Bankruptcy or IVA - Advice Please!!

waleslad2019

Looking for some advice on whether to go bankrupt or go into an IVA. 

Im already in a DMP with PayPlan but I’m taking on another £40k of personal debt after my company going into liquidation.
So my total debt is around £60k. I’m a home owner, but jointly with my wife and also we had help to buy as well. So realistically my equity is probably max £30k. 

Reason I wanted to mention that information is Pay Plan are recommending an IVA which will be over 6 years - that scares the life out of me that for 6 years they will dictate what I pay back every year.
my basic salary is £40k a year so currently my bills are what I take home. That’s the reason I’m thinking bankruptcy would be my better route so that I’m not held over a barrel for 6 years. But on the other hand, I’m worried about my house and don’t want to but my wife & kids in jeopardy with a selfish decision.

Any help would be really appreciated as this is really taking a toll on us as a family now and I want to try and get a solution in place within a month! Thank you 

fatbelly

I'd be reluctant to go for bankruptcy. You already have 30k equity in a property and they have 3 years to deal with it

As for an IVA, well the devil's in the detail. You know in a dmp you will pay back 60k, and an Iva lasts 72 months in your case. So if the proposed monthly payments are around £800 there is no financial advantage. If they are around £400 there might be.

However you can often bring a dmp to a close earlier than planned

https://debtcamel.co.uk/7-ways-to-speed-up-a-dmp-so-it-finishes-sooner/

RAS

The new IVA rules are more reasonable but you really need to do a Statement of Affairs for yourselves at least.

If in doubt, start by getting the new bank account, stop paying unsecured debt and start saving the emergency fund. That'll serve you well whatever you choose.

waleslad2019

@fatbelly @RAS appreciate the advice guys. Been getting conflicting information whether to go bankrupt that they won’t take my house as it’s too much hassle. And the IVA scared the life out of me that if I try and earn more money to better my families life, they can just take more off me which doesn’t exactly improve my situation.
I’ve got a call with the IVA team for PayPlan tomorrow morning so I’m hoping that will answer some of my questions regarding annual reviews, what they look at to determine income etc.

You mention the emergency fund. They will allow me to put savings away? I didn’t think they would. That would be amazing if they did as we don’t have any savings in case something happened

RAS

One of the difficulties with advice is that you are on the BR forum, not DFW. Which really limits the number of responses you will get. And any form of insolvency has much more impact on your credit record going forward than informal options.

There's plenty of folk that are on DFW who owe more than you do. And are doing DMPs.

Some are with Stepchange, a few with Payplan and some self manage.

If you didn't have an emergency fund before you set up the DMP with Payplan, many would say you started too early.

I'd strongly suggest you ask for this thread to be moved over to DFW. Self report.

The suggested path in DFW is usually.

Stop paying all non essential debt. And wait for defaults to be registered. That minimises the length of time your credit record is damaged.

Use the money you are no longer paying creditors to create an emergency fund. That increases resilience and massively reduces stress. Live with your new budget and finesse over the first year. That budget includes money to top up the emergency fund.

As debts default, set up payments below the maximum in the first instance. You can always make additional payments if you get a pay rise, back pay, tax rebate etc.

In time you will probably get discount offers. If you can afford a lump sum, offer less and try to settle one at a time. You are often be better doing this outside a Stepchange or Payplan envelope.

fatbelly

Let us know what Payplan say. I am interested in what they think you will be paying monthly in an IVA

ManyWays

Been getting conflicting information whether to go bankrupt that they won’t take my house as it’s too much hassle.
That is a hell of a gamble, basically that house prices will fall quite a bit. Not one I would be keen on (I am assuming your wife doesnt have the money to buy back your share from the OR). 

fatbelly

It's possible they would not force a sale in bankruptcy but they have a duty to access your equity one way or another for the benefit of your creditors (and their own fees).

waleslad2019

@fatbelly so update from my IVA call with PayPlan and it was pretty positive. They are going to present a full & final settlement to my creditors of £5,000. They can’t guarantee it will be accepted but said they’ve had worse offers accepted. I’m borrowing the money from family and it seems like the best case scenario to be rid of all the debt without having to enter an agreement to pay monthly over 6 years.

waleslad2019

ManyWays said:

Been getting conflicting information whether to go bankrupt that they won’t take my house as it’s too much hassle.
That is a hell of a gamble, basically that house prices will fall quite a bit. Not one I would be keen on (I am assuming your wife doesnt have the money to buy back your share from the OR). 

It is a gamble I completely agree. But weirdly in my mind that seemed like a better option than the IVA. Reason for that is I work in sales, so if I start earning great commission, 50% of it gets taken off me straight away - I just feel like I won’t be better off financially for the length of the IVA. 

But I’m hoping the full & final settlement I’m putting forward will be accepted and that will be the end of it. I’ll post an update when I hear back if it would help anyone else 

ManyWays

In bankruptcy, you would lose 100% of that commission for 3 years.