Bankruptcy or IVO

ryanj

Hello,

i'm about to sign a document for an IVA and I am able to pay back £100 per month.

I am £31,000 in debt with 3 creditors. I have no assets and i'm in rental acommdation.

Is an IVA my best option or is Bankruptcy more logical as i've had no assets?

Any advice would be welcome.

Thanks


Ryan

National_Debtline

Hi Ryanj and welcome to MSE,


Both of these are big options that you are considering, with a lot of different aspects and consequences to them, so it would be advisable to make sure you get full advice, from a free debt advice service before doing either.


A few tips that may help you weigh things up are that an IVA normally lasts for 6 years and if successful would mean that any remaining debt would be written off after that time. The payments can be reviewed every 12months and are unlikely to decrease but may increase. Your current offer is approximately 6.5p in ever £1 that you owe, which is lower than a typical IVA but if the company is happy to take it on at that rate then that is ok. Avoid paying any up front fees - make sure the IVA fee is spread evenly over the course of the IVA.


If you went bankrupt it would cost an initial outlay of £655 and if you do have £100per month spare then you would likely have to pay into an income payment arrangement for 3 years. In bankruptcy any assets that you may have, such as a car, property, savings, etc. are at risk. Both bankruptcy and IVA's are very damaging to your credit file and both can affect employment contracts and tenancy agreements (depending on how they are worded). Think carefully before doing anything, good luck,


Laura
@natdebtline

foxy-stoat

ryanj wrote: »

Hello,

i'm about to sign a document for an IVA and I am able to pay back £100 per month.

I am £31,000 in debt with 3 creditors. I have no assets and i'm in rental acommdation.

Is an IVA my best option or is Bankruptcy more logical as i've had no assets?

Any advice would be welcome.

Thanks


Ryan

With so many variables and unforeseen circumstances between now and the end of either BR or IVA, likelihood of you receiving a windfall or inheritance, or job changes, pay rises, maybe you will be in a position to buy a house in the next 5,10,15 or 20 years.....no one can advise you either way - if they do then it would be the wrong advice. You need to proceed with what you feel is right, and get the PPI refunds in before you sign up !

For me, over double my gross salary in the red, knowledge that I will be receiving enough help from my family to buy a house within the same decade and job propects including pay rises, I opted for an IVA and never looked back. The only regret was back then the PPI thing wasnt common knowledge so I could of done that prior to IVA and may even been able to get back on track - but then I would not of had the "training" and "discipline" of making a budget and keeping to it for the 60 months, with annual reviews.

So I look back on my IVA as the education that I should of received from either family or school.

I think BR is a short cut with longer reaching implications in later financial life, IVA is pretty bad but not quite as bad.

DorisTrousers

An IVA for someone in rented accommodation with no assets would be proposed at 5 years instead of 6, as stated above, although creditors may try amend any proposal to 6 years at creditors meeting. As there is no property involved, and therefore no equity issues, then 5 years is the most likely outcome.

That isn't to say it is your best or worst course of action, only you can decide upon that.

ryanj

Thank you for your advice! Much appriciated!

fatbelly

Also be aware that the bankruptcy fee rises to £680 on 21st July 2016

You have no assets. The question is why are you not going for bankruptcy?

Johnsmith2016

Need more specifics but 9/10 i would say bankcruptcy if you have no assets and rented accomodation.

Iva & bankcruptcy both a form of insolvancy i think the difference on your credit report is negliable imo - you pay more back with a iva usually, last 5 not 3 years, and can fail - bankcrutcy is a clean slate, cheaper and wont fail. And you may not get the 3 year ipa if you cant afford it. They make a ton of fees on ivas hence i found many trying yo steer me this direction when in retrospect it was absolutely the wrong choice.
You can now do bankcruptcy online and pay in installments.