IVA vs Bankruptcy

DorisTrousers

phil2580 wrote: »

My point is that Payplan will hook you with a low monthly payment (£85), then uplift it at the creditors' meeting to get the votes through on the basis that most people, once they've got that far, won't want to back out.

Because all Inc. and Exp. calculations are based on the same set of guidelines, it doesn't matter where you go. Sooner or later your contributions will be aligned to the same guidelines.

Can't agree with that, sorry. There are huge differences between providers and to suggest otherwise does no-one any good.

Yes, I.P. firms are somewhat hamstrung by StepChange's own guidelines (but hopefully not for much longer) being what voting houses look at, and they also very much lean towards creditors rather than debtors in comparison to, say, the CFS.

That does not mean, though, that one provider cannot provide a more realistic budget, using the same guidelines anyway, as another. Some providers have their own in house criteria which means they cannot propose below a certain contribution level, for example. StepChange may be, and probably are if their DMP arm is anything to go by, such an organisation.

I am no great fan of Payplan, but to suggest they are looking at £85 whilst secretly knowing that it will end up at £145 is an accusation I would be very wary of making personally.

Wasabi74

Thank you all. When I called Stepchanged and mentioned about another company providing me with the figure of £85 they did confirm that they have a cut off min amount of £100 for IVAs. As I understand it, if I'm not happy with the amount approved I can always halt the process and decide on BR instead?

About being on benefits .... I'm expecting it to be a temporary situation for me. I got divorced two years ago; having three nursery aged children (incl twins) and receiving a minimal amount of child maintenance from their father is the reason why I'm finding myself in this situation, as nursery costs would have been much higher than my take home pay, hence me having to stop working until the youngest start school (in about 18 months). Going for BR would work out better than an IVA in that respect as once I'm back at work (hopefully) in a year and a half I would be able to move to a bigger place with not too many issues as I would be able to answer 'no' to the 'are you currently under BR etc etc' question on those forms as well as explaining the reason to any understanding landlords/agencies for ending up on BR (please correct me if I'm completely wrong there...).

Food shopping can be done online yes, but since I discovered Aldi I have been able to reduced my food costs nearly by half .... sadly they don't deliver! Small problem really, as I can always use a minicab to get back home with all the shopping twice a month.

A quick question... Once BR has been approved, do you have to stick to a given budget during the year that it lasts or once it's done you're free to start afresh managing your own finances? I'm thinking if I do decide to go with BR and they do take my car away, I would have some spare money every month for emergencies that I would have otherwise spent on car park space, fuel etc etc. Also, if I decide to sell the car ahead of BR, would I be able to use some of that money on things like essential travel to visit family (no family in the UK, hence would be booking flights), pay utility bills as well as clothes for the children or would I get in trouble for doing so?

Thank you all again for your advice, it's being invaluable.

DorisTrousers

If your income is made up solely of benefits then whilst the OR has to examine your budget he will not ask for any monthly payments from you. Therefore, what you spend your money on is up to you. If nothing changes in the 12 months you are in BR then once you are discharged the OR cannot ask you for payments after that, so if you get back into work then you don't have to worry about paying anything towards the debts.

You are free to sell your car prior to the BR, but you would be expected to get a fair market price for it. It would not be unreasonable to use some of the proceeds to purchase a more modest vehicle, say £1k or so. It would also not be unreasonable to use some of it for general living expenses (not debt, if you have arrears on utilities you should not prioritise them, they form part of the BR estate). Essential clothes would be fine, if the washer needs replacing etc although you should keep receipts to be on the safe side, and you can indeed use some of the proceeds to fund the BR process itself. My own view is that flights would be going too far, and the OR may decide to impose BR restrictions if you did that, however you must decide for yourself. If there are BR restrictions imposed then you will be on the Insolvency Register for a longer period than would otherwise be the case. Any remaining monies would be expected to be handed over to cover the OR costs and possibly give a small return to creditors.

Wasabi74

DorisTrousers wrote: »

If your income is made up solely of benefits then whilst the OR has to examine your budget he will not ask for any monthly payments from you. Therefore, what you spend your money on is up to you. If nothing changes in the 12 months you are in BR then once you are discharged the OR cannot ask you for payments after that, so if you get back into work then you don't have to worry about paying anything towards the debts.
.

Thank you. So, my income is made up mainly of benefits but also a couple of hundreds from my ex husband each month, would that be counted as other income and would I therefore be made to pay a monthly amount as I would with an IVA? Would that be for three years, and how do the BR monthly amounts compare to IVA monthly payments in general?

Trying to decide whether five years on an IVA paying around £100 monthly (and keeping my car) is preferable to potentially three years on BR where I might end up paying a similar amount and I lose my car, as well as a least favourable credit rating that goes with BR...

DorisTrousers

Unfortunately, some may say, the Insolvency Service does not consider child maintenance income as being exempt from any income payments calculation. Income payments, as you say, last for 3 years, and can change depending upon your circumstances.

A lot of debt advisors will assert that figures that the OR considers reasonable when calculating disposable income are more generous than can be used in an IVA, but I am not so sure it works like that. For example, a single person will probably benefit from that, but for people with children, especially single people, the water is a lot muddier. You also have to factor in that each OR is different and you may get a completely different outcome from one than you do from another. I wish there were a black and white answer for you, but there isn't, it is simply a matter of personal choice.