Maths question

Catalyst

Wonder if you can help...

Following advice from business debtline we can either go BR or to at least try to continue the IVA route that we are currently on. So I am thinking figures today, and would appreciate your thoughts.

Can you help make sense of these figures?

Here's the figures:

Currrent Debt:
IVA £90K
Repossession shortfall on a rented property this will be huge as well and at least £80K - although we will try and appeal some of the costs.


Current Assets:
1. Family home bought at £355, valued at £355, mortgage £315. That's £40K minus fees so around £35K towards the arrears? Is that right?

2. Rental property with equity of approx £40K


Our IVA debt repayment:
IVA at £750pcm x 12months x 5 years = 45K


Questions:
1. I am having trouble working out whether it would be better for us to go bankrupt now and save £750pcm after the BR if that's allowed. We are having great difficulty surviving right now and are both freelance so can show that there is currently no excess. We hope that after a year our income gets better (economy picks up, childcare costs reduce etc).

2. If we continue IVA route (and assuming that we get second jobs, lodger etc) will we be better off? We are also considering that the bank will most likely come after the repossession shortfall, so we could face another huge debt up to 12 years on.

3. We are both knocking on a bit and have 3 young children. So financially, mentally and emotionally I need to think about the best option on all fronts which I percieve as:

IVA: £54K IVA repayment + Yr 5 remortgage of our investment property + repossession shortfall costs = relentless pushing ourselves but keeping our family home and investment. Many many years of very large debt.

BR: 1 year of no payments (and not having to do 2 jobs, logder etc) + no repossession shortfall on the horizon = relief, ability to start again, no family home, great sense of failure.

When could we start to 'save' money again after a BR? Either way we are looking at a 10-year recovery plan aren't we?

Your comments gratefully received, particularly the maths.

kepar

Sorry a bit confused, how many rented properties have you got as you state one has a huge shortfall and the other has equity is that right.

Catalyst

yes - we had 2 rentals, and now have 1. The other 1 was the loss making machine that got us into this sorry state of affairs...

kepar

If you have £750 a month spare to pay your IVA, then you will have spare to pay an IPA for three years to the OR. I believe that you may get better allowances in BR than an IVA so you will not have to pay as much. But the payment will be for 3 years and not the five. So basically you will come out after three years and be able to save the £9000 a year no problem.
With the changes in property rules the OR now waits 27 months before deciding on action for the main property, but I am not sure about the rental..
The problem as I see it that if you sell what do you with the capital as you could be seen to be favouring a creditor.


So you estimate your debt to be around £170k, br will wipe that. You may lose your home but you will be able to start again. With your income you will have a chance to rebuild. My wife has an IPA and now the payments are into single figures we can finally see the end. We know that we will get an extra £400 a month which can be saved, we have managed to budget well , so the extra will be extra.

tigerfeet2006

The OR will take the money from the rental property for your estate and not pay the the mortgage, so you will loose that.

Pop up you SoA on here and someone can show you how a OR may look at it.
http://www.makesenseofcards.com/soacalc.html