Advice please

molly1412

we have been advised that bankruptcy is the best option for us, however i have been thinking about nothing since and wondering whether IVA is the better option to go through. and you never know who to trust even the charities i have been told are funded through the bank so i am so lost so any advice would be gratefully received.

So here goes.........

we currently have debts of just under £50,000 we currently pay out £1100 a month + £330 in a loan to parents (which unless any one has a brainwave i have already discovered that this willl just be wiped through both IVA & bankruptcy they wont allow us to contribute towards this (luckily we have supportive parents but i still feel awful about this and will always make sure they get paid back at some point) we have survived and with both our wage have a little left over but not enough so have to use credit sometimes for fuel & food etc. always in our overdraft but some months OH gets good bonus so this seems to correct us. however we are now unexpectidely having baby number 2 and this would then mean due to childcare costs it would not be worth me returning to work full time and we def can afford the bills never mind have any money to live on.

so although we are not in that position right now its a certainty that we will be there soon (unless we win lottery) so we know we have to do something luckily enough we can cope until i stop work.

the house is worth £165,000 and we owe £200,000 we are on interest only mortgage - as much as i dont want to lose my house it wouldnt be the end of the world.

i am considering that IVA might be better as my husband job might be at risk if bankrupt (we still not had this confirmed) but he is a car dealership manager and although doesnt directly sell finance he oversees this so i cant imagine why it wouldnt be at risk. also we wouldnt have to both go into IVA as most debt is in his name - it made sense with bankruptcy as the house would be only wrote off if both bankrupt.

with IVA what happens if your house gets repossessed?
IVA are the more strict with your allowances?
as my hasband wage is bonus related would all this go to the creditors?
i have car on hire purchase but in husband name would they return this? i would need it for when i return to work and with the children as we dont live near ammenities or public trasport (except taxi)


any advice on the above would be apprecaited also anyone experiences or links to their section on forum would be great

thanks again x

Charco_2

Oh dear, you really are confused and with a million and one questions!

I'll answer the easy ones first:

"with IVA what happens if your house gets repossessed?"
Your mortgage company resume possession of the house, sell it for a loss (they dont care about the price because you are still responsible for the shortfall), and then they issue a bill to you - unlike your mortgage however, this bill is now unsecured. You are already £35k negative equity, this will be more if repossessed, then you enter this debt into your debt solution - IVA or BR.
IVA are the more strict with your allowances?
No, this is a common myth. The aim of both solutions is that you repay as much as you are able to afford.
BR used to have a less stringent I&E and only took a percentage of your surplus, whereas an IVA accounts for everything in your I&E and takes the full surplus - the eventual figures would end up about the same though. This changed in December last year and BR I&E now paints a more accurate picture of your finances too.
It is likely you will repay less in BR because if you have a surplus to offer then you will only be paying for 36 months, whereas in an IVA you will repay for 60 months. BR is slightly more restrictive however - as you say, it is likely a BR would affect your Hubby's work, an IVA may not necessarily affect it but you would have to find out. Your IP will know if it is likely or not but only an anonymous phonecall to his HR dept would give you a definitive answer.

as my hasband wage is bonus related would all this go to the creditors?
No, it depends. If your husbands pay was mostly bonus then your IP would have to calculate an average take home pay for the year based on previous years. Anything earned over and above this would be split 50/50 with the IVA. If your husband's take home pay was enough to base IVA contributions on WITHOUT the bonuses, then it would be calculated that way and the bonuses would be split 50/50 later on.

i have car on hire purchase but in husband name would they return this? i would need it for when i return to work and with the children as we dont live near ammenities or public trasport (except taxi)
If it makes financial sense for you to keep a car then it is likely that you would be allowed to keep it. It depends on the value of the car first though. As it is a HP then the value matters very littel but if you're driving a ferrari and the monthly HP payments are crippling then you'll be asked to return it for a more moderate car. If you owned the car then it would have to be under a value of around £3k but since it is on HP this is less relevant. The main factor your creditors will consider is the necessity for you to have a car (you need it for work - if you return to work).

molly1412

hi charco thanks for your helpful reply - but sorry its now raised me to ask more questions.

1) repossession - what happens if i was in a IVA set up prior to them taking possession and they took possession after this date? i didnt think that any of that debt was absorbed unless you were bankrupt? so if i am understanding right you might also be able to take this debt into consideration but at what stage? surely if they have had no say in your creditors vote on IVA then they might not accept part of IVA (sorry just trying to get clear in my head as i thought it was only bankruptcy that wrote off that debt)

2) which ever way we know that we are going to have to live to a strict budget and not on credit but the bonus is not guarenteed, he had a good year last year and earned nearly every quarter but this year are not predicted to do that and also its not guarenteed - do they go on last year p60?

3) as for the car its hire purchase we dont have any money in it, but it does cost us £250 a month so not sure how they would look at that, my husband gets a car for work but this is not in his contract so he could need a car if they ever decided he cant use works car, therefore would not be able to work. do they repossess the car?

yeah i think we are going to have to call HR about his job as this is a big influence on our decision.

do you mind me asking are you in an IVA? i am just trying to get a first hand account of the experience

thanks again

dancingfairy

Re the house - what's the situation? you are in negative equity at the moment?
In bankruptcy you would not necessarily loose the house - the same in an IVA, you need to work out if you can afford to keep the house - can you pay the mortgage if your other debts were dealt with by an IVA/Bankruptcy and pay the council tax, electric, water etc - that's the starting point. On an IVA I believe you may be able to catch up the arrears on the house before you start paying the rest of the creditors. Normally in an IVA you are expected to attempt to remortgage at a certain point in the process but normally this fails as in an IVA you aren't likely to get a remortgage so you offer a further year of payments instead. I'm not sure how it works if the house is in negative equity though.
Have you actually spoken to any of the debt charities to go through all this to get some opinions?
Charco works in the industry and I think works for an IVA company.
You really need to get some proper advice as I believe that an IVA prohibits certain jobs/occupations in a smilar way to bankruptcy.
df

dancingfairy

For bankruptcy If the house is in significant negative equity and remains that way the then Official Receiver will transfer his interest back to the bankrupt - new guidlines have recently been issued. I'm not 100% sure how it works but the people on the bankruptcy board will know more.
df

foreverautumn

House in Bankruptcy No equity and negative equity. The OR can now hold onto it for 2 years and 3 months. To make a decision on this. But if you are at least 35,000 negative equity now, i don't see that you will have any equity in 2 years. Also realisation costs as well, need to be taken into account. After this time you are still in negative equity, then the house will be given back to you.

House in Iva, there is normally a 4th year clause. Where by you will be required to remortgage. To release equity. You will only have to reach 85% loan to value ratio. This will be based on a forced sale valuation. (which is lower than a market value). If you are unable to remortgage, then you would be required to carry on your payments for another year. If you are still in negative equity, or have 5,000 or less equity. Then you will end your iva at the 60 months payment.
Hope that helps.
Any shortfall i the house becomes an unsecured creditor, and would be included in either option.