Bankruptcy/IVA questions

emos4607

Hi, i wondered if anyone would be kind enough to help me?.

I was pretty sure about going down the IVA route for debts of nearly 100K but someone i have spoken to has put doubts in my mind and wanted clarification on a couple of things.

I had been told by cccsva that the IVA would last 5 years and that it would stay on my credit file for a further 12 months after the 5 years had finished. I've been told by another debt organisation that in action fact once the IVA is completed that it stays on the credit file for a further 6 yeas meaning that you are not completely clear of it for 12 years.... is this correct?.

Also, i have small negative equity in my home, or at best am breaking even, if i chose bankruptcy rather than IVA what will happen to the house as i have 2 small children to consider?.

Also, if i choose bankruptcy will i have to inform my employer?.

Thanks

Charco_2

Depends on who your employer is! If you work in finance then you probably have to bring it up with them but for the vast majority of jobs it's none of their business! (If you go bankrupt your tax code will change until the next year - i think but i could be confucing things - so they might know something is up anyway... not sure about IVA - i'll come back to this!)

You were right the first time about your credit rating though. All defaults must be registered to the START of your IVA. So six years after the start of your IVA will vanish from your credit file - some lenders play silly !!!!!!s about this and mark your file willy-nilly whenever they feel like it so you'd have to go back and argue it out with them but it is your RIGHT to have it recorded correctly so you just insist.

Your house is in negative equity (or break even - it wouldn't even matter if you had a bit of equity because you might not be able to release it) but anyway, i digress. In both bankruptcy and an IVA your house would be safe.

In an IVA you would not be expected to deal with equity you don't have, in BR you might have to make a token payment of a few hundred £s to deal with any potential equity (but you might not)

Your BR can last a few years - but people can be disharged generally in one year. If your house has no equity now but might within the three years your Official Receiver might say "offer £500 now and we'll forget all about it, regardless of what happens with your house".
In an IVA, if you've no equity then you'll not have to do anything. Even if you had a bit of equity but couldn't release it then it would be ignored. (It's generally understood that you wont be able to get a mortgage for more than 85% the value of your home so if you had a house worth £100k and a motgage for £90k then on paper you'd have £10k equity... but you can't release it by remortgaging and even if you sold it there'd be all sorts of fees to be paid and relocation costs for you so there wouldn't really be £10k so it would simply be ignored)

So i suppose the big question now is, have you done an Income and Expenditure to work out how much disposable income you have and therefore how much you'd be expected to pay towards a debt solution (DMP, IVA or Bankruptcy).

emos4607

Thanks Charco for your help and information, trying to make a decision is quite daunting.

We have gone through income/expenditure with cccsva and the surplus each month is £400 which is comfortable i think at the moment. Unfortunately my other half is in his probationary period of a new job and my employer is consulting with my job level about possible redundancies so an IVA may fail if either or both of us lose our jobs.

The reasons we initally favoured an IVA was keeping the roof over our heads and making an effort to repay as much as we could. If the IVA fails after a period of time then we will be forced into bankruptcy anyway so wondering whether we bite the bullet?. I can't see any more risk in going bankrupt if we are allowed to keep the house than going for the IVA but is there anything i have overlooked?

summer19

Hello,

Im not going to be of Any help not like charco he is great! I like u was going fot the iva but the money we have each month just isnt enough, so we r now considering b/r like u, also our house is in negitive equity. I am undecided what to do cause I dont want to do a iva for a year and still end up going b/r! I really hope u get it sorted out soon cause its soooooooooooooooo stressfull!

Good luck.xxx

emos4607

Hi Summer, thanks for your reply.... i've seen some of your other posts and know its getting you down.

The IVA did look like the light at the end of the tunnel until someone pointed out today that in the long run the IVA costs more because you pay for a longer period and that even in year 4 after making all those payments it could still fail and leave you facing bankruptcy.

What i'm really struggling with is that Bankruptcy sounds like the best option for us to get back on track as quickly as possible with no greater penalty than an IVA, but surely its not going to be as easy or straighforward as that?. There must be something i am missing?

Hope you get sorted soon and life returns to normal, one thing is for sure.... i will NEVER get into this mess again!.

bluemonday3

Hi

I am in a similar position with huge decisions to make, I thought if you applied for bankruptcy your house is automatically taken, but I have just read this is not the case?
How does this work and are you then allowed to continue paying your mortgage?

emos4607

Hi,

We are in slight negative equity or at best break even, from what i can gather as there is no equity in our property there is no mileage for our creditors in selling it and therefore we keep the roof over our heads as long as we keep up with the mortgage.

I've read that during year 3 if the situation is still the same, or we have very little equity that the official recievers interest in the property passes back over to us and i think that might be the end of it?.

I'm not sure what kind of say the mortgage company has about it all and whether they can throw a spanner in the works?

bluemonday3

Wow, that throws me into more turmoil as in similar position, have 2 children and desperate to keep a roof over our heads.
Can live as basic as need to if can see light at the end of the tunnel...
Have no idea what to do for the best, with DMP, it's set to last at least 19 years, can't do it, it'll finish me off... so did not want to be in this mess at my age..

emos4607

DMP was definately not an option for us, particularly as we were advised that it may not stop any of the creditors carrying on with thier own debt recovery procedures. 19 years of debt is a prison sentence especially as we've been in debt for the past 5 already!.

Realistically i think its an IVA or B/R for us, i've been working just to meet debt repayments and so we have not "lived" for a long time, sticking to whatever budget is imposed by an IVA or B/R wouldn't be too much of a problem and at least the money we'd be living on would be truly ours and not credit.

I've missed out on time at home with my small children and this may give me back some options. Bankruptcy feels scary to think about but i'm trying to see it as the start of better things to come.

I hope things work out for you