Bancruptcy or IVA?

Count_Waffellmuncher_III

Round_The_Bend wrote: »

I would suggest that your friend do the 'Debt Remedy' on the CCCS website, as a starter. There is a danger that s/he is underestimating his/her monthly expenditure, meaning that the IVA may not be possible.

My understanding is that creditors are now looking for anything up to 40% of the outstandng debt to be repaid, before agreeing to an IVA. Given the size of the outstanding debt, I suspect that your friend might be borderline for an IVA anyway.

I know that when I carried out my own online 'debt remedy', juggling the figures only slightly changed the recommendation from IVA to Bankruptcy. This and reading other comments on this forum has convinced me that bankruptcy is the only viable option.

Tell your friend that although it's really difficult to confront this issue, carrying on the way in which s/he is currently is likely to be far worse in the long-term, in terms of physical and mental health.

All the very best to him/her, whatever s/he decides.

Interesting comments, thank you, I know for certain that there's no way that creditors could be offered any kind of chunk of the balance before committing to an IVA, there's just no capital available.

Regarding health issues, it certainly has caused a lot of worry and stress, and over the last few months I've tried to show my friend that one way or another something has to change and things just could not carry on as they were.
Following my advice, they are now in discussions with the CAB, and have defaulted on everything whilst they decide what action to take, at this point in time CAB seem hesitant to suggest either one route over and above the other, although to my mind it's very clear cut.
A decision will have to be made very soon, and I thought that by starting this thread It might point out any issues that might have been missed, and help to either reinforce my opinion as being the only reasonable route to go, or steer thoughts into the other route.

jenni75

If you can get them to read a few of the diaries on here that may help. Our IVA was a stupid desperate error of judgement on our part, having been convinced when calling a debt company for general advice. I am pleased that they are taking advice from the CAB (our worst mistake was looking in the phone book for debt help instead.)

headoutofsand

jenni75 wrote: »

If you can get them to read a few of the diaries on here that may help. Our IVA was a stupid desperate error of judgement on our part, having been convinced when calling a debt company for general advice. I am pleased that they are taking advice from the CAB (our worst mistake was looking in the phone book for debt help instead.)

I couldn't agree more with Jenni. Try to persuade your friend to get on here and have a look around, then if he/she feels like participating on the board then great. This board will shed good light on the whole process and make it easy for your friend to make a decision.;)

Count_Waffellmuncher_III

headoutofsand wrote: »

I couldn't agree more with Jenni. Try to persuade your friend to get on here and have a look around, then if he/she feels like participating on the board then great. This board will shed good light on the whole process and make it easy for your friend to make a decision.;)

I've been telling them to start a basic thread like this for weeks.;)

Round_The_Bend

Sorry, I think that I may have confused you. Your friend would not have to pay up to 40% of the outstanding debt up front with an IVA.

My understanding is that the creditors would expect to receive at least between 25-40% of the outstanding debt, as repayments, over the five year course of the IVA. If your friend's debt is £80,000, then this would amount to between £20,000 and £32,000, working out at repayments of £333-£533, per month. I don't know whether interest is added to the total owing. Your friend would also need to bear in mind that a minimum of £5000 will be taken up in fees for the Insolvency Practitioner. Again, I am unsure if this is added to the total debt or included within it.

Other posters have also suggested that the OR is more generous, in terms of living expenses than the IP.

Aside from not having your name in the paper (and who knows, maybe some people might enjoy the infamy), I'm not really sure whether there are too many other advantages with an IVA over bankruptcy.

Are you posting over on the IVA board too, as others there may have suggestions? I have to say that the bankruptcy board does appear a lot more cheerful than the IVA board in my experience. Maybe that tells you something!

Count_Waffellmuncher_III

Round_The_Bend wrote: »

Sorry, I think that I may have confused you. Your friend would not have to pay up to 40% of the outstanding debt up front with an IVA.

My understanding is that the creditors would expect to receive at least between 25-40% of the outstanding debt, as repayments, over the five year course of the IVA. If your friend's debt is £80,000, then this would amount to between £20,000 and £32,000, working out at repayments of £333-£533, per month. I don't know whether interest is added to the total owing. Your friend would also need to bear in mind that a minimum of £5000 will be taken up in fees for the Insolvency Practitioner. Again, I am unsure if this is added to the total debt or included within it.

Other posters have also suggested that the OR is more generous, in terms of living expenses than the IP.

Aside from not having your name in the paper (and who knows, maybe some people might enjoy the infamy), I'm not really sure whether there are too many other advantages with an IVA over bankruptcy.

Are you posting over on the IVA board too, as others there may have suggestions? I have to say that the bankruptcy board does appear a lot more cheerful than the IVA board in my experience. Maybe that tells you something!

Ah OK, I was confused by that. It makes sense now.
From where I'm standing it seems to make little point paying out 30/40/50% over a few years, (5?) when going BR it's all done and dusted in 1?

headoutofsand

Count_Waffellmuncher_III wrote: »

Ah OK, I was confused by that. It makes sense now.
From where I'm standing it seems to make little point paying out 30/40/50% over a few years, (5?) when going BR it's all done and dusted in 1?

Indeed it does, now your friends have to decide what to do next. The planning and timing of these matters need to be explored. The longer they dither the more hassle from "the big bad wolf";)

Tobiwan_Kenobi

As I wrote on another identical thread, I went to an IP with details of my debts and situation and they suggested BR. An IVA keeps you in chains for 5-6 years, where BR gives you a clean break and a new start (as many user names suggest).

It certainly isn't an easy way out, but it does allow you to clear your head and start to see the wood for the trees.

Round_The_Bend

From where I'm standing it seems to make little point paying out 30/40/50% over a few years, (5?) when going BR it's all done and dusted in 1?

Not quite as simple because your friend may be required to make monthly IPA payments towards the debt. This lasts for three years and is based upon any surplus income available after essential living expenses are taken into account. As a rough guide, I believe that the OR takes 50% of all surplus income over £99 or thereabouts. This is still better than no living expenses as is the case currently and is more generous than the terms offered within an IVA.

Count_Waffellmuncher_III

Round_The_Bend wrote: »

From where I'm standing it seems to make little point paying out 30/40/50% over a few years, (5?) when going BR it's all done and dusted in 1?

Not quite as simple because your friend may be required to make monthly IPA payments towards the debt. This lasts for three years and is based upon any surplus income available after essential living expenses are taken into account. As a rough guide, I believe that the OR takes 50% of all surplus income over £99 or thereabouts. This is still better than no living expenses as is the case currently and is more generous than the terms offered within an IVA.

Sorry, I was being a little simplistic, I'm fully aware and have made sure my friend is of a possible IPA, however this would still be less ££ and of shorter duration than an IVA.