considering bankruptcy

bugaluggs78

My husband and I have been on a DMP for almost 5 years and have paid a small amount off our debts.

Our total debts equal approximately £23000, some are joint and some are individuals, spread accross 9 creditors.

One of them is now pushing for a CCJ and a charging order (this one is a joint debt, owing £4200)

We are now considering an I.V.A or Bankruptcy as possibly options.

We have a mortgage (payments are up to date) we owe £105000, but unlikely to sell for more than £80000 according to local sales and a recent valuation.

We own a car outright, that is 14 years old, a japanese import that is large enough for the whole family (we have 4 children), they are not in the Glass's guide so no idea how much it is worth.
My husband also has one on finance, 2 years left to run.

We have no other assets/savings.

We both work, combined it is around £25k and we do qualify for in-work benefits.

My husband is classed as disabled due to one of his arms and one of our children is also disabled, both are on low rate DLA.

Our main worry is losing the home!

then the people carrier (i use this for the school run which is 4 miles away and not on a bus route at the times school starts, I also use it for my sons appointments which are at a hospital miles away)

then my husbands car (he works 6am-2pm, 20 miles away, no public transport at that time of the morning)

The finance company have said as long as payments are up to date, they would not take it back, but would the official receiver and our creditors accept this?

If one creditor secures a charging order, how will the others respond?

No idea what we should be doing and can't get hold of payplan until Monday now.

mum2one

Re the car - if you could prove that you do need it, (in this case u do) it would be unlikely that it gets repossed and with it being 14 years old its unlikely to be valued at more than 1k.

As for the other car - can't really answer that would depend on the OR.

Hopefully someone more experienced will be able to help with the rest. have you looked on payplan website they may have sections of q+a.

Good luck with everything xxx

Mouse1812

bugaluggs78 wrote: »

We have a mortgage (payments are up to date) we owe £105000, but unlikely to sell for more than £80000 according to local sales and a recent valuation.

Our main worry is losing the home!

You won't loose your home, promise. Still got mine.

Be ready to resist any creditor's attempt to get a charging order though.

In meantime check this thread

bugaluggs78

thankyou both x

I have just re-read the letter and they are suggesting the CCJ/charging order after receiving my latest payment offer.

I haven't made a new offer but have made a token payment last month so wondering if they think that is going to be a new one from now on!

Will ring payplan on Monday.

My son is having major surgery next week and I won't be at home for a week, hope nothing is done then!

Mouse1812

It will take them several weeks / months to move to judgement and then charging order - get the bankruptcy in first

bugaluggs78

is bankruptcy better than an IVA?

dancingfairy

They are different. If you had equity in the house then an IVA would probably make more sense.

IVA
cars would be ignored (I think).
You would set out a proposal to your creditors to pay x amount per month for a set period (usually 4 years I think) and they would vote whether to accept it or not.
No direct fees to paid by you.
Most suited if you can be pretty much certain of making the payments for 4 years. O.K you can make variations etc but if you lost your job for instance or something else meant you couldn't complete the IVA then a lot of your work would be wasted (as some of the money you paid would go the person running the IVA) and the IVA could fail.
Also you would be expected to attempt to remortgage at the end of year 4 (I think) and offer some of that to the creditors or pay an extra year.

Bankruptcy
I believe the amounts/guidelines are stricter (although not prohibitive)
Obviously the OR may have an interest in any vehicles you own - especially if they are worth over a certain amount (1k or is it 2k now)?
The OR can make a decision on what to do with the house any time up to the 2 year 3 month mark. If it is in a lot of negative equity they may deal with the house straight away and say it's fine to stay etc.
You may be required to make payments into your bankruptcy for up to 3 years depending on your circumstance, if your circumstances change then the IPA would be changed accordingly.
Obviously there's up front fees as well of 750 (I think) each.

In terms of credit rating/job prospects etc then I think there is little in it. Some jobs bankrupts aren't allowed to do - mainly those in law/accounting/finance etc but I think an IVA would have a similar effect. Credit rating trashed in both cases.

