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IVA vs Bankruptcy
Comments
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Your credit file would still be shot in that example, and the only winner, as you say, would be Barclays. Can't see too much merit myself in that one, but each to their own I suppose.0
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Nothing you can do now will leave your credit record intact.
Your credit record would show an arrangement and default with a settled default eventually, after the end of the agreement. That looks looks less bad on a credit report than insolvency, whether that's the bankruptcy or IVA form. One negative is that it would appear on your credit report for longer than an IVA, were Barclays to accept one with a common five year term, which I assume they wouldn't.
Bankruptcy leaves your credit report faster but you are required to disclose bankruptcy forever if asked later, such as when applying or a mortgage or tenancy.
What an arrangement does among other things is let you answer no to the bankruptcy question if a prospective landlord or mortgage company asks the question.
My guess is that bankruptcy would be your best option, assuming that you won't have a need for a mortgage for at least ten years and that you will be able to find a landlord who'll accept a tenant with a bankruptcy a couple of years before the start of a tenancy. The main purpose of seeking an arrangement is to reduce that particular landlord risk, but the arrangement does it by reducing your spare cash, so it's not a great deal for you overall, I think. Better the bankruptcy and probably one year later end of the day to day living money effect. That improved situation and the extra cash margin that helps you to keep on paying the rent is something you can explain to a landlord, along with the reasons that led to your situation happening initially.
There isn't a perfect answer, it's just trade-offs of various sorts.0 -
I work for an IVA provider, so know what's going on here.
I'd be very wary of that Payplan suggestion of £85 per month, especially as Stepchange have suggested £145.
Your income and expenditure will be calculated along the Stepchange guidelines, which are industry-standard, so if they're saying £145, chances are you will be close to £145 as a final figure.
Barclays themselves don't vote for your arrangement. Their vote will be handled by a company called The Insolvency Exchange (TIX). TIX invariably apply modifications to uplift the contributions where there is a clear deviation from the Stepchange guidelines, so even if Payplan were to propose at £85, you could well find your contributions being uplifted at the Creditors' Meeting anyway.
jamesd comments about Bankruptcy leaving your credit report faster, and needing to disclose it forever are incorrect. An IVA will stay on your file for 6 years from it's date of approval; Bankruptcy will stay for 6 years from the date it's granted, so no difference there.
You are only legally required to disclose your Bankruptcy while you are subject to it, or any restrictions resulting from it. Once you have been discharged from it, and any restrictions, your time is served (except for the credit file record, which disappears eventually.)0 -
I work for an IVA provider, so know what's going on here.
I'd be very wary of that Payplan suggestion of £85 per month, especially as Stepchange have suggested £145.
Your income and expenditure will be calculated along the Stepchange guidelines, which are industry-standard, so if they're saying £145, chances are you will be close to £145 as a final figure.
Barclays themselves don't vote for your arrangement. Their vote will be handled by a company called The Insolvency Exchange (TIX). TIX invariably apply modifications to uplift the contributions where there is a clear deviation from the Stepchange guidelines, so even if Payplan were to propose at £85, you could well find your contributions being uplifted at the Creditors' Meeting anyway.
jamesd comments about Bankruptcy leaving your credit report faster, and needing to disclose it forever are incorrect. An IVA will stay on your file for 6 years from it's date of approval; Bankruptcy will stay for 6 years from the date it's granted, so no difference there.
You are only legally required to disclose your Bankruptcy while you are subject to it, or any restrictions resulting from it. Once you have been discharged from it, and any restrictions, your time is served (except for the credit file record, which disappears eventually.)
Thank you all. Phil - my main problem is that StepChange calculation of £145 monthly leaves me with a very tight budget, which will most likely cause issues as for example my rent goes up by £45 annually, as well as my income likely to be reduced by a bit in the next year or so. I don't think an IVA would be sustainable long term should I go with StepChange, whereas with PayPlan's amount it would be workable and would leave me with room for any increase of expenses in the near future.
My main worries are:
- Accommodation: currently renting privately and will need to move in the next two years max due to lack of space. With an IVA this will cause issues as it will be difficult to find an understanding landlord in the next five years, however should I plunge for BR I only need to stay put for one year after which it should be ok to rent through an agency with no issues as I understand it? (rent up to date btw and have always paid on time).
