Failing an IVA - What next

RAS

try this link http://www.debtlineni.org/

It is for the CCCS joint activity in NI.

I know Payplan also offer services there but CCCS might be a rounder service.

MIVAA

Hi Woolly,

I'm confused as to why you would be interested in throwing away your IVA at this point.

It sounds to me that you have just about reached the top of the proverbial hill, with potentially the down-slope in front of you, and you want to throw the towel in, without realising the full consequences of what that means, both emotionally and financially.

I understand you have had a terribly tight financial budget for this last few years, however, if you are sure you can comfortably afford £434 - £450 towards the IVA you should continue with it.

Defaulting on the IVA, and declaring yourself bankrupt will come with consequences. For example:

You will have to go to court and attend your Bankruptcy hearing, not necessarily the end of the world, but nonetheless, a stressful process especially if you are going through it in secrecy.

If you continue to work, and declare yourself bankrupt you will probably have to provide payments to creditors for 3 years, under an Income Payment Agreement (IPA). These payments will be set by the Official Receiver (OR). These payments maybe less than you will pay into your IVA, but the amount you pay will be decided by the OR and not by mutual consent as the IVA has been calculated.

You may not realise, but Bankruptcy is not a private arrangement, so your name will be published in the local press. If a friend or your husband saw the notice, then the cat would be out of the bag, so to speak.

If you decided to retire whilst you are bankrupt, or whilst you are subject to an IPA, you would find your pension pot would potentially be under threat from the OR, especially if you decided to take a lump sum out of the pot.

If you own or part own your home with your husband there would be serious fallout from declaring yourself bankrupt. If there is equity held within the value of your home, your share will become the property of the OR, and he will look to realise it. This could mean he could make you sell your home if nobody can be found to buy out his interest, and in any event, he would write to your husband if he is a joint owner to inform him of his involvement and interest in the property.

There are other points too which you would need to be aware of, but give this some serious thought before you either stop your IVA payments and default you IVA.

Let us know your thoughts on these points, and we'll go from there.

Thanks

MIVAA.

RAS

MIVAA wrote: »

Hi Woolly,

You may not realise, but Bankruptcy is not a private arrangement, so your name will be published in the local press. If a friend or your husband saw the notice, then the cat would be out of the bag, so to speak.

i believe this is changing very shortly, in England and Wales anyway. Do check it out.

MIVAA

RAS wrote: »

i believe this is changing very shortly, in England and Wales anyway. Do check it out.

Ras,

This maybe so, but you need to realise that Woolly needs help now not shortly.

Woolly, this information is accurate as of now and hence you can expect it to happen should you declare yourself bankrupt now.

MIVAA

woolysheep

I really would prefer to continue with the IVA but with a just payment. Prior to going into my IVA I never missed any payments to my creditors, they were all up to date. I could have gone for a £25,000 consolidation loan @ £320 pm!!!. I had one direct debit which failed but went through several days later but it caused my bank to hold back on the loan for a couple of months for my account to be clear again of any DD non payments but I couldn't wait. Had I known at the time, I could have rung my bank and asked them to increase my overdraft by £20-30 therefore allowing all DD's to go through.

MIVAA

Hi Woolly,

I'm really pleased that you are of a mind to keep your IVA going, because from what you have said so far, I think it's in your best interests to do so if you possibly can.

I'm sure you'll be able to agree an affordable IVA payment based on your latest personal circumstances, and once you've managed to get things sorted I'm confident you'll be fine.

I would suggest you should start preparing for your review now, and this is pretty straight forward too.

Best thing to do is to set out all your latest expenditure details on to a spreadsheet, which will allow you to make some adjustments as needed. If you don't have one available, or if you are no good with computers I will gladly email one to you if you wish.

Once you have everything accounted for you'll be able to see what the IVA payment is likely to be.

If you have any issues with expense allowances then I can help you with that too, if you would like.

Let me know what you would like to do, and we'll get it sorted.

Thanks

MIVAA

woolysheep

Thank you M1VVA,

Yes, please send spreadsheet and I will gratefully accept any help. I have sent email address.

Wooly

rog2

MIVAA wrote: »

Hi Woolly,

I'm confused as to why you would be interested in throwing away your IVA at this point.

