Is an IVA an option for me?

veersix

Hi,

Northern Rock have finally sold my house (it was a vol. repo.) and have sent me a letter detailing the shortfall. I had a Together mortgage which was part secured loan, part unsecured loan. The total amount they have calculated as being owed to them now is £54,158 all in. Based on my current SOA I have around £316 a month surplus to pay off that amount. In addition I currently have two personal loans and a credit card with First Direct which I am not in arrears for as as I am able (currently) to service the debt. These break down thus:

Loan 1 balance is £614 witha monthyl payment of £154.
Loan 2 balance is £4356 with a monthly payment of £127.
Credit card balance is £6100 with a monthly payment of approx £180.

So, assuming NR won't accept £316 a month for the next 14 years, will I be able to go the IVA route with only 2 creditors? Is there a slim chance that NR would freeze the interest on the amount I owe them and let me increase my payments as and when I clear the other debts or would they be a bit miffed about maintaining my First Direct payments?

I have tried the CCCS Debt Remedy tool on the CCCS website and it recommended a DMP for all my debt or bankruptcy. When I did the vol repo I was 100% sure I was just going to make myself bankrupt, but I'm starting to have doubts about that being the best way forward now.

TIA,
veersix

althas

I believe that there is a minimum of 3 different creditors required for an IVA. Do you have anything else, such as an overdraft, store card etc? Every unsecured creditor needs to be included no matter how small

The thing with a DMP is that it is not a legally binding agreement, and although NR may well freeze interest at the moment, there is no guarantee that they will stick to this in the future, and do you really want another 14 years??

I would advise that you talk to a professional Insolvency Practitioner to get a full look at your options. If you have no assets now to worry about, bankruptsy may well be the option. BR or IVA will affect your credit file for 6 years whichever you go with. But there will be other factors to take into account. Would your job/career be affected by BR?? things like that

Talk to a professional for a clear picture

Good luck on whatever you decide

thecableguy12

and also nr are very horrible about ivas and often decline or ask for hig divendends

MIVAA

Hi veersix,

You'll see it written a thousand times on this forum, and forums similar to this one, that an IVA is primarily the favoured solution when there's a property or income to protect, and in pretty much all other scenarios Bankruptcy should be considered the primary option to become debt free.

This is because it is going to be the quickest and cheapest way to become debt free.

However, everyone is different, and there are many people who choose an IVA as their preferred option even though they'll repay more for longer - and that clearly is a personal choice for each person who faces that decision.

When you chose to have your property VR'ed, you effectively removed one of the main advantages that an IVA could have provided.

If you have an income that needs to be protected, and that means, if you are part of a profession that excludes the option of bankruptcy, or if you have an income which would be put in danger or lost should your employer find out about your bankruptcy then the IVA would still hold an advantage for you.

But even if not, the choice of whether or not you apply for an IVA is up to you.

althas is sort of right regarding the amount of creditors, in general terms, but there is no real minimum, and it is possible to have just 2 creditors when the debt is as high as yours.

Therefore, I would say you could apply, if you really wanted to - in the knowledge that there were no guarantees. It's true that NR can be difficult to deal with, but on balance I wouldn't let that stop me having a try, if it was my preferred option, after all at worst they can only say No

But getting someone to help might be your most difficult quest. Finding an IP that is prepared to work for your case without any up front fees will be tough, especially when the odds are stacked against you due to NR being your major creditor.

I hope this helps.

Good luck

MIVAA

veersix

Thanks for the replies guys.

I do only have two creditors. My current account is with First Direct too, so going overdrawn wouldn't help there My current job isn't in jeopardy if I go bankrupt as I don't work in the finance industry, I'm a software developer (although that's not to say I might not need to work in the industry as a software developer in the future :rolleyes:).

Although I'd like to be a responsible citizen and pay back all that I owe in full, the thing that worries me most about a DMP is that it's not legally binding. There's no guarantee that NR would stop the interest or even if they did, there's nothing to stop them charging interest again in the future.

My major concern with BR is that I'm only three months into my current rental agreement and it has a clause that ends the tenancy in the event of my bankruptcy. Now I would hope that if I spoke to the landlord they'd see the sense in keeping me in the house, but who knows how they'll react. There are also the long term effects of BR of course, your card's marked for ever more.

The IVA route seems to be a good middle ground, but my head says BR is probably where I'm going to end up.

veersix.

Charco_2

What MIVAA is saying is true except i'm not sure about the fees part, it may be worth a punt at speaking to an IP even if just for your own sanity. Worst that can happen is they say you're not a viable case. If you are a viable case then an IP will put a proposal together for you and if its not accepted you shouldn't have had to pay anything!

I know the company i work for do not charge fees unless you've had a tangible service (i.e. they've provided an IVA) and would even be willing to talk you through your BR paperwork if that ended up being your best/only option!