With your level of negative equity I believe the OR may well not be interested (unless they think housing prices will suddenly rocket in your area). Obviously this is my best guess and not definitive.
Can you afford to pay the mortgage if not paying unsecured creditors?
Is the mortgage level realistic in terms of local rents etc - for example the OR may question if your mortgage was twice what it would cost to rent a similar house?
Have a chat to one of the debt charities (or more than 1 if it helps).
Best of Luck
df

bugaluggs78

the housing market local has been rubbish for about 6/7 years now, can't see it changing anytime soon.

We can afford the mortgage fine, its actually lower than a lot of similar houses that are private rented.

In social housing I suspect we would be classed as 'overcrowded'.

I doubt we can afford to go Bankcrupt as £1500 is a lot to find.

An IVA sounds ok, we are already paying an amount each month now but it doesn't seem to be making a difference!

Just worried about the vehicles really as we need both!

alastairq

If any or all your creditors manage to obtain Charge orders over your home, this effectively means they have converted your unsecured debt into secured debt.

I suspect they have looked at your combined financial position and guess you have discovered BR is a real option?

To raise the required amount to petition BR, folk simply cease all unsecured debt payments.

As Mr Mouse says, BR done soonest, preserves whatever equity your home acquires......in the future.......for you, and not for a creditor.


The vehicles will not be a problem!

For sure, the one with the most 'value' may have to be down-graded to one of a value not exceeding £1000.


That is..if the OR decides to terminate the credit agreement in the first place?

But, to make matters clear, BR does not prevent a person from owning or running a car.

The issue is twofold with BR.

[1] a car is an asset, which the OR must realise for the BR estate.

Who actually buys the OR's interest in the car doesn't matter...it could be you, or your family.

However, if you can 'prove-a-need'.....then..providing a car's value is less than circa £1000, the OR can exempt it as an asset.

But if the OR does not, it doesn't prevent you from having the [or 'a'] car.

[2] if a car is exempted as an asset..then the BR individual can claim, on their SOA, for service, maintenance and running costs.


Even if no exemption is deemed....family transportation costs can and should be included in the SOAs..

Just because bus and taxi fares are part of the claim, does not mean one has to use the bus or taxi!

So..do not worry about cars..one way or another, you will have the use of cars!

Unlike an IVA..[which, if in the future you both find things economically getting worse....you may not be able to afford.......and creditors may not agree to a lowering of payments....therefore the IVA will fail, therefore bankruptcy is the only other option to follow?}....the a BR each, will settle the debt situation 'immediately'..and offer you protection from current creditors in the future.

Remember in the distant future your house/home will be yours....and possibly your kids...your security against hard times in the future!

If a creditor manages to obtain a charge on your house...they are converting unsecured debt.....and even though you may gain equity by diminishing the mortgage...it all disappears again because of the charges!

So..you don't win!

Given your circumstances, my advice is to go for BR soonest [as Mr Mouse says?].....the pain will be over a darned sight quicker, and offer you more protection in the future.

[And..I doubt an IPA would be imposed, given your combined income?..plus, unlike an IVA, a surplus-based IPA can be instantly varied to suit any changes in your circumstances.......no one has to give their 'permission'..who has a vested interest!

bugaluggs78

thanks for such a detailed response, it is very much appreciated.

If the OR deems my car as an asset and allow me to keep it, is has to be worth less than £1k?

Looing at autotrader, the prices vary greatly, but if they look at the highest price it could be worth £4-£5k!
It is 14 years old and if they made us give it up, to replace it for another suitable 7 seater, we would be looking at one maybe 20 years old.
A zafira would not be big enough for us, this car is reliable and suits are families needs. We paid £5k for it four years ago.

Could I sell it to my parents for a nominal price before I petition, then just continue using it but not own it? or would that be sussed out?

If the finance company allow my husband to keep his finance agreement running, will the OR allow this? it is currently £180 a month, for another 2 years.

Can all this be determined before we go ahead with Bankruptcy?

If this company plan to go for a ccj for each of us then a charging order, how long realistically have we got? (to get the money together)

arcon5

If you sell it for a nominal price to a relative it is my understanding the OR can apply to the courts to recover the asset.

Getting a CCJ... 8-12 weeks maybe? If the claim form comes through you should be able to acknowledge the claim and request more time to form a defense. Then it takes time to apply for the charging order.