Defaulting on the IVA, and declaring yourself bankrupt will come with consequences. For example:

You will have to go to court and attend your Bankruptcy hearing, not necessarily the end of the world, but nonetheless, a stressful process especially if you are going through it in secrecy.

If you continue to work, and declare yourself bankrupt you will probably have to provide payments to creditors for 3 years, under an Income Payment Agreement (IPA). These payments will be set by the Official Receiver (OR). These payments maybe less than you will pay into your IVA, but the amount you pay will be decided by the OR and not by mutual consent as the IVA has been calculated.

You may not realise, but Bankruptcy is not a private arrangement, so your name will be published in the local press. If a friend or your husband saw the notice, then the cat would be out of the bag, so to speak.

If you decided to retire whilst you are bankrupt, or whilst you are subject to an IPA, you would find your pension pot would potentially be under threat from the OR, especially if you decided to take a lump sum out of the pot.

If you own or part own your home with your husband there would be serious fallout from declaring yourself bankrupt. If there is equity held within the value of your home, your share will become the property of the OR, and he will look to realise it. This could mean he could make you sell your home if nobody can be found to buy out his interest, and in any event, he would write to your husband if he is a joint owner to inform him of his involvement and interest in the property.

There are other points too which you would need to be aware of, but give this some serious thought before you either stop your IVA payments and default you IVA.

MIVAA.

Hi MIVAA

Please forgive me for saying so, but I'm just a little concerned at some of the advice that you are giving the OP:

Yes indeed, Bankruptcy is 'not a private arrangement' but neither, for that matter, is an IVA. Both are legally recognised forms of 'Insolvency' and the details of those on an IVA are published, alongside those of bankrupts, on the Insolvency register for anyone to see. I agree that the 'name in local paper' can be a daunting prospect, but the reality, based on my own experience and that reported by others who have gone through the bankruptcy process, is that whilst the name may indeed be published the 'impact' is minimal - in fact it is only rarely noticed and soon forgotten - 'today's news is tomorrow's chip paper' is a phrase often quoted on the 'bankruptcy board'.

The 'attendance at Court' is, I agree, potentially a very stressful occasion, but in many, if not the majority of cases, the bankrupt only has to present his/her papers, having filled in the forms with help freely available from the Insolvency Service as well as from most of the Debt Counselling Charities. These 'papers' are usually seen by the judge and, unless there are any questionable issues, the judge will issue the declaration, often without the need to see the bankrupt. IF the bankrupt does have to go before the judge, it is, in many cases, for the judge to ascertain that that person has sought sound professional advice before embarking on the bankruptcy route. My own experience was that of a creditor petitioned bankrupt and, in those circumstances, I had no choice as to whether or not to go before the judge. I found the staff at the court to be extremely helpful and the 'judge' to be anything but 'judgemental' - he looked at my papers and told me that 'Bankruptcy would give me a fresh start' as he wished me luck for the future.

I was a joint owner, with my wife, of my home at the time of my bankruptcy. A trustee was appointed to deal with my 'estate in bankruptcy' and my wife was offered first option of 'purchasing' my BI from the trustee. We were able to negociate and there was no undue pressure from the trustee. His initial letter stated that he would 'only use his powers to force a sale through the courts as a last option'. The net result is that we still have our home, albeit with a 'mortgage' whereas we had been mortgage free for fifteen years - the 'mortgage' that we now have equates to less than the equivalent 'rent' that we would have had to pay, had we been forced out of our house.

If a 'bankrupt' has surplus disposable income, then certainly the OR/Trustee can impose an IPA/IPO, although it should be noted that this would only be imposed if there is surplus disposable income after the deduction of necessary expenditure. Many will be surprised to learn what is, or can be, included in 'necessary expenditure' - after all the aim process of bankruptcy is primarily to put a line under an otherwise insolvable 'debt problem' rather than to force the bankrupt into wearing a virtual 'hair shirt' for the rest of his/her life. Any IPA/IPO that is imposed is subject to regular review and the bankrupt shouls, certainly during the 'Bankruptcy Period' inform the OR/Trustee of any change in financial circumstances in order that the IPA/IPO can be reviewed and payments altered accordingly. These payments can go down as well as up.

