Whats best?

pinkladymel

Hiya
My sister is in serious debt of about 6000 and says she doesnt care anymore she just wants it gone because she cannot afford to pay it. Could someone explain to me because i have been searching the internet for two hours now (LOL) what an IVA and bankruptcy is. What I mean is, what does your circumstances have to be? How do you go about it? How long will it effect you for? and when will you ever get your life back/when will credit rating be returned to ok?

Thanks in advance xx

Posthinking

Welcome. Start here www.insolvency.gov.uk

NekoZombie

Bankruptcy and an IVA are both insolvency, though an IVA is often a good option for those who work in certain professions that are not allowed to become bankrupts, e.g. solicitors.

With an IVA, you need a regular income (so must be in full-time employment) with sizeable surplus, and be in debt over 15k. An agreement is made between the debtor and creditors to make a monthly payment towards a settlement figure that is usually 40p to the £1. The monthly payment runs for a total of 5 years, after which the debts are marked as settled. A year later, and the IVA drops of the credit reports, so in total 6 years without credit.

An IVA is said to be a private agreement between the debtor and his/her creditors, though I have heard recently that this is not always the case as they have publicised on the web. Further, credit controllers make no distinction between bankruptcy and IVAs.

You can already see that an IVA is not an option for your sister as her debts are below the 15k mark.

Bankruptcy is usually self petitioned, and for a fee of £325 plus a court fee of £150, a debtor can declare themselves bankrupt by presenting the relevant papers to court. It takes one year to be automatically discharged from bankruptcy (and therefore released from all debts), though early discharge can happen from as early as 5 months after petitioning. Bankruptcy will remain on the credit report for a further 5 years ( so, like an IVA, the same 6 years bad credit) after which things will slowly improve.

The downside is once a bankrupt, forever a bankrupt in that if the debtor is ever asked 'have you ever been bankrupt', the answer has to be yes. Further, if there is any surplus in the debtors monthly income and expenditure, the OR will appropriate approximately half of it to pay off creditors.

You can see neither option is an easy one - so it's not immediately obvious which one is best. She will definitely need to take professional advice as we do not know much about her personal circumstances - it may be that a debt management plan may be the solution, though I understand that she wants rid.

I'm sure Rich will be along shortly - I must be a mind reader, but I reckon he'll post a message with some uselul links to get free impartial advice from the CCCS and Payplan.

If not, look for Fermi - his sig will tell you all you need to know.

tigerfeet2006

Here we go nicked from the man himself lol!!

Your first port of call should be to contact one of the Debt Charities; see links below. Their services are free; they have no vested interest to serve; their advisors are professionally trained and the advice they give will be objective and in your best interests only. CCCS operate a system of telephone appointments that are designed to be flexible and don’t require you to attend an office based interview. At the CAB you will need to make an appointment with a specialist Financial Advisor; other advisors may not have the specialist knowledge you’ll need.

http://www.cccs.co.uk/

http://www.nationaldebtline.co.uk/

http://www.citizensadvice.org.uk/index.htm

If you’re advised that bankruptcy is the most suitable solution to your financial problems then we can offer the best support and anecdotal advice that you’ll find anywhere on the Web.

For more specific advice and support, in an environment that is managed by people with first hand experience of bankruptcy, and moderated to ensure that no deliberately inflammatory or abusive posts are made then please visit:

http://bankruptcysupportersclub.co.uk/default.aspx

Just remember, as desperate as you may feel at the moment, we have all experienced what you are going through at the moment and with the right support and advice things will improve. It’s not an easy route to take but it is a route that will put you back in control of your life rather than just reacting to events.

fermi

I may as well chip in with my pre-prepared bit about professional advice then.:D:p

[SIZE=-1]Professional, free and impartial advice on debt problems can be obtained from several charitable organisations. They never make a penny from the advice they give, which means it will be given with only your best interests at heart.[/SIZE][SIZE=-1]

You can contact:
[/SIZE]

• [SIZE=-1] Your local CAB Office and ask to speak to a 'money advisor'.[/SIZE]
• [SIZE=-1]The Consumer Credit Counselling Service (CCCS) - Tel: 0800 138 1111 [/SIZE]
• [SIZE=-1]National Debtline - Tel: 0808 808 4000 [/SIZE]
• [SIZE=-1]Payplan - Tel: 0800 917 7823.[/SIZE]

NekoZombie

tigerfeet2006 wrote: »

Here we go nicked from the man himself lol!!

Your first port of call should be to contact one of the Debt Charities; see links below. Their services are free; they have no vested interest to serve; their advisors are professionally trained and the advice they give will be objective and in your best interests only. CCCS operate a system of telephone appointments that are designed to be flexible and don’t require you to attend an office based interview. At the CAB you will need to make an appointment with a specialist Financial Advisor; other advisors may not have the specialist knowledge you’ll need.

http://www.cccs.co.uk/

http://www.nationaldebtline.co.uk/

http://www.citizensadvice.org.uk/index.htm

If you’re advised that bankruptcy is the most suitable solution to your financial problems then we can offer the best support and anecdotal advice that you’ll find anywhere on the Web.

For more specific advice and support, in an environment that is managed by people with first hand experience of bankruptcy, and moderated to ensure that no deliberately inflammatory or abusive posts are made then please visit:

http://bankruptcysupportersclub.co.uk/default.aspx

Just remember, as desperate as you may feel at the moment, we have all experienced what you are going through at the moment and with the right support and advice things will improve. It’s not an easy route to take but it is a route that will put you back in control of your life rather than just reacting to events.

hahaha! Tigerfeet, that was one hell of a move! Now why didn't I think of that?? :beer:

Richard_S

NekoZombie wrote: »

Bankruptcy is usually self petitioned, and for a fee of £325 plus a court fee of £150, a debtor can declare themselves bankrupt by presenting the relevant papers to court.

Ah Neko,

My turn and not to Post my pro forma because Tiger Feet has already done that for me; my unpaid secretary.:D

I do believe the fee is £335 :rotfl: :rotfl:

Rich

Richard_S

Thanks Tigerfeet,

We'll have to get a contract of employment drawn up. Mmm, maybe not I don't have such a good record when it comes to contracts;:eek: maybe a gentleman's agreement.:D

NekoZombie

Richard_S wrote: »

NekoZombie wrote: »

Bankruptcy is usually self petitioned, and for a fee of £325 plus a court fee of £150, a debtor can declare themselves bankrupt by presenting the relevant papers to court.

Ah Neko,

My turn and not to Post my pro forma because Tiger Feet has already done that for me; my unpaid secretary.:D

I do believe the fee is £335 :rotfl: :rotfl:

Rich

Ahh Rich, it was a test, to see if you were paying attention!! I see you were, A +, top of the class!

tigerfeet2006

Richard_S wrote: »

Thanks Tigerfeet,

We'll have to get a contract of employment drawn up. Mmm, maybe not I don't have such a good record when it comes to contracts;:eek: maybe a gentleman's agreement.:D

As I know what a gentleman you are Richard a gentleman's agreement is fine by me :beer: