IVA vs Bankruptcy

Wasabi74

Spoke to StepChange yesterday and they advised both an IVA and declaring myself bankrupt as both valid options. Current debt is a total of £30k (one loan and one credit card both with Barclays). I currently rent privately but sue to space issues will need to move in the next two years tops.

I was given pros/cons of each option but I really don't know which one to go for. Main factor is the fact that I'll need to be able to rent somewhere new mid term and it's a worry that both IVA/Bankruptcy will make it very hard (although apparently much easier with an IVA?).

Any advice would be much appreciated. StepChange provided all the facts but they couldn't recommend which of the two options would be preferable, and despite having read online for hours on both I'm still at a loss on which one to go for.... I'm single with 3 children if that makes any difference...

Many thanks in advance

debtfree2016

Hi Wasabi74, if you were to enter either IVA/Bankruptcy you will have trouble renting unless it's private rental. May I ask have you spoken to Barclays about freezing the interest and also have you ever been mis-sold any PPI ? you effectively only have one creditor, I know that with an IVA it's a majority vote not sure on how Bankruptcy works. So if Barclays aren't happy with the repayment figure they will decline the IVA.


What you could consider is finding how much you would be repaying in the IVA and then dealing with the Barclays direct with that figure missing out the middle man. Admittedly the IVA/ Bankruptcy will write of some of the debt and once approved that will be then end of it provided you make all repayments. Hope the above helps and please wait for more responses that may help. Best of luck

Wasabi74

Sorry for the late response and thank you so much for your advice. No PPI sadly. Stepchange did mention that being all the debt solely with Barclays might be an issue but the fact that I haven't missed any payments so far would act in my favour.

So, I just got off the phone with PayPlan and they have recommended an IVA at a monthly payment of £85. Stepchange suggested £145 as the minimum amount they would recommend for a viable IVA. Obviously I rather go with PayPlan as the amount Stepchange has suggested would leave me with no room for rent increases, income drops etc in the future but is the PayPlan amount realistically likely to be approved by Barclays?

Not sure what to do.......

debtfree2016

Hello Wasabi74, have you spoken direct to Barclays regarding repayments and that you are struggling?

Wasabi74

No, not yet .... always thought of an IVA as the best option as otherwise it would take me twenty years to pay the whole amount (even if Barclays agrees to freeze their interest). Having a really bad credit rating for 6 years is a bummer but I doubt I would have the money to buy a house for example any time soon anyway.... (I'm assuming I would be able to keep my car ... worth about £5,000 which I might be completely wrong about)

DorisTrousers

Your car would be a massive issue in BR, it is very likely that you would lose it as it is of excessive value. Therefore, IVA does seem favourite.

The payment amount issue is down to you, but if Payplan are confident of getting it through at that level then you have nothing to lose really by having a crack. An IVA protects your assets, so you would be allowed to keep it under the IVA.

mwarby

Worth bearing in mind that with an IVA you may still end up having to downgrade the car, with only 1 creditor they can propose whatever amendmant they like, no worries about being outvoted

Wasabi74

Thank you both. It is a worry that they might ask me to downgrade the car. I do have three young children so need a big car with a boot big enough to accommodate a double pushchair for example, not sure whether they would take that into account?

And yes, definitely a big concern that all my debt is with Barclays :-(. Just hoping that because I am currently up to date with all payments (will start defaulting though from next month to try and put that money towards living expenses) they'll be looking at my case in a more lenient way....

DorisTrousers

I've never once seen a creditor ask a debtor to downgrade a car on an IVA proposal if the car was bought and paid for. It is possible I suppose, but very unlikely. Far more likely that they would do that if there was a very large HP payment taking away from any possible repayment.

jamesd

Contact Barclays. Tell them that you are about to commence an IVA that PayPlan suggested should be at £85 a month or go bankrupt. Offer Barclays the option of making a better arrangement offer than what bankruptcy would deliver them if they declined a five year IVA, given that the bankruptcy would probably last for only a year and leave them with almost nothing. Perhaps suggest an interest freeze and £85 a month for ten years if you think you can handle that. This is probably a considerably better deal for them than IVA or bankruptcy since it lasts for ten years rather than five or one.

Wasabi74

jamesd wrote: »

Contact Barclays. Tell them that you are about to commence an IVA that PayPlan suggested should be at £85 a month or go bankrupt. Offer Barclays the option of making a better arrangement offer than what bankruptcy would deliver them if they declined a five year IVA, given that the bankruptcy would probably last for only a year and leave them with almost nothing. Perhaps suggest an interest freeze and £85 a month for ten years if you think you can handle that. This is probably a considerably better deal for them than IVA or bankruptcy since it lasts for ten years rather than five or one.

Jamesd - if Barclays were to accept such a deal, would my credit record stay intact? Otherwise I cannot see the advantages of offering Barclays to pay them £85 a month for say ten years when with an IVA I would only have to pay that amount for half the time (assuming it would be accepted).