IVA vs bankruptcy

utterly_ashamed

Hi - could you give me your advice on IVA vs bankruptcy please?

I have no assets at all. I’m struggling to see the benefits of an IVA over bankruptcy even though it’s been suggested to me by two debt charities. One of the reasons being that living expenses are more generous under an IVA ....

sourcrates

Hi,


Originally IVA `s were designed for people who have a lot of debt, but also had assets to protect, such as a house.

More recently they have been mis-sold quite a lot, to people who may of been better off with another solution, such as a DMP or DRO.


Basically bankruptcy is slightly more intrusive on your life, wear as an IVA isn't, but it will last longer, up to 6 years, as a pose to the 12 months you are normally bankrupt for.
I say intrusive, its not really as bad as it sounds, in Bankruptcy, all your debts are included, and after a year, you are free to start again, although depending on your disposable income, you may get an IPA for up to 3 years.


IVA`s can be a long hard slog, there are no guarantees it will be accepted, after you apply, but once it is accepted you have legal protection from your creditors, same as in bankruptcy, but IVA`s can fail if your income is reduced for whatever reason, in bankruptcy, that cannot happen.

Both options affect your credit file for 6 years regardless.

As a rule of thumb, if you have no assets to protect, why put yourself through up to 6 years of an IVA when it can all be over, mostly, in 12 months ?

debt_doctor

Hi,

In bankruptcy you might be subject to an Income Payments Agreement (IPA) for 3 years which would take any surplus income. The allowances are reasonable.

Why not put up your SOA on here for us to look at?

DD

utterly_ashamed

Hi thanks for getting back to me!

That’s my thoughts too - they both have awful effects on your credit file and I’ve literally nothing to try and protect so why string it out for 5 years instead of 3?

Yes it’s highly likely due to my salary I’ll have to pay an IPA and fully prepared to live on a strict budget just to have some freedom from the big cloud hanging over me.

I’ll sort out the SOA and stick it up. Would it be ok for me to just do my expenditure as it were? Rather than all debts and whatnot as well? That may take quite some time! And it’s pretty much a completely hopeless sitch with the only solution some sort of insolvency. Even if I was paying very very little out I wouldn’t even be able to make the minimum payments never mind anything else. Christ knows how I’ve got myself in such a mess.

utterly_ashamed

Actually - I do know - spending more than I earn, living beyond my means and burying my head!!

Craig1981

Ive been through IVA, and IMHO, i do believe it is better than bankruptcy (or bankruptcy on an IPA). i have seen many a person do DRO/bankruptcy, and 12 months after discharge, back again to where they were, because they do not learn from their mistakes - not saying this will happen to you.

IVA forced you into making payments (to me, paying back 39-42p to the £). you then learn for 5 years how to manage and budget accordingly.

there again, if you have no surplus income, then bankruptcy is the answer. if high surplus income, then IVA would be the answer, dependant on assets as well.

would all come down to personal circumstances, and what is best for you.

fatbelly

utterly_ashamed wrote: »

Hi - could you give me your advice on IVA vs bankruptcy please?

I have no assets at all. I’m struggling to see the benefits of an IVA over bankruptcy even though it’s been suggested to me by two debt charities. One of the reasons being that living expenses are more generous under an IVA ....

Sounds like another example of advice being skewed by the fees due to the IP in an IVA.

Payments under an IVA are for 60 months, under a bankruptcy 36. There would have to be a huge difference in allowable expenses. I'm not convinced.

Do what DD suggests and post a SOA.