In an IVA circumstances changed, bankruptcy a good option?

ScaredyCat1980

Hi there,
I could really use some advice please. I'm currently in an IVA which I made about 6 months of payments of £187. I have now met someone & am pregnant. My supervisor advised me to take a 6 month payment break which is due to end next month.
There's no way I will be able to keep up with these payments with my benefits stopping, I will be worse off. Also I'll be on maternity leave for most of next year. I think that bankruptcy seems the best/only option for me now, and Im scared of what this will mean as I don't have the £700 for bankruptcy fees, and I doubt ive paid enough into the IVA to cover this. I get the impression that making myself bankrupt would be looked upon more favourably than being made bankrupt by a creditor.

I'd be grateful of any advice. I'm worried for how stressful this process will be with being pregnant, and it all sounds very invasive & like I'm going to be strung up.
I don't know what would be viewed as a criminal offence after reading government guidelines. I haven't taken out any credit since the IVA.
I rent property currently & I don't know if I'll ever be able to get a new landlord through an agency with an IVA or bankruptcy.
please let me know your experience of what to expect & if I'd be better off trying to reduce the IVA and see if my partner can pay it 👀
Thank you x

Johnsmith2016

Hi,

Did you take advice from a debt charity before choosing an IVA? For example step change or citizens advice? If so for what reasons was an IVA the better option vs bankcruptcy?

Do you qualify for the reduced bankcruptcy fees of £525, is there anything you are currently paying that would be included in your bankcrutcy that you could stop paying to raise the fees.
The problem with an IVA is they can and do fail and are not very flexible, if you are stuggling to repay after only 6 months, I would be wary of one failing within the 5 years due to a change in circumstances and you go bankcrupt anyway, but after paying a ton in IVA fees and payments and wasting time which could be better served biting the bullet, getting dishcarged and rebuilding your credit.
How much is the debt you owe?
I was in a similar position of chosing a iva or bankcruptcy, and spoke to many agencys regarding it. The bankcruptcy was a no brainer in my case. Despite many of them trying to sway me into an iva as they make a ton of fees. For me the difference on the credit file is negliable as both trash it for 6 years. You repay an iva for 5 years, bankcruptcy debts are wiped and discharged in 12 months usually, and only 1 in 5 get the IPA which lasts 3 years it would depend on your circumstances and income/outgoings, but if you are going to be off on maternity i doubt you would earn enough.
If you have no assets and little income i would say bankcruptcy is far better in my honest opinion, too many people do an IVA because of the bankcruptcy stigma, when bankcruptcy would of been the better option.
I did mine within 2 weeks. Wish i had done it sooner as it was painless. I got citizens advice to fill in my forms, booked my court date, and was in there 10 mins - stamped and done. The official reciever was wonderful and had a chat and again done within 10 mins. You hear some horror stories but not all are like that depends if your case is simple.
What specifically have you done that could get you strung up with the official reciever? I found the whole process, easy, simple and much less scary than I imagined.
Could you rent somewere new in your partners name only?
If you could answer a bit more about your specific situation I will try to help based on my experience.

Johnsmith2016

Also from April you will be able to do the bankruptcy online which may be favourable to you.

luvchocolate

I would suggest you read everything you can including the welcome thread on here, the I.S website is also helpful.
Speak to one of of the debt charities I spoke to stepchange, do your research then come back and ask questions.
It is usually quiet here at weekends so do not worry if you get only a couple of replies x

ScaredyCat1980

Hi,

Thank you for taking time to reply.

Yeah I spoke with StepChange & they told me the options & that an IVA or bankruptcy would be the best route to go down, however bankruptcy sounded so final & frightening that I was more open to the IVA route.
Once I'd done the paperwork for the IVA I started to think that perhaps I hadn't chosen the right option, but when I called StepChange they would only put me through to the IVA team & I felt trapped as I couldn't get independant advice from them anymore as they wanted me to complete the IVA. I managed to speak to a member of the bankruptcy team who was very helpful but it took a lot of persuasion to let me speak to them.
I currently pay 23p to the £1 into the IVA.

I'm going through a divorce, and have 2 children with my ex so the propect of bankruptcy s pressure scares me with everything else ive got going on,but your account of what happens has made me feel a bit more positive.

