General Bankruptcy Query and Assets (Car)

Suseka97

Thank you WIA - I have to admit to feeling a little out of my depth here.

I have urged him to make an appointment with his GP and get some sort of referral to counselling. I think there is more to his MH issues than just his financial situation. It really saddens me to see someone who was so full of life now shutting himself away, keeping friends at bay and seeing no joy in anything he does. One thing I am glad for is that he has a young daughter who is the apple of his eye and the only person that brings a smile to his face- I hold onto the fact that she keeps him sane. I'm also lucky he finds he can talk to me - but I have to be careful and treat him sensitively. Just sitting down and getting him to show me his bank account and debt details took quite a bit out of him and so I'm leaving him alone for a few days whilst I do more research.

He has set up a new and separate bank account now - although made the mistake of ticking a box for a partial switch, which moved all of his DDs over. I've just said to cancel the ones he cannot pay. I'm writing is holding letters today and will get them out in the post.

He needs to sort out his rent for the next two months - so I'm hoping members of his family might help with that. But until he is able to return to full time work (with full pay) there is little point in looking to set up the IVA, although I have suggested it's worth having that chat. In the meantime I'll just help keep his creditors at bay.

What I am curious about though is why SC would put an IVA solution up, but not bankruptcy. With no assets (bar a car worth just a little over £1), no property and limited funds that bankruptcy should be at least an equal option. As far as I can find out the only additional negative of bankruptcy is if it might affect your job now, or in the future (until the BR is discharged). I've suggested he should ask that question when he speaks with them.

I agree a face-to-face conversation would probably be better - but I don't think he can right now.

WhenIam64

but I don't think he can right now.

Debt Advice charities can usually get some breathing space for people with MH to start the process - 30 days or sometimes more. So having them onboard shows the creditors that he is getting advice and, being commercial organisations, they are willing to stop any additional work that costs them.

IVA gives the debt process a legal wrap-around whereas a DMP is more informal and can be rejected. Some creditors may not accept a DMP.

Sometimes self-managed debt repayments for those with MH issues can be better than either but it does take a bit of knowledge to see it through to the end. Or the SM-DR can be used to move the debt downwards towards a DRO but it all depends on circumstances, the numbers and the client. Since no assets or car, then it is the level of debt that prevents the DRO.

If your friend has worked in an industry with it own trade association, or if he has ever been in the Services, there may be some form of industry charity that can help too. Sharing the load you have taken on yourself, means there will be others that can fill in when you can't or don't feel capable of doing.

maxmycardagain

He might do well to negotiate with creditors and haggle over a discount to clear debts to under £20K but have a 3rd party pay whatever sum comes back, the brighter creditors often see the chance of 75% payment vs SFA as a no brainer...

tho HE (the debtor) cannot make the payments

Willing2Learn

Hi Suseka97,

I'm not sure whether the following stuff is helpful to you, but thought I should mention it. I just hope it doesn't confuse things for you.

CONC 7.2 stipulates rules and guidance for creditors who understand or reasonably suspects that a customer is particularly vulnerable. It also says customers who have mental health difficulties or mental capacity limitations may fall into the category of particularly vulnerable customers. The guidance goes on to say that firms may wish to have regard to the principles outlined in the Money Advice Liaison Group (MALG) Guidelines “Good Practice Awareness Guidelines for Consumers with Mental Health Problems and Debt”
http://malg.org.uk/wp-content/uploads/2017/03/MALG-Debt-and-Mental-Health-Guidelines-2015.pdf

MALG have developed and produced a Debt and Mental Health Evidence Form (DMHEF). The PDF version of this form can be found on the page linked below:
http://malg.org.uk/resources/malg-mental-health-and-debt-guidelines/

You may also want to look at section 5 of the Lending Standards Board Information for Practitioners - The Standards of Lending Practice for personal customers - Financial difficulty. It says that firms should have appropriate policies and procedures in place to identify and support vulnerable customers where this impacts on their ability to pay.
https://www.lendingstandardsboard.org.uk/wp-content/uploads/2016/09/lsb-information-for-practitioners-financial-difficulty.pdf

Suseka97

I have been reading various posts on this forum and the IVA/DRO sub-forum - to try and get a better understanding of these processes. It has made for interesting reading and as a result has raised one further question in my mind.

In terms of this situation, as explained above - would not a bankruptcy route be more suitable than an IVA. It would not affect my friend's employment situation any more than an IVA would and he has no assets (property) to protect.

I'm just a little concerned about the 5/6 year timeframe of the IVA option and having read that many IVAs fail during that timeframe.

How complicated is bankruptcy beyond form filling and a possible meeting or telephone conversation with the OR? I appreciate it is complex.

thevdm

I can't say if bankruptcy is a better option than an IVA I can add that the process of filling the forms in and the OR interview is very straightforward. Obviously this varies case to case. If there are no preferential payments or assets of value to consider then it should be fairly simple. I found the most time consuming part being providing living expenses. The forms themselves are similar to the start of the IVA with the main difference being that it's done online (so is quicker) and you haven't got to wait for the creditors meeting.



Although bankruptcy lasts for 1 year, it can lead to an IPA/IPO if the person has excess income and an IPA/IPO last for 3 years, so the difference in time would be 2 to 3 years.

There's a report on the failure rate of IVAs which also touches on some being extended due to payment breaks - https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/679681/IVA_Outcomes_and_provider_breakdown_as_at_31_December_2017.pdf


I think one of the problems with an IVA is that during that timeframe there is a high liklyhood of at least one white good breaking down. There aren't many washing machines that last past 6 years from new these days (although I do have 3 children so ours does get some abuse). If something like this happens then it can lead to a payment break to allow time to save and replace the broken appliance, thus leading to an extension of the IVA.


If this person is working in a job with variable hours, this can overly complicate an IVA. I can't comment on how this affecets an IPA/IPO as I haven't experienced that first hand.