Failing IVA

kellbells

Just wondered if someone can help out?

If an IVA fails after 3 consecutive non payments, who is responsible for paying the bankruptcy fees?

I am asking on behalf of my parents who have been told by Kingsgate Insolvency that they would be responsible for them but I've read elsewhere that the IP is the one who instigates the bankruptcy therefore it is paid by them or out of whatever money is held in the IVA at that stage.

Can someone please clarify?

Many thanks.

DevCoder

Several possibilities

1. There is a clause in your IVA that states that funds must be held for (possible) bankruptcy, in which case its paid out the pot. Normally funds are ringfenced in the IVA pot for the benefit of the creditors and wouldn't necessarily be used for bankruptcy costs. If an IP is the trustee of the IVA then they normally will write this protection in otherwise the IP will have to pay the costs personally.
2. The IP can ask the creditors to fund the bankruptcy
3. The IP can let the IVA fail and the creditors will then take whatever action they want (ie petition the bankruptcy etc).

longtermplanner

If you go back a few years it used to be common for an IP to make you bankrupt if your IVA failed. That clause is now rare. Your parents need to read their IVA to check, but my assumption would be that their IP is correct.

Do your parents want to go bankrupt? Are they worried about how to get the bankruptcy fees?

kellbells

longtermplanner wrote: »

If you go back a few years it used to be common for an IP to make you bankrupt if your IVA failed. That clause is now rare. Your parents need to read their IVA to check, but my assumption would be that their IP is correct.

Do your parents want to go bankrupt? Are they worried about how to get the bankruptcy fees?

Thank you. Mum is unsure about bankruptcy still. I've tried to explain it to her but all I get from her is "no, I don't want to do that".

I know if she doesn't pay the IVA then that money can pay for the bankruptcy.

She was going to retire but with the outcome of her call to Kingsgate, they've told her she can still afford to pay them £100 per month based on her & dads pension income of £1500 per month. Mum has now decided to continue working as she's unsure if they'll be able to live on pension income alone.

longtermplanner

Horses, water etc.

Which sounds dismissive, but actually the decision to go bankrupt has to be her decision. It's all very well people saying that the stigma is less these days, but it is still very real for many older folks.

All I think you can do is be there and emphasise that her health is the most important thing and point out how much your dad is probably relying on her being well.