Am I being just stupid or what?

ChampagneCharlie

Here's the problem. My professional advisor at Dains wants me to go for an 'open & closed' IVA as opposed to BR, which hitherto I had been councelled by CCCS to go for and which I have discussed at some length over on the Bankruptcy side of this forum.

Basic situation: lost own business in 2007, made redundant last Sept 08, tried to keep whole business/lifestyle/mortgages going too long etc resulting in massive debts totalling nearly £0.5m. I have just had my property repossessed (not where I live) but I do now have a new job paying quite well.




Dains solution is: I should borrow an extra £50k (against my wife's unmortgaged property) and offer creditors between 45 -50p in the £ instead of the 36p/£ my BR would yield, on a clean break basis. Their arguments for taking this option are:

1. 45p or more is better than 36p, and will be accepted by the creditors over BR, esp since the main creditors are banks.
2. My income over expenditure surplus is high (c.£1300) and this would be mostly gobbled up by BR income payments beyond immediate BR 12 months;
3. An IVA would allow me to retain my surplus to pay down new £50k mortgage.
4. The IVA would allow me to remain a councillor (true) and protect my professional status in the job market (eh?)

My difficulties with the above are:

1. Another £50k debt is the last thing I need - or is it a clever move in the circumstances with int rates so low? They wont always be so ...
2. What will Dains be making out of this in fees?
3. Is there such a thing as a clean break IVA?
4. Would I really be better off with this solution?

My wife thinks that BR would be better because it would be cheaper all round and should I (God forbid be made redundant again for whatever reason) then I wouldnt have another mortgage round my neck.

I'm torn between the two options, the only thing I want is to get out of my hideous financial situation and stabilise my finances. I dont mind resigning as a councillor but I am worried that should I find myself in the job market again, I'd be having to fund a mortgage with no income (been there before, no fun at all), and IVA is perhaps not quite so bad as BR on your file. Work is so precarious nowadays dare I take this risk?


Would really appreciate some objective opinion here - I need resolution desperately.

With anticipatory thanks

CC

MIVAA

Hi ChampagneCharlie

It's a tough question you ask - for it is really only a decision you can make to be fair.

Having said that, I would question the viability of an 'open & closed' IVA for your situation based on what you have said so far.

Full and Final IVAs or Lump Sum IVAs, as they are also known, rely on a very narrow set of circumstances being in place before they begin to stand up as a viable alternative to the normal 5 year IVA - and as with all IVAs they will return more money to creditors that the bankrupcty option. But if you have a disposable income of approx £1,300 per month, I believe your creditors would insist you enter into a 5 year agreement as it will generate substantially more return than £50k lump sum - about £28k more.

With this in mind, and based on the a few of your other comments, I would suggest you should continue to explore the bankruptcy route.

Since you ask, the fees for arranging a one off payment IVA will be somewhere around £5k, and would be well worth paying if you are desperate to avoid bankruptcy and hoping to shed a huge proportion of your debt - but as I said, it doesn't look like a viable option due to the extra money they would get out of you over 5 years.

I hope this helps

MIVAA

ChampagneCharlie

Thank you for that - you've just helped me make up my mind, having had a 2nd opinion from another IP unconnected to Dains who reach much the same conclusion.

If fact it makes me quite cross that all Dains are really interested in is securing a nice fat fee rather than give me the best quality advice for my situation.:mad:

Caveat Emptor it seems reigns supreme in every profession these days. Who can you trust? Certainly not the banks, politicians, lawyers, accountants etc.

Once again, appreciate your help.:A

ATB

CC

Walter_J

ChampagneCharlie wrote: »

If fact it makes me quite cross that all Dains are really interested in is securing a nice fat fee rather than give me the best quality advice for my situation.:mad:

Caveat Emptor it seems reigns supreme in every profession these days. Who can you trust? Certainly not the banks, politicians, lawyers, accountants etc.

Unfortunately, insolvency practitioners are in effect on commission to sell you an IVA in the same way that a 'financial advisor' is on commission to flog you a life insurance policy.

The chances of getting good advice from either of these groups of spivs are extremely slim. It is a reasonable stance to take that no-one who wears a suit and gives 'advice' for a living can be trusted an inch. They are generally only interested in lining their pockets.

For impartial advice come here or ask a bloke in a pub...:rotfl:

thewad

50p in the pound on £0.5m debt is £250,000 payback or £50,000 a year.
With a surplus of £1300 your not going to be able to get nowhere near the monthly payments.

John