Bankruptcy or IVA ?

Ruad

Hi All

Thanks in advance for any assistance/guidance

Five years ago I would never have dream,t I and my family (wife and three young children) would be in the current mess we find ourselves in.

To cut a long story very short, as whole we have approx -
70k in unsecured debt (35k me 25k wife and 10k Joint)
Around 15k equity in mortgaged property, possibly less.

Income wise we have possibly £280 a month spare income after all outgoings taken into account. This amount being determined by step change.

Step change advice is that an iva is a strong possibility to consider and as such we have a telephone interview with Aperture/Grant Thornton on Tuesday.

Such advice being based on my wife returning par time to work after maternity leave (which will result in spare income))

My question is if we didn't,t have any disposable income then would bankruptcy be the better route to take in that it would be discharged in 12 months without the need for an IPA to be put in place rather than an iVA which would run for 5/6 years.

Apologies if I should have included more info, but the above is the top and bottom of where were at now, how we got here is a lengthy story but if any of it is needed to offer guidance please let me know.

Thanks again.

DorisTrousers

What you do is completely up to you of course. I assume you are self employed? StepChange refer self employed clients to GT, but I am afraid that across the industry GT don't have the greatest reputation for customer service, so research on that could prove valuable, although there is no harm in speaking to them I suppose.

The key issue is the house. Do you want to keep it, or are you happy to put it at risk?

IVA protects assets, BR puts them at risk.

If you had no disposable income, then an IVA would not be possible anyway. In that instance, assuming the Official Receiver, who would initially act as Trustee, agrees that there is nothing payment wise that he/she can go after via way of Income Payments, then you do indeed enter 12 months before discharge. The OR does have a legal duty to recover what can be recovered for the benefit of the estate, i.e. creditors, and there are 3 main areas they will look at.

Income payments (in this case, assume not).

Other assets bar property, e.g. vehicles of excess value, valuable antiques, shares, savings etc. Lets assume nothing there.

Property. Here is your big risk as the OR has £15k he could go after. Now, you do have the right to make the OR an offer, via a 3rd party, to buy out his beneficial interest for what he deems reasonable, plus legal costs. They do have the right though to hang onto the interest in the property for a period of 3 years. For some time now, as far as I am aware, Official Receivers have preferred, en masse, to hang on the interest in the assumption that its value will increase. House prices are generally on the rise again, and also you may be paying down the capital as well (assuming you are not on interest only). The property would then generally be re-valued after 2 years and 3 months. Whilst the interest can still be dealt with without the loss of the property, the likelihood is that it will be at far greater cost. There is also the danger that the OR will appoint an outside Insolvency Practitioner to act as Trustee. Their fees are both very high and preferential as well. Of course, if your home has no equity, or significant negative equity, then the above doesn't apply.

Think very carefully about your next move, and do speak to as many professionals as you feel comfortable with in order to get a balanced viewpoint.

owlet

Are you guessing the house equity?
Make sure you get a few valuations based on a quick sale (lower value) . Then you will know what you are looking at for equity.

There is a fine line with your possible equity as to whether the OR would be interested.

DorisTrousers

Owlet is correct, inasmuch as the equity may have been over-estimated, and the OR may not be interested at all, but the problem is that you can't ring them beforehand and find out so you are taking a risk.

The facts are that, if SC are correct, then BR will involve £705 BR costs (less if you qualify for remission) times two, and 3 years of payments, estimated at £280 per month, possibly variable. Possible forced sale at the end of it, maybe no repercussions whatsoever house-wise of course.

As I said before, think very carefully.

owlet

If you want us to have a look at your SOA, the link is here

http://www.stoozing.com/calculator/soa.php

We might be able to see things that have been missed.