IVA or Bankruptcy?

Georgie99_2

Hello a mate of mine has got an IVA which he is struggling to keep up the repayments. He is in private rented accommodation and has now told me in order to pay the IVA this month he has paid it out of his rent money and is intending to do the same again next month. He is paranoid he will be given notice to quit.

He has no job, no income other than benefits (incapacity benefit and housing benefit). He is very unlikely to get a job because of his poor health.

Soz, I don't have any proper knowledge on bankruptcy, but I thought, if you don't have any assets whatsoever, you'd be better off going BR as after a period of time (3 years?) the debt gets written off and you don't have to repay.

Isn't my mate better off to keep the roof over his head than meeting IVA payments?

G

debtinfo

Absolutely, Rent, Food, heating, water, council tax, these must be the first things paid, If after that he cant pay his IVA then he shouldnt be in an IVA, Was he unemployed when he signed up for the IVA if he was then he has been given terrible advice

curly04

most IVA's are bad advise!

thechippy

In his situation, I'd not worry about failing the iva payments - just pay essential outgoings - the worst is that he will be made br for failing the iva - saves him paying for it himself....;)

If he has no assets etc, then as stated, an iva was poor advice indeed!!

PAY THE RENT IN PREFERENCE TO THE IVA........;)

Georgie99_2

debtinfo wrote: »

Absolutely, Rent, Food, heating, water, council tax, these must be the first things paid, If after that he cant pay his IVA then he shouldnt be in an IVA, Was he unemployed when he signed up for the IVA if he was then he has been given terrible advice

No he wasnt unemployed when the iva was negotiated but he was told he couldnt go bankrupt. He was only earning part-time wages - approx 70 per week and topped up by benefits.

He has an elderly parent and he is possibly going to inherit one day - so that is a background assett I think.

All along he has been worried about the stigma of bankruptcy - but this iva is affecting him just as much - cant get credit etc and iva will take 4 or 5 years to repay.

Georgie99_2

Is that correct, if he doesnt make anymore repayments under the iva - will he be made bankrupt automatically? Wouldp BR affect his landlord at the flat he rents.

Will he have to make smaller repayments under the bankruptcy - sorry I dont understand the system?

Does the BR get wiped after a period of time giving him the chance to get his credit rating increased.

He's hoping that one day he might be in the position to buy a small flat funded by his inheritance and a small mortgage if he can get fit enough to work. Am i right in saying that would never happen all the time you've got an IVA hanging over you.

hunt85

I would suggest he takes advice on it all, definitely stop paying the IVA and start paying all basic living costs instead. He should contact one of the debt charities or Citizens advice. I think if he has no assets and is now unemployed and unwell then BR might be a better course of action. BR wipes off all the debt, takes normally about 1 year to be discharged and then it stays on your credit file for 6 years so you cannot obtain any credit in that time. you don't make any monthly repayments etc, its nothing like an IVA. Good luck to him!

edit! you can be made to make some payments based on your disposable income after basic living costs each month and if you've been irresponsible, but i think if you're on benefits etc then this doesn't apply.

debtinfo

Hi georgie, i think he has been given some very bad advice, who was it that gave him that advice. As the others have said speak to one of the debt charities CAB, CCCS or national debtline who can go through his options thoroughly.

To answer your direct questions, he would be able to go bankrupt, depending on his level of debt there are also other options. He would have to formally conclude the IVA first, and we can speak about that when he has taken advice and decided what to do. Whilst sometimes an IVA supervisor can make you bankrupt it is unusual these days and mostly happens where the IVA has been going on for a long time or the payments were very high

His inheritence is safe as long as the person has not already died and does not die during the bankruptcy (which should last no more than a year)

The bankruptcy drops of the credit file after 6 years

With an IVA or a bankruptcy on your record it is more difficult to get a mortgage in the future but it is possible, it would depend on how much of a deposit he had, what interest rate he would accept and what the state of the economy is at that time (ie it is difficult for lots of people to get mortgages at the moment)

Finally, whilst he is on benefits he wont have to make any monthly payments if he gets work he might, usually Bakruptcy payments ae less than an IVA and they certainly shouldnt be more

Hope that helps

Georgie99_2

I dont know which organization set up the IVA but I agree I think he's been given bad advice.

He has been paying the IVA for over a year but basically the figure must have been set too high if he can't afford to shop for food or pay his rent.

Thanks to you all for your help and advice.

G