IVA living expenses versus BR

ascot64

I keep seeing references to allowable living expenses being more generous in BR but I cannot find any guideline amounts if you go the IVA route.

Are there any or is it a case of them being cut to the bone by the creditors/IP?

dalip

Spot on. In bc the OR will see that you have enough income to live on without credit,thus avoiding getting into the same situation again. In IPA they are not usually not so keen for you to live within your means if it means they get less in the £ back.D

blind-as-a-bat_2

have you any assets of value (property etc) or is your job at risk if you go BR? if the answers are no to those question an IVA is probebly not the correct answer for you

ascot64

Yes I have a lot of equity. My debts are even bigger however but my main reason for going with an IVA is that my business is successful but is a partnership so I and my OH are personally liable.

BR would be the last resort as it would kill my business off and I need an income for the future and do not want to let down customers and staff.

The IVA amount we are proposing would make most peoples eyes water but it is doable if I can keep the business running.

skylight

Perhaps speak to your accountant about turning the company into a Limited, rather than what on the surface looks like sole traders (partnership)? Each being directors of your limited company, it makes things easier on you personally when the business is entirely separate.

And there are no actual allowances in either IVA or BR that are set in law. IVA's like to see you cut to the bone so there is more money in the pot to pay the creditors back (over 5 years AND you may still have to realise the equity in your property in the last year, have you been informed of this???) whereas BR is more relaxed and understands about life getting in the way and payable over 3 years.

blind-as-a-bat_2

Fair enough then, but you understand i had to make sure as too many IVA,s are entered into (and fail) when it was pointless

Your tone in saying it is doable does not sound good though, remember you are entering into a 5 year contract at a time when the cost of living is already rising at a great rate, and the IVa usually require every spare penny so does not allow for much "re-negatiation"

You will pay more, usually a lot more to an IVA, and if it fails at any point all money paid in is lost so you have to be sure you can manage it, not just now but in the following 5 years, if there is ANY doubt you are unwise to enter into one from a financial point of view.

Although i can see a few justifications that it will buy time at least, which may validate the risk

ascot64

Skylight - becoming a limited company doesn't protect me from debts incurred before going limited. I wish it did. We will most likely do that so that we are protected in the future but it is too late for the current situation. I am aware of the future realisation of equity.

Blind as a Bat - thanks for your concern. When I say doable I mean that the proposal is likely to offer about 80p in the £. I am hoping that will be enough without squeezing every last drop from us and making life unbearable.

HMRC will be 80% of the debt so I am not even sure we will get their agreement but for the sake of the business I have to try. They stand to get a lot lot less if they make us BR. I stand to lose credibility and a good viable business.

blind-as-a-bat_2

80p in the £ sounds a lot, but these days doesnt surprise me, but as it involves the HMRC i understand, they are not the most forgiving creditor (understatemant of the century:rolleyes: )

Just try to leave a bit of "wiggle" room if you can and i truly hope your main creditor sees sense, not there strong point, but i understand you have nothing to lose by trying

Good luck

RichOneday_2

ascot, 80% sounds a lot for an IVA. They usually get accepted upwards of 35%, although can be 100%.

You can probably negotiate a better deal than that. Do a realistic assessment of what creditors would get if you were bankrupt (I know you want to avoid that route but it would be wise to let the IVA company know you are totally prepared to let it happen).

What they would get in bankruptcy is your starting point, along with the 60 payments totalling at least 35% of the debt, but if you can try for between 40-50%.

An important point is that the IVA company are not 'on your side' even though they will reassure you they are. They just want to get the thing accepted so they can milk you for fees. Make them work for it. Tell them 50% or you may as well go bankrupt and watch the response.

ascot64

Fortunately we have a fabulous IP whose fees are very reasonable given the amount of money involved.

RichOneday_2

All the same 80% for your IPA total payments is high.

Remember Mr Bates getting a 75% acceptance for his 1p CVA offer?

Ultimately, its just a money go round - the less you pay to HMRC in the IVA the more you will be able to pay to HMRC in future, so there's no real moral dilemma involved.