Into Yr 4 of IVA - try and keep it or go bankrupt?

thinkpositive1

I am just commencing Year 4 of my IVA but continuing falls in my income and unpredictability of securing fee paying work (I am self employed) have been putting me and my financial situation under huge pressure...to the point where I am seriously considering bankruptcy. With just under 2 years to go and 3 years til my credit record is clean again I have been doing my utmost to maintain an IVA.

The situation is that I have a house which I rent out ever since I moved in with my partner. The rent covers about 40% of my mortgage costs so this has become untenable and I am about to surrender the property. There will be about £25K "shortfall".

I am in 2 minds as what is best to do: to go bankrupt now or to try and renegotiate my IVA which may or may not be accepted - so there is a possibility I could still end up having to go bankrupt in a few months time of the IVA variation cannot be agreed.

My IVA company are reasonably convinced they could negotiate a variation to my IVA to include the shortfall there will be when my house gets sold - even though there will only be about 1.5 years of my IVA left to run then. They say this happens a lot and they seem confident of getting a variation agreed. I understand 50% of creditors by value have to vote to agree a variation.

Having been in a debt plan for over 5 years now: over 2 years in a DMP and 3 in an IVA I have been trying to avoid going BR and if I do, I will wish I did 5 years ago and would have been well in the clear by now.

Anyhow, what do people think is best to do - await the sale of my house and get my IVA company to look at a proposal to creditors for a IVA variation. There could be a good outcome from this or possibly the outcome would be a non agreement by creditors to a variation proposal and just delay having to go bankrupt in 4-5 months time.

I am tempted to try and go for a variation to the IVA once the house has been sold and the exact shortfall known but will kick myself if the outcome of those negotiations is creditors failing to agree it....regretting that I didn't go BR now.

longtermplanner

If the only thing you have to lose is 4 or 5 months, then it surely is worth the wait?

milliemonster

I totally agree with the above, for the sake of waiting a few more months don't go bankrupt now, your ip is best laced to advise as he/she will know your case intimately, if they are saying that they are happy to propose a variation then they are pretty confident it will be accepted

At least give it a try, waiting a few months to find out and if it isn't successful then going bankrupt then surely isn't going to make any difference?

thinkpositive1

Thanks both for your replies.

I take your points. I guess my instinct thinks it almost impossible that a variation with such a large new debt being brought into the IVA plan and with a relatively short period left to run that enough creditors, including my mortgage company, would agree to this.

I would like to try it. The time thing is about the fact I really want to find a clear plan that works for me from now on. It is the uncertainty and not having an agreed way forward in place that is my concern.

Aside from the hard facts about the debts it is the strain of worrying "will they / won't they agree to it" and not knowing the outcome for 4-5 months probably compared to going BR now at least knowing where I stand. Although with BR I could have 3 years IPA payments to make and I know it is not an easy "alternative".

UpToMyNeckInIt

...If your IP is willing to include the property shortfall and call a variation meeting with your creditors, then let them go ahead, as you have nothing to lose.

I agree that, this far into the IVA, it would be tragic to allow it to fail. Saying that, going BR may be your best option, now that you do not have a major asset at risk. OK I know it means resetting the 6-Years of knackered credit.

Might also be worth posting your concerns on the main 'Bankruptcy & DRO' board as well.

Also worth a chat with your local CAB office to get an opinion independent of that of your IP.

Let us know how it goes.

thinkpositive1

Thanks uptomyneckinit.

I booked in a few weeks ago with CAB - seeing them in 3 weeks. Also have posed some questions on the BR board but this possibility (of the variation opportunity) was only something really coming to light yesterday as phoned my IP to go over a few issues.

IP have all the way along taken a stance of "it is all about whatever is affordable for you" and been very helpful and flexible over the 3 years. I trust their advice. They think I would probably need to offer up a bit extra in my payments to raise the cahnces of getting creditors to agree to a varaiation on the scale we'll be looking at but by then, 18 months of payments and clear credit file in 2.5 years would be preferable I think to BR with potentially 3 years payments of IPA and 6 more years to run.

UpToMyNeckInIt

I think your latest post demonstrates that you are carefully considering your options, not panicking, and merely flitting from one debt solution to another. I quite understand your thinking and desire to restore credit rating ASAP, it is a very important consideration.

Just shows how a supportive IP can make all the difference. Just make sure the proposed increase in repayments are affordable to you though.

Best of luck.