My partner could probably rent in his name yeah that's a good idea. They want to credit check every adult in the premises so im not sure if hede need to say he was going to live there alone, or if they could check me and it would affect us getting the place.

I haven't done anything that I think I could be in trouble with the receiver for, but as ive been in a repayment break from the IVA for 6 months im not sure how impressed they will be where ive been out for meals here and there or spent money on Amazon for baby things etc but I don't think there's anything unreasonable on there.

Do you know what the difference would be between making myself bankruptcy and being made bankrupt by a creditor?
What information would I need to take to citizens advice if I were to petition for my own bankruptcy?

Thank you for your help so far

Marie x


I owe 28 thousand after their fees. If the IVA fails and I don't get declared bankrupt by the creditors then I beieve that they will start chasing me for payment again, which is likely to be aggressive and threatening as many of the debts have been sold on.

Johnsmith2016

No problem.

Go to this link

https://www.gov.uk/bankruptcy/declare-bankruptcy

Print off a copy of 6.27 and 6.28

I called my local citizens advice and got a date with a debt advisor a few days later, they told me to fill in as much as I could even if it was a mess they would type it all up for me and go through it all properly. I went they did a final copy leaving out and adding relevant things then printed me off 3 copies to take to court. I called my local court and got a date for the week after.

You say it seems so final and frightening - fine, but try to see the positive yes its FINAL - as in it cannot fail, and it offers you protection from creditors who now have to deal with the official reciever.
12 months later it is wiped. For me the difference on the credit file is negliable both trash it for 6 years and both are a type of insolvancy. I was the same most tried talk me into an IVA at first when I didnt know what I was doing as they make a ton of fees. But looking back now it would of been a mistake, and I am so glad i chose bankcruptcy. A fresh start that wipes the slate.
If your partner can rent then that sorts that, being on maternity should help you avoid the IPA for 12 months.

It may take some time for a creditor to actually go through with making you bankcrupt - if you can do it yourself i certainly would.

I doubt you would be in any trouble with OR - i withdrew cash from credit cards to pay my bankcruptcy fees and told them so, they couldnt of been less bothered, meals and baby stuff off amazon will likely be the same. Its not like you have gone and bought a ferrari whilst knowing you was going bankcrupt

Johnsmith2016

For me i do believe bankcruptcy is the better option vs IVA for 2 simple reasons

1. - there is no way you can carrying on paying the IVA due to your benefits stopping.

2. Your off on materity for much of next year so will more than likely avoid the IPA.

as I said before they will be doing it online from April which you may prefer.

ScaredyCat1980

Thank you very much. I will try to get the £700 together & hopefully it will be an online process by then.

I assume that my partners income will be taken into account in bankruptcy, do you know if this is the case, and if there's a surplus after bills how much can be put into an IPA? My salary is £700 p/m and I'll get £145 a month child benefit but aside from that he will have to pay all household costs & the rent alone is £700 a month looking to rise to £800 shortly.

Many thanks for your support
Marie.

National_Debtline

Hi ScaredyCat and welcome to the forum.


The bankruptcy application process moves online as of April, so not long to wait if that is your preferred method. In any case you will need to wait until your IVA has officially failed which could take a little while yet.


You should note that the cost will be £655 under the new system - this is made up of the existing £525 deposit plus a £130 "adjudicator fee" replacing court fees.


Your partner's income is taken into account - but only indirectly. The Official Receiver will want to check that you're not paying more than your fair share of household bills, that's all. In theory, any money you personally have spare after reasonable living costs could be sought in an Income Payment Agreement, but from what you've told us so far I would guess the odds of that happening are quite low.


Dennis
@natdebtline

DorisTrousers

One point being missed here is that you cannot have two insolvencies running at the same time, so you cannot enter a BR unless and until you IVA has been formally terminated.

This isn't the worst news in the world, as you are still legally protected from the creditors in the IVA whilst the closure process is taking place, even though you would not be making any payments. You can start the BR process online when the time comes, and make small (they must be regular I am led to believe or they will just send your money back after a certain period of non-payment) but regular payments online towards the £655 cost of the BR. If you can get an estimated timescale for closure then you can maybe work out a schedule of payments to ensure the minimum gap between one and the other. Hope that makes sense.

Johnsmith2016

Yes I agree, goes without saying you cant have both IVA and bankcruptcy, so finalise one before doing the other. Whilst saving up for the fee if this is what you have chosen