

    moneyAdviceMap.png There may be a local debt help agency in your area, if so check it is non-profit or a charity, before signing up. Try entering your postcode into Money Advice Map to find free independent financial advice centres in your area.
    BSCno.87
    The only stupid question is an unasked one
    Loving life as a Kernow Hippy
  • alastairq
    alastairq Posts: 5,030 Forumite
    lonestarfan wrote: »
    A friend of mine is getting divorced and has negative equity in the house which is for sale and he has huge debts. He is sorting out an IVA, which in my opinion has taken months. Why is an IVA better for him than bankruptcy? As far as I can see there is no money at all to be divided between him and his wife. He will have to pay monthly maintenance to his wife on divorce I would imagine. only if there are children involved I was wondering if his outgoings are deemed to be less if he is a bankrupt and therefore he will have to pay his wife more maintainance. Maintenance is calculated on income, and is subject to many influencing factors. Whether BR or not has no influence Is he allowed to keep any money from his paid employment to house himself? He is allowed reasonable living expenses.....after these are deducted from income [along with maintenance, if ordered or agreed]...any surplus left over goes into the BR.
    Many thank
    I'd like to be able to understand his situation and suggest where he goes for help if I understood a bit more.
    Many thanks.

    Regarding bankruptcy? This is an option if the individual is insolvent..ie, after all reasonable living expenses are deducted, there is insufficient income to meet the debts.

    This does not mean the individual has no money......being BR doesn't mean being broke or penniless.

    But it does mean, an individual's assets are realised [by the OR] for the benefit of creditors......

    The Receiver [OR] will allow the BR individual to retain sufficient income to meet those 'reasonable living expenses'.....so no fears of being without a roof.....that is, if the individual can find one?
    No, I don't think all other drivers are idiots......but some are determined to change my mind.......
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