Please please help - In an IVA but cannot maintain it - Bankruptcy?? Scared

Daisy4567

Morning All,

It's a long one but I'm desperate - please read and help if you can, thank you.

Well, in January 2011 we had an IVA agreed but it just isn't happening. Just after the IVA was agreed DH lost his job and was unemployed for 2.5 months - not a long time admittedly but this meant that living on JSA of £62 ish a week and trying to pay everything whilst living really only my wages meant that we have fallen behind both in our IVA payments and in other things like Council Tax.

Today is my payday and having sat down and worked out everything going out this month still we are in a defecit before I even consider going out and buying us food.

Plus, DH needs his car to get to work and I need my car (they are both clapped out old bangers) but DH's car has just failed it's MOT and needs £150.00 worth of work doing to it - money we just don't have.

My biggest concern about going BR is losing the house. Yes it's only bricks and mortar but when we've tried to sell it in the past it hasn't sold and not only that but Landlords wouldn't touch us with our bad credit or the fact that we have a small dog.

We were on the list for the Local Council Housing Assiciation and even though the Northern Rock took us to court for Repo they still had us in the least important grading.

We currently have an SPO on the house.

Now, re the house - it is in negative equity but as we have a mortgage and a secured loan, the mortgage would be covered and paid in full but the secured loan would not.

Would this mean losing the house? Or could the surplus from the Secured Loan go into the BR?

We have had such a terrible time of it over the years that I feel like I just cannot take this any longer and don't know what to do.

Please guys - I'm grateful for all input and advise.

Thank you in advance

D

fermi

Has the IVA been formally failed yet?

While the house remains unsold, the shortfall on the secured loan could not go into any bankruptcy. And obviously to stay in the house you would have to maintain payments on it all (and/or according to the SPO).

If the house was repossessed and sold, then any shortfall would then fall into a bankruptcy.

If that happened you would need to be very careful not to sign any paperwork after the bankruptcy date that says you are liable. Northern Rock can and do try to trick you into doing that.

Going bankrupt would not necessarily mean losing the house. With negative equity on it, the OR/trustee would not benefit from forcing a sale. It's just a question of whether you could afford to keep up payments post BR?

Daisy4567

Hi fermi,

Thank you for your post - I am very grateful to you for taking the time.

Maintaining payments would be feasible - it's all the other stuff which is killing us - we need a new start after years of hardship which all stemmed from helping my Father out of a financial sticky spot and subsequent redundancies.

But - although the house is in negative equity - the 1st Mortgage (NR) would get everything but the Secured Laon (Endeavour) would not.

Therefore wouldn't the OR force a sale so that NR got their money even if Endeavour didn't?

Daisy4567

Sorry - missed the bit that the IVA hasn't been formally failed yet as we are paying it in place of buying groceries

fermi

Daisy4567 wrote: »

Therefore wouldn't the OR force a sale so that NR got their money even if Endeavour didn't?

No. The OR/trustee only has a duty to realise assets to pay toward your unsecured debts.

With the house being in negative equity, there would be no net proceeds of the sale as far as the OR is concerened, so the OR/trustee would have no reason or grounds to force a sale.

The OR/trustee would retain ownership of the beneficial interest in any future sale for up to 3 years, so if the housing market suddenly (unlikely) took off in the near future (taking you out of negative equity) then some interest might accrue that they would want to get their hands on. But even then, they would look to see whether you could buy that interest/equity back off them rather than forcing a sale.

Property/housing issues like this can be pretty complicated, and difficult to determine what would be in your long term interest.

Have you taken advice from anyone apart from your IVA provider? CAB, etc?

fermi

Daisy4567 wrote: »

Sorry - missed the bit that the IVA hasn't been formally failed yet as we are paying it in place of buying groceries

Well, that's not sustainable in the short terms, let alone a longer one.

Have you discussed your IP/supervisor how you are struggling?

I would also discuss your situation with an independent advice agency as well, as your IVA provider will obviously have their best interests served by you continuing payments.

See: https://forums.moneysavingexpert.com/discussion/2077631

dancingfairy

You can take miss a month or 2 on an IVA I believe (but obviously need permission from your IVA provider), also the person in charge of your case has discretion to vary the payment by up to 10% from what was originally agreed (ie up to 10% less) but if you need to change it beyond that then another creditors meeting has to take place to agree the variation.
Is it definitely an IVA you are in? a lot of things are sold as IVA's when they are in fact dmp's.
P.S I'm not saying you should or shouldn't carry on with your IVA but just to give you more options to consider.
df

Daisy4567

Thank you both for your input. Dancingfairy - when hubby lost his job we missed all the allowed payments so unfortunately that's not an option for us.

Fermi - you're right about it not being sustainable. I have spoken in the past to an individual money advisor at the Council and I think i'll contact him again.

The initial problem would be finding the money to go bankrupt and still pay for the house. It would take ages to do that and what can you not pay to save the money for it?

Teen_the_Drama_Queen

Hi Daisy

We stopped paying our mortgage and secured loan to save up for the BR fee. All other unsecured debts fell by the wayside too. The only thing we kept up was the council tax and utilities and contents insurance (the buildings ins automatically stopped once we ceased paying the mortgage).

Surprising how popular you become with your local friendly postman!! He's a regular visitor to your home with missives from disgruntled creditors.

Its not an ideal solution, but you have got to get the money together for the BR and, if necessary, a deposit for a rental property. Thats the route myself and DH went down and it wasn't frowned on by the OR, they are human and realise that you have to do what is necessary.

Ineedaname

Not paying the mortgage and any secured loans is only adviseable if you intend on giving the house up. Otherwise you end up with arrears to catch up on.

However, the OP would need to fail the IVA in order to go BR, so not paying the IVA to force it to fail would give them funds to save for BR.

Teen_the_Drama_Queen

Oh yeah, good point INAN...... sorry, didn't mean to mislead you Daisy, it was just I noted in your first post you mentioned about landlords not wanting tenants with a dog, just wanted to say this wasn't always a no-no.