Failing IVA

percnica

HI, I'm two years into an IVA and was doing OK until December 2007. Now with having to find new rental and with my company having to reduce my hours/salary, so we can survive the current lack of contracts, I cannot afford the payment. My Insolvency Practitioner called a creditors meeting to asking for reduction from 550 to 300 and an extension of 1 year. However rejected at 1st meeting so IP tried to rally more votes for but on second vote only the same people voted so had 2 for 2 against but the no's had the larger % of the debt so the vote was no. I'm now going to have to file for bankruptcy as I cannot continue the payments. I don't own any property or items of value.
Should I try and continue the IVA or just throw in the towel?
Will I now have to make the 3 year re-payments etc required for bankruptcy and will my failed IVA affect the outcome of the bankruptcy?
Will the bankruptcy administrators take into account the existing dividend the creditors received from the IVA? OR will it just take a fresh review my finances?
Do the bankruptcy administrators take into account my partners salary, like the IVA?
The debts are all in my name. (Incurred before we meet)
Any help welcome
Thanks

NekoZombie

Hi Percnica

sadly, your IVA payments will count for nothing should you go BR. You will probably find that most if not all your payments thus far have gone towards paying your IP's fees rather than any creditors.

In addition, like you state, if you go BR you may have to make IPA payments for three years. Bear in mind that you income and expenditure allowances will be far more generous than under an IVA, you may even find you don't make payments at all. Under an IVA I was required to pay back £350 pcm - my IPA is only £71 pcm so you can see it is a big difference.

It will be up to you whether you wish to continue trying with the IVA. I can see why you would want to after two years worth of payments, but overall bankruptcy will cost you less in total even if you were to do it now. In terms of stigma, there really isn't that much difference between the two.

Hope that makes sense...

Neko

fermi

The technical ins/outs of IVA's are not quite my thing, but I'll try to answer.

percnica wrote: »

Should I try and continue the IVA or just throw in the towel?

Depends if you feel you can make the payments required by the IP/creditors. Is there any chance of this, or is it just a "no-go"?

How many full payments have you missed?

Have funds been retained by the IP to petition for your bankruptcy. If not, then as far as I know bankruptcy is not guaranteed.

Will I now have to make the 3 year re-payments etc required for bankruptcy and will my failed IVA affect the outcome of the bankruptcy?

A failed IVA shouldn't make any significant difference.

Will the bankruptcy administrators take into account the existing dividend the creditors received from the IVA? OR will it just take a fresh review my finances?

They will normally request the details from your IP/supervisor, and go from there.

However, if you decide to petition for your own bankruptcy, then you will have to get a rough idea of outstanding balances from the IP/superior so you can complete the forms.

Do the bankruptcy administrators take into account my partners salary, like the IVA?

Your partners salary is only relevant in so far as the OR will want to make sure that household expenses are being shared fairly.

Your income and expenditure would be assessed on its own merits, and a decision on how much (if anything) you would have to pay in an IPA would be based on that.

In general, the OR is more generous with regard to allowable expenses in your I&E compared with an IVA.

Hope that helps. I'm sure some others here who have been in your situation can comment further if I've got anything wrong.

NekoZombie

Btw, I should add that a year ago I was seriously thinking of an IVA, but knew it was too tight to manage in reality. I decided on BR, and have since been discharged. I pay an IPA of £71 pcm, which will probably go down a little as I now have increased expenses at my new flat. I feel very positive about the whole experience and my only regret is that I didn't do it sooner.

Overall I would say its much easier to get your life back on track than people may realise.

percnica

Hi Thanks for all the feed back. I have told my IVA people that I cannot continue to make the original payment structure so they are now going to send me the relevant forms for me to file for BR. All my IVA payments are up to date and the creditors report for the last year is due this week. Not sure if the IVA people are going to inform the creditors that I'm filing for BR or if I should?
So I will need to contact them on this point.
Must say that the IVA people did all they could to get the creditors to agree to the new terms but they said no.

When I file for BR and have the OR interview can I just present the existing I&E reports that I have been sending to the IVA people or are they looking for more details/data?
Also how long does the process normally take from submission of forms to court appearance/declared BR?

One other thing what happens if I go and work abroad while under BR and work in tax free zone (on contact i.e. 6 months on 6 months off).?

Thanks

scootw1

"Have funds been retained by the IP to petition for your bankruptcy. If not, then as far as I know bankruptcy is not guaranteed."
fermi


As far as I am aware, anyone can petition for bankruptcy as long as they can convince the judge it is the last resort (they are apparently tightening up on this) which shouldn't be a problem with the OP as they have been through an IVA so did their best to sort things out. You are right in saying that OP should check if the terms of their IVA allow for the IP to pay the bankruptcy fees but I'm guessing that they don't (that's me being cynical)

fermi

Thanks scootw; but I was referring to the fact that unless the IP has the duty and funds to petition for your bankruptcy in the agreement, then there is no guarantee that anyone else (creditors) will do it for you.

NOT that you might be refused. Should have been clearer.

It will be up to you to make arrangements if you feel it is the way to go.