Failed IVA, What next

stoneyk

Hi all,

my wife and I have just failed our IVA and are at our witts end as to where to go now,

We were paying our IVA without any problems for 3.5 years until my wife lost her job in May 2009, we were unable to meet our payments and eventually our IVA was failed.

Since then, my wife has fallen pregnant and I have had to take a pay cut inorder to keep my job.

I have considered bankruptcy and my father has kindly offered to pay for our bankruptcy as we are not in a postion to pay for it ourselves and have been told that as we have no assets, it is highly unlikely our creditors will petition for our bankruptcy.

I have been thinking of offering our creditors 10% of the money we owe as a full and final payment which my father has again offered to pay, We currently owe 25K between 5 creditors and wondered what the chances are of them accepting, the way I see it is they can accept and get some money back or decline our offer and get nothing when we go bankrupt.

I would welcome any advise,

Thank you

Miss_Poohs

Hi there, I'm sure someone with alot more knowledge than me will be along shortly, but I think for a F/F settlement to be viable it has to be in the region of 45% - 55% of the debt.

Good luck - and keep watching for better info.

Deep_In_Debt

Sorry not sure on this. It sounds like Br may be an option for you. 10% of 25k is not a lot and unlikely to be accepted by creditors. Pop over to the BR board and I'm sure the good people over there will be able to offer lots of advice and support.

Nick700

Good afternoon,

I agree that 10% is not a lot to offer your creditors, and I doubt that many of them would accept that. Having said that, as it will avoid bankruptcy, maybe you should open negotiations with them re the 10% offer - they can see you cannot offer anything from your failed IVA, and quite often they are more sympathetic if someone has tried their best in an IVA and it has failed through an unfortunate change in circumstances.

Send a copy of your most recent Income and Expenditure and a letter making the offer to your creditors, give them 21 days to reply and see what they say. The main thing you shouldn't do is pay the lump sum to any of them before they have all agreed as even if 3 accept and 2 don't, you will still be unable to pay 2 debts and may have to still petition for bankruptcy and have given a significant portion of your lump sum, without solving your difficulties.

However, if you manage to pay off some of your debts by this route, and reduce your debt to below £15,000, maybe you could apply for a Debt Relief Order which costs less and has less consequences that bankruptcy. Details of this can be found on the government insolvency service website.

Hope that helps.

Nick

Keep us updated on the forum.

Charco_2

If you had made a move earlier, then you could perhaps have made the full and final offer to your creditors before the IVA was failed however you are where you are now so definitely make the offers to your creditors... it's worth noting that a number of the banks sell their bad debts to Debt Collection Agencies for sometimes even less than the 10% you're offering, that's why when the collection agencies write to you they can offer massive cuts off the balance like 50% - it's money for free to them!

EDIT: BTW how much debt had you before you started the IVA? How much of the three and ahalf years of payments went to reducing this balance and how much went on fees?