The actual bankruptcy beriod, unless extended by the imposition of a BRO/BRU (Bankruptcy Restriction Order/Undertaking) will last no more than twelve months. In many cases, bankrupts obtain an 'early discharge' once the OR has finished his investigation into the affairs of that bankrupt. In many cases, mine included, bankrupts are discharged from their 'obligations under bankruptcy' within 6 - 9 months of their bankruptcy order. Whilst any IPO/IPA that was imposed during the bankruptcy period will continue until the 36 month period is complete, no IPA/IPO will be imposed after discharge, whether early discharge or full term discharge. Those IPAs/IPOs already in place can be altered if the discharged bankrupt's circumstances change after discharge. Although it is not very common for payments to be increased, a discharged bankrupt whose earnings actually drop can, most certainly, apply to the OR for a review.

Now - the above points are made based on my own experience, coupled with those of others who post on these forums. They are not, nor are they intended to be, a basis for an argument as to which form of insolvency is better - IVA or Bankruptcy. This is a choice that only the debtor can make, except, of course, where bankruptcy is imposed on the debtor by a creditor. Forums like this can, certainly, help that debtor to decide which is the best course of action to take, but we can not give definitive advice. That is why we always reccomend that the debtor seeks totally independent, professional advice. By 'Independent' we mean the advice given by those acknowledged 'Debt Counselling Charities' that are fully endorsed by this forum. These include, although are not limited to:

• National Debtline - www.nationaldebtline.co.uk/ - tel. 0808 808 4000
• CCCS - www.cccs.co.uk/ - tel. 0800 138 1111
• A debt adviser at your local CAB

These charities will give you free, professional and unbiased advice, and will support you, along with forums like this, through the process of dealing with your debts.

This is especially important these days, as there are so many private 'Debt Management Companies' and 'IVA Factories' who see your 'debt' as little more than a commodity that can be traded for profit. The 'fees' incurred by Insolvency Practitioners for the management of an IA can be in excess of £6 - £8,000 and is usually deducted from payments made by the debtor before any money is distributed between creditors. Small wonder, then, that the 'Industry' attracts a very high proportion of players whose integrity is open to question.

It may well be that an IVA is the best solution for the OP, and all I would say is that the OP should be guided by the advice given by one of the above charitable organisations. If an IVA is reccomended, then the OP should deal with the Insolvency Practitioner suggested by the charity to ensure that the IVA is properly managed in the interests of both creditors and debtor.

Woolysheep - a few days is niether here nor there - please pick up the phone and take a few moments to phone one of the Debt Counselling Charities.

MIVAA - I have absolutely no reason to question, or doubt, your own integrity and for that, if for nothing else, you should also encourage woolysheep to seek the independent advice that she so obviously needs.

rog2

woolysheep wrote: »

I am going to see CAB on 2/4/09. Is there anyone else here in N.I. I can contact.

I am sorry, woolysheep - I've just seen that you have an appointmet with CAB in two days time - don't make any decisions until you've had the appointment.

Other counselling services in Norther Ireland? - You CAN contact those charities I have mentioned. I also endorse 'Debtline' but I appreciate that it is always busy. CAB are by far the largest Debt Counselling Charity in Northern Ireland, but, as a quick 'Google' will show, the Province is innundated with 'for profit debt management companies.'

MIVAA

Hi Rog2,

Have you read the thread?

Obviously not, so I'll summarise it for you

The OP is in an IVA already, and has been for 20 months.

She is at risk of her arrangement failing due to misdirection, confusion and the associated stress caused by a people, ie Ras and now yourself, offering inappropriate advice.

If you had taken the time to read through the OP's concerns and bothered to evaluate her position and then comment on that, rather than calling into question my integrity, you would have realised how inappropriate it would be for her to contact CAB, NBL or CCCS at this stage.

By saying you have no reason to question or doubt my integrity unless I call for the OP to follow your advice is galling to say the least.

There are extremely busy anyway, but they would just say you need to talk to your IP!! They wouldn't have the time to offer Woolly the kind of support and advice she needs.

As I understand it, MSE forum is a place where people turn for financial help and support. Simple as that.

What's the point in endlessly suggesting people should go somewhere else to get help and support, especially if the MSE community is capable and willing to offer it.

This sub-board is regularly used by people to pose questions about their current IVAs. Questions they wouldn't get answers to without having to speak to their IP, and then potentially compromise themselves.

So please read the thread from the beginning, follow the thread through and you'll understand why I was emphasising the points about bankruptcy as I did.

If you still have an issue with the quality of my advice after that, then let me know.

MIVAA