IVA or Bankruptcy

GlasgowSwan_2

IVA or Bankruptcy

My girlfriend is in a lot of debt £40,000 she is on minimum wage so there is very little chance this is ever going to get paid. In addition she can no longer afford to pay the minimum payments. She has written to her creditors explaining how much she can afford to pay. She got a mixed response. None of the debt is secured against her house but she has very little equity so re mortgage or selling isn’t going to solve much,

She is currently in touch with the debt advice people listed in this site. I have a feeling that the outcome they are going to recommend is going to be IVA or Bankruptcy.

I don’t know anything about either of these options could someone fill me in on what these are about and what is involved. I want to help her all I can.

Entrepreneur_en_faillite

By far the best advice anyone can give is to follow the advice given by organisations like CCCS.

I did, and , with the help of my friends in this forum, I am now bankrupt, and comfortable with this fact.

That's not to say that this will be an easy ride for your girlfriend, because it won't. Anyone who thinks that bankruptcy or having an IVA is an easy way out is a fool, it's the most stressful thing I have ever done in my life (now on a whole heap of drugs from the Doctor).

Incidentally, there is an article on the Tonight with Trevor MacDonald program on ITV on Friday night at 8PM that your girlfriend may find helpful.

Addicted2Chocolate

An IVA propsal ( the offer put to the creditors) is usually based on her making a monethly payment from her income for up to five years. If she is on low income I cant see the creditors will go for this. Usually creditors will only vote yes to an IVA if the prospects for their repaymetn are better ( ie they will get more p back in the £). An IVA can exclude assets (such as her home) but usually the creditors want the home included, for example they will only vote yes if the IVA includes a modification that if at end of IVA all payments are not made then supervisor (the insolvency practitioner ) will sell the home.
How much is the home worth ( based on recent valuations?) and what is the amount outstanding to mortgagees in total? If she goes bankrupt the Trustee will have 3 years to deal with the home, so they can wait for the equity to increase. See the information on the insolvency website:
What will happen to my home?:
http://www.insolvency.gov.uk/guidanceleaflets/home/home.htm

and Guide to Bankruptcy:
http://www.insolvency.gov.uk/guidanceleaflets/guidetobankruptcy/guidetobankruptcy.htm

lots of other Publications on there which should answer most questions.
Good luck to her.

Addicted2Chocolate

or she could order the leaflets to be sent to her by post:
Publication Ordering
Our booklets can now be ordered free of charge from the DTI Publications Orderline. To do this you will need to either telephone, fax or email your order, along with the URN and the address you wish them to be sent to.

By telephone: 0845 015 0010

By email: publications@dti.gsi.gov.uk

By fax: 0845 015 0020

crossleydd42

CCCS can be found at:

https://www.cccs.co.uk/

GlasgowSwan_2

Do both approaches me she would loose the house

Addicted2Chocolate

depends on the contents of the IVA proposal...she can get a free consultation from an Insolvency Practitioner and they would be able to advise on whether her case is suitable for IVA and whether IVA would have to include the house. I dont know much about IVA's. She can find a local insolvency practitioner in yellow pages.

donnalove

iva'a are there to try and protect your home she will not be forced to sell but to remortgage in the fourth year of iva to relise equity. she can get this added to her proposal. also iva's are very tight on budget and want you to pay maximum into it. also if she fails to stick to the arrangement they can if supervisor has enough funds petition for bankrupcty
we have just completed ours.