IVA Rejected - What next?

loui5

I've heard that my IVA has been rejected by MBNA, and unfortunatley around 30% of my total debt is with them so the whole IVA was rejected at the creditors meeting. The stated reason they rejected the IVA was that if I went with a DMP and all interest was frozen then the whole debt could be repaid in 9.98 years.

The IVA was arranged with Payplan and they've recommended I go with a DMP for 6 months and then reapply for an IVA. Hopefully in the 6 months someone will apply interest and so this will provide a reason to MBNA that the IVA should be accepted.

The total repayment was around 48% compared to the 8% it would have been in bankruptcy. Repayment would have been a little over £500 per month on a total debt of £65k. I had thought a good deal for the creditors, and some light at the end of the tunnel for me. This was the main reason I was drawn to the IVA as it seemed to offer a good balance between paying back as much as I could afford whilst allowing a good future for my family.

My first instinct was to hit back at MBNA by looking at un-enforceablity of the credit card agreement, or to go bankrupt. But I've waited a couple of weeks, calmed down and carried on with the DMP as an interim measure. With the DMP now in place I'm starting to look at options again and any advice would be much appreciated.

My wife and I are joint owners of our house, which is negative equity, and our only other assets are our cars (approx £6k and £1k). So bankruptcy could be an option.

I do a lot of business mileage a year, so get a tax code which results in about £200pcm salary increase to reflect the very low business mileage I get paid. I've just had next years tax code, but I expect to be driving less this year so could ask for an update of this code to drive my salary (and so IVA contributions) down so that it goes over 10 years.

I could stay on the DMP, but I can't see interest being frozen for 10 years and repaying around 48% means I'd be unlikely to keep up with just the interest charges. Although If I could prove un-enforceablity with MBNA then a DMP would be good as I could pay all my other creditors in full.

A slightly older SOA is here http:// (edited to remove link) forums.moneysavingexpert.com/showthread.html?t=2098673

Any suggestions as to a next step?

icm_2

From what you state in this post. I think your best option is bankruptcy, but you need to get professional advice. I was seriously considering bankruptcy, using PayPlan but they were being so awkward about the surplus after the initial telephone interview. Eventually the proposal was nearly £40 more than verbally proposed when the forms came out for me to sign. They wearnt budging on overtime paymnets either. New guideleines come into force 1st May stating that first 10% of [net monthly pay] based overtime can be kept and the rest split 50/50. EXAMPLE your monthly net takehome pay is £2,000 - you would be able to keep the first £200 and split the rest 50/50. Guesss what ALTHOUGH these new guidelines can be used from 1st Feb, Payplan have no intention of using these until May. For me overtime is an issue as I am lucky enough to have regular overtime so the 10% rule was the one thing which was making me favour the IVA. Once that was off the table, no chance.

Anyway, I am declaring myself bankrupt today, my appoitment is 9:00am, I have debts of over £50k, I am ashamed at 50 that I have this amount of debt and no assets. BUT, I feel that I can rebuild my life after bankruptcy, support my wife and family and look towards my retirement knowing I will have no debts....

Yes, its going to be difficult over the next 3 years, as I know I will be in a IPA but that will be a whole lot easier than 5years IVA when every last penny is squeezed out of you. I think MBNA has done you a favour in stopping you going into a IVA, as I have heard a lot of people fail before the 5 years and then only option is bankruptcy at that point.

Best wishes on whatever you decide to do.

ICM

loui5

Thanks ICM! Hope all went well with the bankruptcy this morning? As you say there's some difficulty ahead, but at least there is light at the end of the tunnel. Fingers crossed for a bright future!

I think I will go to see an independent financial adviser to discuss bankruptcy, from lurking on these boards I think I understand the consequences fairly well but it's not something I want to take chances with. Taking the IVA and DMP proposals will hopefully give them a lot of information to be able to tailor the advice to my circumstances.

Not sure if there is something else I'm missing though, any other options I should be exploring or ways of enhancing my chances of a successful IVA when (if) I re-apply in 6 months?