Bankruptcy vs IVA

YamahaR6

I recently filled out the debt remedy on the cccs website and they recommended bankrupcty. After contacting a few other places (Payplan, DFD, Think Money) they all recommended an IVA. I don't have any assets and I'm living in rented accommodation with a new partner (together about 4 months, debts from 3 years ago with previous partner).

My soa is below. What I really want to know is, is bankruptcy really the last option and would I be better off going into an IVA?

Also, the house we rent is rented in my partners name, hes's lived there for about 6 years now and I've only lived there a couple of months and am not named on the rental agreement. I just pay my partner an amount each month to cover half of the rent. Will the OR still need to see the tenancy agreement etc if I'm not on it and will they need to contact the landlord? I don't want to do anything that might affect my new partner in anyway, especially as he's rented that house for 6 years it would be wrong for me to come along and cause problems with his agency.

How far back into your affairs does the OR go? And also how much do you generally have to pay as part of an IPA for the 3 years? The IVA companies want £250 a month for 5 years, if the IPA would require me to pay a similar amount for 3 years then this surely is more favourable?

Lastly, will they take my car or any of my partners vehicles? I own the one car which is a 7 year old skoda worth about £1200, my partner owns a toyota hi-lux plus several motorbikes worth a considerable amount more!

Any advice is greatly received!

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 2
Monthly Income Details
Monthly income after tax................ 1229
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1229
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 300
Management charge (leasehold property).. 0
Council tax............................. 55
Electricity............................. 25
Gas..................................... 25
Oil..................................... 0
Water rates............................. 22
Telephone (land line)................... 20
Mobile phone............................ 20
TV Licence.............................. 6
Satellite/Cable TV...................... 11
Internet Services....................... 10
Groceries etc. ......................... 175
Clothing................................ 30
Petrol/diesel........................... 120
Road tax................................ 20
Car Insurance........................... 28
Car maintenance (including MOT)......... 25
Car parking............................. 10
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 10
Pet insurance/vet bills................. 10
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 21
Presents (birthday, christmas etc)...... 0
Haircuts................................ 10
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 20
Total monthly expenses.................. 973

Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 1200
Other assets............................ 0
Total Assets............................ 1200

No Secured nor Hire Purchase Debts
Unsecured Debts
Description....................Debt......Monthly...APR
Mortgage shortfall.............20000.....0.........0
Lloyds TSB overdraft...........750.......0.........0
Barclays overdraft.............1200......0.........0
EDF Energy.....................1100......0.........0
Halifax card...................2300......0.........0
Capital one card...............450.......0.........0
HBOS loan......................6798......0.........0
Total unsecured debts..........32598.....0.........-

Monthly Budget Summary
Total monthly income.................... 1,229
Expenses (including HP & secured debts). 973
Available for debt repayments........... 256
Monthly UNsecured debt repayments....... 0
Amount left after debt repayments....... 256
Personal Balance Sheet Summary
Total assets (things you own)........... 1,200
Total HP & Secured debt................. -0
Total Unsecured debt.................... -32,598
Net Assets.............................. -31,398

peachyprice

Hi Yamaha, welcome to the forum.

Firstly DFD, Think Money and to some extent Payplan have a vested interest in recommeding and IVA, they make a fortune from them!

Secondly, IVA's are suitable for about 3% of people in debt. Unless you have a home to protect or are in a job which would be effected by bankruptcy an IVA is not likely to be your best option.

When you fill in your SoA you need to put the household bills in full, by the looks of it you have only put half, and you have to show your partners contribution to the house hold bills, not his whole salary, just to show the OR your partner id paying his fair share and not being kept by you.

if you do get an IPA it will only be a percentage of your surplus, not the whole suprlus, so looking at the figures you have put so far your IPA would be around £128 per month for 36 months, although there are some things that can be increased, but alos some things like Sky that you cannot include on your SoA, but are still allowed to have.

If you need your car for work it's unlikely that you wold lose it, it's well within the guideline value that you are allowed to keep.

Your partners assets will form no part of your bankruptcy and cannot be touched by the OR.

As you're not on the tenancy agreement the OR will most likely write to your partner to confirm you live there and that there are no rent arrears.

If you could do your SoA again showing the household bills in full and your own personal expenses, but none of your partners that would be a great help.

HTH

YamahaR6

Thanks for the speedy response! It's nice to know there are people out there that have already gone through this and know how it works!

I'm not sure if I've done this right as I've upped the household bills to include us both but I didn't put in his monthly salary as it shows us as then having over £1k a month surplus!

The other question I wanted to ask is a few months ago I ended a long term savings scheme early to release the funds (this was around £3000) what I should have done is pay this to my creditors to get my debt down but what I actually did was pay off a family member (they'd lent me a lot of money towards the end of each month over the last couple of years and I wanted to pay them back). Will I be penalised for this for not using it to pay back the banks?

What are the chances of a bankruptcy petition being refused because of things like the above?

The whole thing is just so stressful and tiring I don't think my new partner appreciates all the stress I'm putting him through either, but then who would!

