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Bankruptcy v IVA

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I've been having a read through all the advice on here but don't really seem to understand the main differences between bankruptcy and an IVA. My partner nd I jaw around £45,000 debts and we own a home which according to the mortgage company we have no equity in. Although when we had an estate agent come round 12 months ago he valued it as having £25,000 equity. I would expect now that if we sold it we may get around £10,000 profit. We do
Not want to loose out home as we have 3 small children and do not want any of this to effect them. We have 2 cars worth around £3000 each and need both to get to work. We have no other assets.
We have been advised by payplan to get an IVA and it was explained really simply to us but once I have read up it does not appear so simple. I have the opportunity to do overtime at work and like to use it to try and improve our lives I am also contemplating working full time
In the next year or 2. I now understand that they can have 45 % of this money. How do they know what I earn? Do I have to send p60's to them or all my wage slips? I don't like the idea of having to have someone looking through all my monies? So they check exactly how much you spend on what?
Does an IvA have the same long term effect on your credit rating? I accept that I will not get credit for 6 years ( I don't want it) but will i then have the same problems with an IVA as I would do if I was bankrupt? With an IVA can I still have a mobile phone contract? After reading how the IvA can effect you on here I just do not seem to be able to see the benefit of it. Employment wise a bankruptcy may effect me with jobs I want to go into but I am still employed by the same company so it isn't the end of the world if I cannot apply for these positions. I would just like someone to tell
Me why I should do IVA which runs a lot longer, have all
My finances intrusively monitored for up to 6 years and have to have the house valued in 4 years time and try and get a mortgage?
Thanks all for your help
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Comments

  • fermi
    fermi Posts: 40,542 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker Rampant Recycler
    Are you both needing to do the IVA or go bankrupt?

    With bankruptcy any trustee would be looking to get their hands on the equity in your house sooner rather than later, so I think that is the biggest concern?

    Can one of you raise funds to buy that back if only the other went bankrupt? Or can someone else, relative etc, buy it out if both of you did?

    Regards the effect on you credit files/rating, there is not really much difference. They are both formal insolvency when push comes to shove.

    Have you spoken to anywhere else apart from PayPlan?

    Always good to get more than one opinion.

    See: https://forums.moneysavingexpert.com/discussion/2077631
    Free/impartial debt advice: National Debtline | StepChange Debt Charity | Find your local CAB

    IVA & fee charging DMP companies: Profits from misery, motivated ONLY by greed
  • I believe that both of us will need to do it as some of the loans are in joint names. How do they value the equity in the house as the mortgge company do not believe that there is any in there. I am just a but annoyed as an IVA was sold to me as not being as bad an bankruptcy but it appears to be. I don't think we could raise the funds in that short amount if time.
  • Sorry we have only been to payplan as my work recommended I only use them
  • fermi
    fermi Posts: 40,542 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker Rampant Recycler
    I believe that both of us will need to do it as some of the loans are in joint names. How do they value the equity in the house as the mortgge company do not believe that there is any in there.

    As far as the Official Receiver is concerned at least.....
    10. Valuation

    The bankrupt's interest in a dwelling-house can be valued using a variety of methods including:

    a. bankrupt's valuation
    b. local knowledge
    c. information from mortgagee
    d. use of the internet
    e. drive-by valuation
    f. professional valuation, i.e. chartered surveyor
    g. estate agent

    The official receiver should decide which form of valuation is appropriate on a case by case basis. Where an offer for the bankrupt’s interest in a property is to be accepted the official receiver should ensure that there is a professional valuation of the dwelling-house, unless a recent independent valuation has been obtained and the official receiver is satisfied that it is accurate.
    Free/impartial debt advice: National Debtline | StepChange Debt Charity | Find your local CAB

    IVA & fee charging DMP companies: Profits from misery, motivated ONLY by greed
  • FoggyBrain_2
    FoggyBrain_2 Posts: 1,121 Forumite
    Hi. I know it's awkward having an IP scrutinise your finances for an IVA. However the OR will do exactly the same in BR. The OR in BR will also hang on to your house for 2 years and three months before deciding what to do with it, at which point it will be at risk. Also the OR might take the cars or ask you to get cheaper ones.

    The only way an IVA appears to be worse than BR is the term -- 5 or 6 years as opposed to 3 years of payments. You will still have to address equity in the house at year 4 ( if there is any), but, if you cannot raise it you just extend the iVA by 12 months (whiche, generally, works out cheaper). They will not force you to sell up.

    You will have your finances checked and watched over, whichever route you take, but that's the price of eventual debt freedom, I am afraid. Neither is a walk in the park and both mean lots of compromise.

    Pop over to https://www.iva.com and have a word with a couple of the firms there -- Melanie Giles comes highly recommended .. the advice is free and impartial. It's always good to speak to a few companies and get a balanced view.
  • Thank you for the advice... I'm just annoyed that it has got to this stage as it was totally manageable until one of the credit card companies decided to change our terms and conditions meaning we were £400 a month worse off. We were only 12 months off a huge loan being paid off too!! I just wish we had done this 5 years ago but then we weren't to predict the way the economy has gone. I've had a chat to our adviser today and feel a little happier about it all. I think it's just that feeling that I will no longer be in control of my finances.
  • FoggyBrain_2
    FoggyBrain_2 Posts: 1,121 Forumite
    It wasn't MBNA was it? --- that's what killed my financial plans off ( mind you I was walkig on thin ice for a while).

    On the contrary --- albeit with a little supervision ( let's face it ... talking about our money matters is very un-british), you are not losing control --- you are taking control. Getting everything on an even footing and stable. Think of it as a 5 / 6 year consolidation loan, without the interest. At the end you will be DEBT FREE (apart from secured borrowing)
    how many of your peers will be in the same position ?
  • adyj73
    adyj73 Posts: 166 Forumite
    You do realise a credit card company cannot enforce the new terms on existing debt as long as you notify them at the time. If they are increasing the APR you have the legal right to call them and close the account paying off the remaining balance under the old terms and not immediately - you just can't use the credit on it anymore

    I did this with a card when they notified me the apr was raising from 15.9 to 29.9%. They closed the account and the balance remained at 15.9%. Funny thing was when I rang them to tell them to close the account they said I could stay on the original rate - I still closed it as I didn't trust them....

    Anyway I then went IVA so it doesn't matter anymore :)
  • Yes it was virgin and yes like you was slipping away but only 12 months away from staying afloat. Along with tax credits being taken away and s £100 a month pay rise which never materialised it has just gone silly! I did phone them at the time and apart from me paying less each month and receiving black marks on my credit rating they wouldn't help. Was all for it yesterday but then received an email asking me for everything from passports to electric bill to letters from child minders! I have had enough of it already and only just started! This is going to be 6 years of hell!! :-(
  • FoggyBrain_2
    FoggyBrain_2 Posts: 1,121 Forumite
    Wookiemummy ... it's difficult to start with -- getting everything together and checked over, but that passes. Being IN an IVA isn't easy, by any means, but certainly far easier than juggling with ever increasing debt. It might be 5 years away ( for those at the start), but at least there IS an end point.

    Stick with it.
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