BR or IVA - Advice please

gtt184

Just wondering what the best option for this is (posted on behalf of my sister)

My sister is on a DMP with step change for £10k debt incurred from a divorce in 2008. Ex-husband stayed in the jointly owned house which has now been repossessed and had negative equity.

So to add to the £10k debt, there is now repossession debt of £57k.

She is a single mum of 3, she has no assets other than normal household goods and a leasehold car. She is a doctor (not a medical doctor)

Her life is pretty miserable really,she doesn't have a penny to her name and lives pretty much hand to mouth. She hasn't got in this mess through being silly with money either and wants a fresh start and to be able to move forward.

She eventually wants to be able to own her own home.

What would you advise is the best option here - IVA or bankruptcy? Step change were keen to recommend an IVA, but that just seems so long winded and so many more years of misery.

She earns £35k a year.

Thanks in advance

macbabypam

I doing know enough about IVA to comment, but BR would give a fresh start. However, it would depend how much surplus income she has as to whether she would receive an IPA under BR. Anything more than approx £20 per person would have to be paid to the OR for 3years. If she has no surplus she would not have to pay an IPA and would be done and dusted after AD in 1year.

If you can post an SOA on here then one of the forum experts could give you better advice whether an IPA is likely. You could try posting on the IVA forum for more advice about that.

gtt184

She's just told me that her surplus income as per her DMP is £185 a month....but honestly, she has nothing to live on :-(

UpToMyNeckInIt

Have a chat with your local CAB office.

If she has little in the way of assets as you describe, and providing her profession does not prohibit it, then going BR is likely to be your Sister's best option.

IVA's are great if you have assets to protect (like property), and if you cannot go BR for professional reasons, but otherwise, going BR is worth looking into.

All the best, whatever you decide.

tigerfeet2006

My gut instinct with no assets to protect is to go the bankruptcy route.

The allowances are different in a DMP as compared to a bankruptcy. If she would like to pop up her SoA as it is in the DMP then people can give her some idea of what may or may not be accepted. But be aware that the OR follows guidelines and these are not hard and fast rules and some are ORs are more lenient than others.

Also get her to read the stickies at the top of the board (Look Here First and the Bankruptcy and Living With It one)

And get he to ring someone like National Debtline for a second opinion.

Research all her options. This is the start of her being in control. Read, ask questions, read, read and read some more and ask questions.

DorisTrousers

IF, and I stress IF, the scenario you have outlined here is accurate, then she should avoid an IVA and go BR.


BR would be far cheaper than an IVA, and I am surprised that StepChange were keen to recommend an alternative solution.


Perhaps there may be reasons for that that though that we are not privy to.

gtt184

Thank you very much so far everyone

She is getting her SOA to me which I will put up.

Step change seem to be telling her that an IVA will be less damaging to her credit rating and she's more likely to get a mortgage after one than if she goes bankrupt?

Anondebtadvisor

gtt184 wrote: »

ut up.

Step change seem to be telling her that an IVA will be less damaging to her credit rating and she's more likely to get a mortgage after one than if she goes bankrupt?

Thats not really true! and i agree that if she wants to put everything behind her and have a fresh start bankruptcy should be the way to go.

longtermplanner

On what you have described (and it's always difficult knowing if you have the full picture about someone else's situation) then this is a clear cut case for bankruptcy. With no assets to protect there is little point in opting for the longer and more uncertain IVA over the fresh start of bankruptcy.

Her chances of being able to buy a house in the next few years seem so unlikely that it's not worth putting any weight on this issue. In the longer term then there isn't really that much difference between an IVA and bankruptcy. And see this recent thread: https://forums.moneysavingexpert.com/discussion/comment/65233455#Comment_65233455

There is a comparison of the two options here, perhaps you could show it to her? http://debtcamel.co.uk/hard-choices/iva-vs-bankrutcy/

You don't say what her profession is, in some jobs bankruptcy is a major problem but she would know if this was going to affect her.

National_Debtline

Hello there,

I'm a massive fan of the Debt Camel site - the Bankruptcy/IVA comparison page is really worth a read.

We have a section on our website dedicated to the various forms of insolvency. There are also fact sheets which discuss Bankruptcy and IVAs in more detail:

https://www.nationaldebtline.org/EW/information/insolvency/Pages/default.aspx

Best wishes,

David @natdebtline

alastairq

Hi..I, too,am impressed with the clarity of explanation on Debt Camel....very concise....and would answer the OP's question entirely.