From IVA to bankruptcy....? HELP!!

sadpootle

Hi all

I have been doing an IVA for a few months now but I am still struggling with my finances. Unfortunately the IVA company cannot reduce the amount I pay them each month as it is at it's lowest already.

I am considering bankruptcy but need to know what the IVA company will do if I go ahead with this (they are Debt Free Direct.) I don't own any property (I rent) I don't have anything of value that can be taken away and the only bank account I have is a basic cash account with Lloyds TSB, so going bankrupt is a serious option for me. My monthly SOA is as follows:


Rent and bills £400.00
IVA payment £271.00
Petrol/travel £100.00
Food £120.00
Car insurance £20.00
Mobile phone £30.00
Pets £30.00

Total £971.00

Monthly income: £1,120.00

Total left for the month: £149.00

This SOA doesn't include things like car breakdown membership, car tax, car repairs and MOT, hairdressers, dentists, doctors, birthdays, Christmas etc.

I am having to rely on my parents to lend me money when I need it.
I live with my partner, who earns less than me. We don't have any joint accounts and he doesn't own any property or any other assets. Will he be affected if I declare bankruptcy?

Also, I am currently working as a credit controller; will I have to tell my employers if I go bankrupt?

Any help would be much appreciated, this is keeping me awake at night :eek:

craigy1973

I am in a similar position to you (although I don't have an IVA). I had a business failure 3 years ago. I am struggling to pay off £90k from 3 main creditors and as I have no assets I am considering bankruptcy. Like you I rent my home (so they cant take that away!). Regarding being a credit controller, if I am correct you manage SALES ledger issues rather than PURCHASING ledger issues. Therefore you are not obtaining credit over £500 without declaring you are bankrupt etc. If you were in purchasing then technically you are obtaining credit on behalf of your company and would therefore need to disclose bankruptcy to your employer. As a Credit Controller you are trying to get people to pay up, therefore not obtaining credit and therefore you don't need to tell your boss! Hope this helps.

NekoZombie

Hi there

welcome to the board. It looks like you were completely mis-sold an IVA which is annoying in and of itself. Technically, when you default on your IVA they should automatically start proceedings for bankruptcy, but in practice this is rarely the case and you will probably need to petition yourself if you want the matter resolved in a timely fashion. The company can't really do anything except keep the fees that you have already paid them so far - they cannot send bailiffs round so your belongings are safe, and as you say you rent so housing isn't an issue either.

I strongly suggest you cease all payments into the IVA if you are serious about bankruptcy - you will need this money to save up for fees. In the meantime work on a much more accurate SOA, which you will need to submit to the courts to determine any possible IPA payments.

Regarding your job - the only way to know for sure is to look over your contract of employment. If there is a clause that states you cannot be bankrupt, then you are obligated to tell your employer about your change in circumstances. Whether you do is another matter . As far as I understand it, it has nothing to do with obtaining credit over £500, just to do with certain professions. For example, solicitors cannot continue practicing law if they become bankrupt. In some instances, as long as an employer is happy to keep you on in your current role, bankruptcy isn't really an issue.

Tr@cker

How was she mis-sold the IVA ? We dont know what the debt was/is and whats changed that the poster cant now make the payments ?
I thought all this was worked out to make the payment affordable.

Richard_S

Tr@cker wrote: »

How was she mis-sold the IVA ? We dont know what the debt was/is and whats changed that the poster cant now make the payments ?
I thought all this was worked out to make the payment affordable.

I would say she was mis-sold the IVA because the budget it was based on was unrealistic. A surplus of £149 per month that doesn't include essential living expenditure is never going to work.

Outcome: Debt Free Direct receive a few months fees, creditors receive nothing and sadpootle has wasted her time and money.

Richard

scootw1

A lot of companies mis-sell IVAs just to get the fees and don't suggest bankruptcy. At the time the OP probably thought they could afford the payments and then found they couldnt. Easily done as you are under stress at the time you take them out and can be pushed into making decisions you wouldnt normally do.

Tr@cker

That wouldn't be a very good advert for DFD then but something doesn't add up, they obviously want business and make 1000's in fees-but they wont be making a lot out of this one if she goes bankrupt will they ?

NekoZombie

Richard_S wrote: »

I would say she was mis-sold the IVA because the budget it was based on was unrealistic. A surplus of £149 per month that doesn't include essential living expenditure is never going to work.

Outcome: Debt Free Direct receive a few months fees, crediotors receive nothing and sadpootle has wasted her time and money.

Richard

Exactly what I meant - its easy to see looking at the OP's SOA that an IVA wasn't really affordable. The other hint is that the OP says her IVA is already at the minimum and can't be reduced - Debt Free Direct have clearly wrung as much blood out of a stone as they could. I remember how sparse my SOA was when I was looking at doing an IVA, but I was clued up enough to realise it wasn't really a realistic budget. It's a shame that so many people opt for an IVA only for it to fail a couple of years down the line, in effect making them *worse* off than in they had just gone bankrupt!

Tr@cker

Presuming she didn't/couldn't pay the fees up-front they're usually added to the plan over 5 years.

NekoZombie

Tr@cker wrote: »

That wouldn't be a very good advert for DFD then but something doesn't add up, they obviously want business and make 1000's in fees-but they wont be making a lot out of this one if she goes bankrupt will they ?

Actually they will - the first few years of an IVA, all the payments go towards the fees. Debt repayments to the creditors don't usually start until year 2 or even 3. In this case lets estimate the OP has made 4 payments of 271 - thats £1084. Now lets imagine that they have a hundred people in the same posistion as the OP - you can see how all those 'small' amounts add up to a very profitable sum even if the IVA does fail!

Tr@cker

I take your point but i still cant see it they want business and anything done as unprofessional as that i'd say they wouldn't last very long as an IP.
Reputations count for a lot in business and before you ask me, no i dont work for debt free direct or any other credit business.