Bankruptcy v IVA advice? £65k in debt!

melf_2

Hi everyone,

Myself and partner have massive debts, mainly due to renovating a property that we really couldn't afford to renovate.

Unsecured loan - £35000
Credit cards - £15000
Overdrafts - £5000
Student loans £7000
odds and sods - £3000 (utility, mobiles)

Income - £2300pm

We have been looking into an IVA but have also been advised that bankruptcy would be a good option for us. That scares the life out of me.

We sold our house at the end of last year to release all the equity possible to pay into debts. We paid back £48000 (originally had a secured loan from FirstPlus for £70000, settlement figure £83000, balance now at £35000 which is now unsecured) so we haev tried to do the right thing. We are in the process of buying a new house, very tiny but we wanted to stay on the ladder if at all possible. Our new mortgage is 100% for £123000.

Basically I wanted some info on IPO's and how bankruptcy affects you in the future? Also what the general views are between IVA's / bankruptcy? What do people really favour. I flit between wanting the IVA and then thinking can I even really afford that and thinking we should go bankrupt. We're in a right mess, been living at my parents for 5 months now and need to have our own place again. Is that so terrible?

I just don't know what to do? The things stoppign us from bankruptcy are the thought of losing the house and it going in the local paper. We hoped that by moving to new town that it would be advertised there but apparently not, its where you aquired the debts. This is the worst thing.

Anyway, any advice would be great.

Thanks

hypno06

Hi, and don't panic, loads of people will be around to help and advise if you hang on in there!

Firstly, have you spoken to CCCS or payplan or one of the other non-fee paying charities to ask for all your options. They are non judgemental and won't try and push you into one thing or another, but they may give you options you had not previously considered.

If you are looking to get another mortgage, then IVA or bankruptcy will not help you at all. If you want to stay on the property ladder, put all your figures into https://www.whatsthecost.com to see if you can see another way out of the debt pickle without defaulting on your current debts.

Can you do a full SOA as per the sticky at the top of this board and we can see if we can offer any other help?

Rafter

Bankruptcy is certainly possible and an IVA will be difficult to negotiate given the size of your debts and lack of assets.

A mortgage is probably going to be difficult either route.

Your student loan debt will not be wiped out by bankruptcy.

Personally I would go bankrupt having taken a friend through a similar situation. It will at least give you a fresh start and you will probably be discharged in less than 12 months but have an attachment to earnings order for 3 years.

You should be allowed enough to live on, including rent, bills etc.

You should take independent, free and impartial advice as suggested too - the judge will require it before he will allow your bankruptcy petition.

Good luck.

R.

melf_2

Spot the newbie, whats an SOA??

I have been to see a couple of Insolvency Practicioners and they both said that we should be able to keep the house as there is no equity in it. Both have also said though to complete on the house before putting in application for IVA or Bankruptcy.

I know nothing really about a DMP, only what I've been reading today. I just don't see how we will ever pay off this amount of money without one IVA or bankruptcy. Its not just the physical making payments, its the stress. We're both getting ill now. We've had a really shocking year (family bereavment and illness) so we really can't carry on with debt hanging over us. Even the 5 years IVA is a stressful thought.

I know we can't have everything, believe me. We've made mistakes. Under budgeted for the house renovation anf then spent money to try and make ourselves feel better after the family problems. Obviously it never works and you end up in our mess. I jut feel so ashamed.

gettingitsorted

Hi Melf pop over and post on the bankruptcy board ,as well as on here

TTMCMschine

If you already owe so much money & are having to consider bnkruptcy or an IVA then I hardly think its a good idea to be looking to take out a mortgage.

What you're essentially wanting to do is to wash your hands of one load of debt & have the creditors swallow the losses, whilst borrowing a load more money from someone else to carry on your lifestyle without paying back what you've spent.

People just seem to have an odd mentality these days, where they want things & even if they can't afford them (like your new house) still go ahead anyway.

You might *want* to stay on the property ladder, but I think that trying to find a way to do it by discharging your other liabilities so that you can afford it is wrong, & I think it means that you haven't really learn't anything.

Sorry.

Merton

TTMCMschine wrote: »

If you already owe so much money & are having to consider bnkruptcy or an IVA then I hardly think its a good idea to be looking to take out a mortgage.

What you're essentially wanting to do is to wash your hands of one load of debt & have the creditors swallow the losses, whilst borrowing a load more money from someone else to carry on your lifestyle without paying back what you've spent.

People just seem to have an odd mentality these days, where they want things & even if they can't afford them (like your new house) still go ahead anyway.

You might *want* to stay on the property ladder, but I think that trying to find a way to do it by discharging your other liabilities so that you can afford it is wrong, & I think it means that you haven't really learn't anything.

Sorry.

I have to agree with you there.

Mr_Blek

TTMCMschine wrote: »

If you already owe so much money & are having to consider bnkruptcy or an IVA then I hardly think its a good idea to be looking to take out a mortgage.

What you're essentially wanting to do is to wash your hands of one load of debt & have the creditors swallow the losses, whilst borrowing a load more money from someone else to carry on your lifestyle without paying back what you've spent.

People just seem to have an odd mentality these days, where they want things & even if they can't afford them (like your new house) still go ahead anyway.

You might *want* to stay on the property ladder, but I think that trying to find a way to do it by discharging your other liabilities so that you can afford it is wrong, & I think it means that you haven't really learn't anything.

Sorry.

Agree totally. You'd think once bitten, twice shy.

Getting on the property ladder is a huge pyramid scam and it is fast running out of new fodder.

melf_2

Hi everyone,

Can I just defend myself by saying that the amount I'd pay out in rent is exactly the same as the amount I'd pay in mortgage. Unfortunatley I live in an expensive part of the country but this is where I work and my partner works so we really can't rent anything for less than £600-650pm. Therefore we just thought that we should try and buy as it would be more sensible financially. We actually thought that would be the right thing to do? Obviously not. Also we haven't aquired any new debt for over 8/9 months. We haev being trying to pile money into our debts while we've been at my parents which has been good but can't carry on forever.

Bestthingsinlifearefree

Hi Welcome to MSE,

It seems better for you to rent rather than take on another £123,000 in debt.

If you buy and interest rates go up or you need to make a repair to the house you will need to pay for those costs where as if you rent you would not need to.

Maybe research the rental market some more as as far as I am aware it is cheaper to rent than buy in all of the UK.

which county / town do you live in?

Good luck.

livinginhope

I'm afraid I also agree with not jumping back on to the housing ladder at this point in time.
You have a good income,why not pay your debts back with a DMP? yes I know it's stressfull sometimes,but it's not all bad,certainly not as bad as going bankrupt,this will affect you for years and should only be the last resort,from what I can see from your figures,you have enough to make a good monthly payment to your creditors and still have enough to rent a decent house.
Bankruptcy and IVAs for that matter,shouldn't be considered lightly and certainly not just because you don't want to have any stress,going BR is stress in itself and your problems will not go away overnight.
As others have said,give Payplan or CCCS a ring and get some more advice before deciding what to do.