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 2
Monthly Income Details
Monthly income after tax................ 1229
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1229
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 600
Management charge (leasehold property).. 0
Council tax............................. 110
Electricity............................. 50
Gas..................................... 50
Oil..................................... 0
Water rates............................. 44
Telephone (land line)................... 40
Mobile phone............................ 30
TV Licence.............................. 11
Satellite/Cable TV...................... 21
Internet Services....................... 20
Groceries etc. ......................... 350
Clothing................................ 30
Petrol/diesel........................... 120
Road tax................................ 20
Car Insurance........................... 28
Car maintenance (including MOT)......... 25
Car parking............................. 10
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 10
Pet insurance/vet bills................. 10
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 21
Presents (birthday, christmas etc)...... 10
Haircuts................................ 10
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 20
Total monthly expenses.................. 1640

Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 1200
Other assets............................ 0
Total Assets............................ 1200

No Secured nor Hire Purchase Debts
Unsecured Debts
Description....................Debt......Monthly...APR
Mortgage shortfall.............20000.....0.........0
Lloyds TSB overdraft...........750.......0.........0
Barclays overdraft.............1200......0.........0
HBOS loan......................6798......0.........0
Capital one card...............450.......0.........0
Halifax credit card............2300......0.........0
EDF Energy.....................1100......0.........0
Total unsecured debts..........32598.....0.........-

Monthly Budget Summary
Total monthly income.................... 1,229
Expenses (including HP & secured debts). 1,640
Available for debt repayments........... -411
Monthly UNsecured debt repayments....... 0
Amount short for making debt repayments. -411
Personal Balance Sheet Summary
Total assets (things you own)........... 1,200
Total HP & Secured debt................. -0
Total Unsecured debt.................... -32,598
Net Assets.............................. -31,398

YamahaR6

I forgot to add, the £20,000 mortgage shortfall is a joint debt with an ex partner. He's made an agreement with the halifax to pay back half of the £20k and they want me to make arrangements to pay the other half although the debt is still in joint names. What happens to this if I am declared bankrupt? He's very wealthy and has an impeccible credit history, will this be affected? (Not that I'm bothered as he cheated on me causing this whole mess in the first place!)

philnicandamy

YamahaR6 wrote: »

I forgot to add, the £20,000 mortgage shortfall is a joint debt with an ex partner. He's made an agreement with the halifax to pay back half of the £20k and they want me to make arrangements to pay the other half although the debt is still in joint names. What happens to this if I am declared bankrupt? He's very wealthy and has an impeccible credit history, will this be affected? (Not that I'm bothered as he cheated on me causing this whole mess in the first place!)

Any joint debts would fall to the person NOT going bankrupt....sorry :rolleyes:

YamahaR6

That's always nice to know, someone finally getting what they deserve even if I'm bringing myself a whole world of other pain in the process!

However I'm really starting to feel completely stupid now I've just been having a read of some of the documents that state what the OR will ask you to provide ie bank letters, statements etc. I don't have any of these, over the last couple of years because I've incurred so many bank charges and received so many letters from debt collection agencies etc I got to the point where I was just shredding letters without even opening them. There's been a serious amount of sticking ones head in the sand going on. How will this affect the proceedings?

philnicandamy

Wont affect anything really...ANY missing information/statements etc the receiver can easily source themselves without hassling you

YamahaR6

Sorry to keep asking so many dumb questions that I'm sure have been answered a million times before! I've just been thinking about my wages etc what happens to wages that are paid into your bank account when you go bankrupt? Ie if I go bankrupt will they take the contents of my bank account or leave me enough to live on for that month and there on after? I don't want to get paid, be declared bankrupt a few days later only to be left with nothing to live on that month! Would it be wise to withdraw my money from my account before I declare myself bankrupt? And if that's the case, where would my wages go from there onwards? Or do they only take the contents of your account on the day you're declared bankrupt and thereafter you keep your wages apart from what you pay towards an IPA if there is one? Is it worth me getting my wages partners bank account until I've set up a new one following bankruptcy? I'm not sure if I'm making myself clear or not here, it's all very confusing!!

debtinfo

looking at you statemnt of affairs and your partners presumed contribution then between you there will be a surplus of £1,000. Since your income is likely to be about 40% of the total income then your surplus will be about £400pm and therefore THE IPA would be about £250pm for 36 months which is still overall cheaper than the IVA.

These are rough figures as you havent given your patners income

YamahaR6

I've missed something here then. I thought a partners surplus income was only taken into account with an IVA and NOT with bankruptcy? The figures I provided are joint household bills, the other stuff like car expenses etc are my own and don't include his, nor do the figures include his own debt committments. Can someone clarify this for me? I thought they only wanted to know that he was paying his fair share of household expenses, not the entire ins and outs of his income and expenditure with regards to working out any surplus!

Charco_2

Woah woah woah! (That's Olde English for "stop a horse")

I would seriously think twice before recommending (or listening to anyone recommending) anyone goes down the road to bankruptcy!

I'll put my cards on the table right now - i own/work in an insolvency company (not mentioned above) and you can think that that tint's my goggles if you like but before you proceed to this drastic road have a wee read of "just enough time to say goodbye" a few threads below this one.

Bankruptcy is not a cheapy cheap way out of debt, no-matter how deep. It's a difficult long journey not to be stepped into lightly. It's not just a matter of comparing the cost of Bankruptcy v IVA... the reason you may pay more in an IVA is coz it's worth it!

As for saying that the IVA providers listed above would definitely recommend an IVA coz they make money from them - i just dont know what to say to that! CCCS also make large amounts of money from IVAs why would they not recommend it? Who knows? Perhaps it's because you have put your information into a machine that calculates an intricate algorithm and is completely fallible.

Before you do anything, SPEAK TO A HUMAN BEING who works in the industry. FOR FREE. Please! The choice at the end of the day will be yours but please speak to someone and get as much information as you can. (as for IVA's being suitable for "about on 3% of people" - where did you pluck this statistical fact from?)