IVA Help plaese

samoya

Sorry for reposting - i'm new here and think i got the wrong board. I would really appreciate some advice from anyone who has been in a similar situation

My friend and his ex wife have been charged over £10,100 for his IVA, and 86p in the pound off his debt meaning that he will be paying back more than he originally owed. His payments are set at £973 PM (rising to £1,200 PM in the last year) which was based on all earnings including ALL overtime. This was 100% of residual joint income, but using an unrealistic wage. He did query it at the time and said overtime was not guaranteed but he was told it HAD to be included as regular wage. After 27 months of paying, and cutting back on mortgage payments, his marriage broke down and he has moved in with me. Neither he nor his ex wife can now make any payments as there is no residual income for either party. Also he is up to 7 months of arrears with the mortgage company - about £6,000. Neither he nor his ex wife have ever met the IP nor had a face to face conversation with anyone from the company. He was wrongly under the impression that he could not go bankrupt because of his job, the IVA company did not correct him about this, and led him to believe that an IVA was his only option. He was told to do his annual updates via a "financial helpline" which he was charged £1,650 for (small print in the agreement). He has paid just under £29,000 into the IVA so far for a £54,000 debt. We checked his credit file yesterday and it appears that only about £1,500 in total has been paid to the creditors. He desperately needs to get out of the IVA but is worried that his ex wife will lose the house - something nobody wants. There is only approx' £10,000 equity in the house and the only other asset between them is her car worth approx' £6,000 which she needs for work. She has considered a cheaper car but because of a disability it is unlikely to be cost effective. I feel he was very badly advised, and I spoke to National debtline yesterday who suggested the IVA was mis-sold. Also for the level of his individual debt I think he would be much better on a DMP. I'd be interested to hear what anyone else thinks or any advice on getting out of this mess without losing the house which is the priority. He is currently paying half the mortgage, half a secured loan, full HP for his car and another full unsecured loan through work, which were all there at the start of the IVA, as well as his new rent and living expenses. They have both filled in new SOAs yesterday showing a monthly deficit, and are waiting a response from the IVA company. We are expecting them to come back saying the IVA has failed. Is it likely that would make either of them bankrupt for the amount of assets available? Any comments or ideas greatly welcomed…

RAS

Hi

It may not be that disasterous if they are made Bk, with a fairly small amount of equity. Afterall, with prices going down and a forced sale, there could be no real equity. and they could buy back the BI for a low fee

The question would then be whether the OR would consider that
they could afford the mortgage on the house, assumingnthat he is also paying for accomodation? The other factor to take into account is that an maintenance for his ex-family would have to be by court order as the OR does not take into account informal arrrangments. He would be advised to make the payments to the children, so his ex is not taxed and it does not count as her income.

I would suggest talking to the OFT and possibly the FO about the exact nature of the advice and service they received, possibly trading Standards.

But on a practical note thewy need to talk to the debt charities listed here http://www.moneysavingexpert.com/loans/debt-help-plan#help

And possibly the Insolvency help-line. Once they know the score, people on the BK forum can talk them through the details, they have all done it or are doing it.

samoya

Thank you for your reply RAS, his ex wife works full time and earns very slightly more than him. They have one child at home who is 20 and at university. The split is fairly recent and other than agreeing to pay half the mortgage and sec' loan at the moment, arrangements are not really very clear. Also it has not been determined how long this arrangement will continue for as things are at an early stage. BR would not be the end of the world, but i guess there is no guarantee of keeping the house. His ex is not coping very well with the situation and losing the house could quite possibly be detrimental to her health. She has already been off work sick for a number of weeks. Does anyone know how often the dividends from the IVA should be paid to creditors or is it different with every company? One payment in 27 months doesn't seem right. I am thinking that if those funds were not available to the IP then BR would be more likely, given the equity available.

samoya

Sorry i meant BR would be less likely?