Does my IVA benefit me over bankruptcy

itstricky

Hi all,

I have had an IVA for over a year now due to my business going down the tubes. I thankfully have a full time job now which pays okay but also have two very young (3 months & 2 year old) children who my partner looks after full time. Even if she got a job and put the kids into daycare most if not all of her salary would have to pay for this plus we both agree it's more beneficial for her to raise the kids rather than someone else.

Due to only having one income and being above the tax credit threshold money is tight and each month is a struggle. After all our bills are paid we have £500 per month for food, gas, electric, diesel and clothing!!! I'm not allowed to earn any more money otherwise the IVA company will look to put it towards additional payments.

I am not a homeowner and rent a house from a family member so no issues there (unless they decide to sell it).

I have to pass security clearance for my job but it's valid until 2026 so even it were to affect my job it would be off my file before it's time for another background check.

I can't help but wonder what the benefit of me paying £200 per month to my IVA is? As far as i'm aware bankruptcy and an IVA stay on your credit file for six years and you're credit is shot regardless of which option you go for.

I forgot to submit my annual income & expenditure information along with payslips (nothing has changed) and the IVA co have scheduled a meeting with my creditors to start bankruptcy proceedings in January. After speaking with them they said if I send all the info required asap they will try to stop it. Part of me thinks I should just let them proceed and save £200 per month and also do as much overtime as I like to improve our quality of life.

I would love to hear from anyone who could advise me on the above as I have found it difficult to find the information online.

fatbelly

If you are made bankrupt the OR will require you to pay your surplus income through an income payment agreement for 3 years. If £200 is your surplus there may be little difference between the two forms of insolvency now.

Probably at the outset you would have been better going for bankruptcy

Craig1981

itstricky wrote: »

I have to pass security clearance for my job but it's valid until 2026 so even it were to affect my job it would be off my file before it's time for another background check.

depednant on the exact type of job you have, some do state if you have EVER declared bankruptcy before. usually not the case with IVA (Happy to be corrected if not)

although bankruptcy will be removed from credit file, insolvency register after 6 years, it will remain on the Gazette for much much longer, and no doubt will be used in future job applications if bankruptcy is ever an issue

fatbelly

itstricky wrote: »

I forgot to submit my annual income & expenditure information along with payslips (nothing has changed) and the IVA co have scheduled a meeting with my creditors to start bankruptcy proceedings in January. After speaking with them they said if I send all the info required asap they will try to stop it. Part of me thinks I should just let them proceed and save £200 per month and also do as much overtime as I like to improve our quality of life.

I would love to hear from anyone who could advise me on the above as I have found it difficult to find the information online.

I'm aware that this is a possibility but not whether it happens in practice. It would seem a case of 'throwing good money after bad' for anyone to pay the £2000ish to petition for your bankruptcy.

The IVAs I've seen fail just get terminated.

How much debt are we talking about here, itstricky?

DorisTrousers

Not sure where you got the bit about not being allowed to earn extra income? IVA's usually will not touch any extra income up to 10% over your normal take home, and then after that it is split down the middle. The practical effect of that is that you get to keep the vast majority of any extra. This would not be the case in a BR, so I guess in that case you would just not bother to earn extra.

Quick example

Normal take home £2k

Any month up to £2,200 you can keep all the extra and use it as you wish, the IVA has no claim on that.

Better month, take home £2,300

Keep first £200, keep half of the surplus £100, pay £50 by debit card to the IVA, keep £250 in total.

And so on and so forth.

This also applies to both partners if in an interlocking IVA, and not at all to any partner not in the IVA.

Speak to your IP for further clarification, but this is how 99% of IVA's work these days.

itstricky

fatbelly wrote: »

I'm aware that this is a possibility but not whether it happens in practice. It would seem a case of 'throwing good money after bad' for anyone to pay the £2000ish to petition for your bankruptcy.

The IVAs I've seen fail just get terminated.

How much debt are we talking about here, itstricky?

Apologies for the delay in reply fatbelly I got struck down by the flu!

Debt is about £37K.
VAT man - £8400
LPS - £2100
Santander overdraft, credit card and personal loan - £24400
The remainder is listed as "Portfolio Recovery Associates" - £2200

fatbelly

I think you may be best sticking with the IVA at £200 per month and don't worry about earning more, as that's more flexible in an IVA.