Torn between IVA & Bankruptcy...

I've got £61K in debt accrued through a business failure and personal debts.

I have no assets at all and now unemployed. However, I'm on the jobs market and being interviewed for jobs in the region of £40-45K with company car. Now whilst that sounds a lot of money, by the time I've paid 40% tax and a waft of tax for having the company car and maintenance for my two daughters (now based on GROSS income)I've been told I'd be expected to contribute about £400 a month to the IVA.


The question is, am I just not better off going bankrupt and if so, would the OR expect more than £400 a month and for how long?

Also, I can't afford the £680 fee to go bankrupt at the moment, is there any way of it being done for free because I'm claiming benefits.It could be a few months before I get back into work and I'm worried about CCJ's as i'm a few months in arrears with my creditors already.
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  • mwarby
    mwarby Posts: 2,048
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    Generally the amount for an IVA and IPA in bankruptcy will be pretty similar, but an IPA is for 3 years and not 5-6

    I'm not sure how company cars are viewed in either, but if it's more a perk than a need to do the job, I'd think in both cases the cost would be looked at to try and minimise any unnecessary contributions

    I think there are charity's out there which can help with fees, but i think they are rather over subscribed. If you are paying anything debt wise, stop and save the money. If you have no assets and no spare money there's not a lot creditors can do, maybe wait till you get that job (also saves income and expenditure being done twice)
  • foxy-stoat
    foxy-stoat Posts: 6,879
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    Discharged wrote: »
    I have no assets at all and now unemployed. However, I'm on the jobs market and being interviewed for jobs in the region of £40-45K .


    You do realise that you will pay 40% tax on income over £43K, so if you earn £45K then your paying 40% on £2000 = £800, £66.00 a month.


    When I went IVA route I went from lodging with a friend for £200 a month to renting a nice flat for £600 a month, so for you rent a place that suits your budget and living costs, get an IVA and in 2022 you will be back to normal.


    Good luck.
  • mwarby
    mwarby Posts: 2,048
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    foxy-stoat wrote: »
    so for you rent a place that suits your budget and living costs, get an IVA and in 2022 you will be back to normal

    You could do much the same in bankruptcy but it'd be 2020 before you stop paying and 2023 before your files are clean(same as with an IVA)
  • foxy-stoat
    foxy-stoat Posts: 6,879
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    mwarby wrote: »
    You could do much the same in bankruptcy but it'd be 2020 before you stop paying and 2023 before your files are clean(same as with an IVA)

    So do you want to be an Ex bankrupt or Ex IVA'er when your done with your debts?


    Not sure if there is much difference in the lenders eyes, employers may be slightly different.
  • mwarby
    mwarby Posts: 2,048
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    foxy-stoat wrote: »
    So do you want to be an Ex bankrupt or Ex IVA'er when your done with your debts?


    Not sure if there is much difference in the lenders eyes, employers may be slightly different.

    Northern is ideal, obviously more people have heard on bankruptcy than of an IVA. I've yet to be asked by an employer if i was ever insolvent, but I think if an employer did ask it's likely they'd view an IVA and bankruptcy much the same. It's always worth checking how your employer or profession views insolvency

    Another point about IVA Vs bankruptcy, is that you can fail an IVA quite easily through change of circumstances, as far as i know you can't fail bankruptcy (if you were uncooperative enough you could delay discharge for a long time, but you'd have to try quite hard to do this
  • mwarby
    mwarby Posts: 2,048
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    As it stands I don't see the OP getting an IVA, due to currently​ being unemployed. Additionally if the OP was to get a job with salary indicated, but was then to lose it (employment rights are pretty few and far between in first 2 years) that could lead to a failed IVA

    Currently the only thing stopping the OP going bankrupt is the fee, and pretty much whatever happens the bankruptcy will be over in a year, with a possible IPA for 2 more years(and this is capped in duration, no extended term if wage drop or similar)
  • fatbelly
    fatbelly Posts: 20,380
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    From the info in your first post I'd go bankrupt. Start the application now and start paying the fee. You do realise it's now an online process and you can pay in instalments with a card?

    Your worry is that you might get a high-paying job and a large IPA. An IVA isn't going to be different in that regard, apart from you would pay for 2 years longer.

    On the flip side, ccjs aren't much to worry about either as you are unemployed with no assets.

    Unfortunately, no remission of bankruptcy fees these days for bankruptcy.
  • mwarby
    mwarby Posts: 2,048
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    An additional thing which is often overlooked when setting up an IVA is - the payments per month are not set in stone, if your disposable income goes up so do the payments

    (the opposite can also happen, but if they go down too far the creditors will review the best course of action for them)
  • Slateford1
    Slateford1 Posts: 15 Forumite
    Say you have 70-80 surplus a month can you do an Iva with that or will a dmp come into play?? Cheers
  • mwarby
    mwarby Posts: 2,048
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    There's no minimum or maximum surplus for an IVA, but creditors don't have to accept and involvement practitioners don't have to work with you(part of their remuneration is a percentage of the funds they collect from you).

    Additionally it's worth point out there's no minimum pence in pound either, this is the amount of pence you repay for every pound of debt, after insolvency fees. The maximum is 100p in pound plus insolvency fees.

    I think your surplus is on the low side of what is normal for an IVA. Before going for an IVA you should seek advice on the best debt solution as a DRO DMP or bankruptcy may suit you better
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