- Sustainability long term: an IVA seems like the least severe solution however I worry any changes on circumstances will put it in danger. I am also in receipt of benefits (as well as child maintenance), not sure whether I would still need to pay an amount for three years with BR? If yes, I probably need to find out what that amount would be...
- Car. A much lesser worry, but it's likely that I'll be able to keep my car (worth just over 5k) with an IVA, whereas with BR I would need to give it up, making my life very difficult (food shopping etc using public transport with three little ones is challenging but not enough to justify keeping it if going for BR).
I keep swaying from IVA to BR, really not sure what to do
. I'm a single parent so feeling very overwhelmed about what the right choice is... I could perhaps go with PayPlan hoping it gets approved and if it doesn't go for BR? Or is BR the best option as it will be likely done and dusted in a year and I can start with a clean slate sooner?. Any help would be much appreciated, thank you. 0 -
You are only legally required to disclose your Bankruptcy while you are subject to it, or any restrictions resulting from it. Once you have been discharged from it, and any restrictions, your time is served (except for the credit file record, which disappears eventually.)
you sure ?
While you don't have to inform the creditor(you do whilist bankrupt) as a matter of course, if asked 'have you ever been bankrupt or in an IVA ?' you would have to answer truthfully, just as you have to answer questions about income,identity etc.
Whilist you are bankrupt you must tell everyone who gives you credit over £500, even if not asked0 -
Both of your assertions about my comment are wrong:jamesd comments about Bankruptcy leaving your credit report faster, and needing to disclose it forever are incorrect. An IVA will stay on your file for 6 years from it's date of approval; Bankruptcy will stay for 6 years from the date it's granted, so no difference there.
1. The voluntary arrangement described was for ten years and it will not leave the report on the IVA or bankruptcy schedule because it is neither an IVA nor bankruptcy.
2. It is fraud for an applicant who has been bankrupt to answer no when asked if they have ever been bankrupt.
One value of the Payplan suggestion is an independently arrived at negotiating position when offering Barclays an alternative to bankruptcy.0 -
You'll find that letting agencies will often ask questions like "have you ever been bankrupt or had an IVA or DRO?" and "have you ever had a county court judgement?". So will sensible landlords not using an agency. Both can seek information from credit reports.With an IVA this will cause issues as it will be difficult to find an understanding landlord in the next five years, however should I plunge for BR I only need to stay put for one year after which it should be ok to rent through an agency with no issues as I understand it? (rent up to date btw and have always paid on time).
Being on benefits is going to be more of a challenge than BR or IVA. Lots of landlords flat out refuse to let to anyone on benefits.
Normal is a discharge after one year but it's not guaranteed.I am also in receipt of benefits (as well as child maintenance), not sure whether I would still need to pay an amount for three years with BR?
One alternative for food shopping is food delivery. That can be more convenient as well as cheaper than transport costs. If public transport is limited you might be able to keep the car, perhaps otherwise if you can make a sufficiently good case.- Car. A much lesser worry, but it's likely that I'll be able to keep my car (worth just over 5k) with an IVA, whereas with BR I would need to give it up, making my life very difficult (food shopping etc using public transport with three little ones is challenging but not enough to justify keeping it if going for BR).
BR doesn't get a fully clean state but to me it looks like your best option because it comprehensively eliminates your future liabilities, returning you to a normal life more quickly.I keep swaying from IVA to BR, really not sure what to do . I'm a single parent so feeling very overwhelmed about what the right choice is... I could perhaps go with PayPlan hoping it gets approved and if it doesn't go for BR? Or is BR the best option as it will be likely done and dusted in a year and I can start with a clean slate sooner?. Any help would be much appreciated, thank you.0 -
Both of your assertions about my comment are wrong:
1. The voluntary arrangement described was for ten years and it will not leave the report on the IVA or bankruptcy schedule because it is neither an IVA nor bankruptcy.
2. It is fraud for an applicant who has been bankrupt to answer no when asked if they have ever been bankrupt.
One value of the Payplan suggestion is an independently arrived at negotiating position when offering Barclays an alternative to bankruptcy.
My mistake - you were describing a self-administered Debt Management Plan, not a voluntary arrangement. Two very different things.
There is no legislation for you to declare your bankruptcy at any point after discharge, however while it is on your credit file it is obviously sensible to do so. Once it has been removed from your credit file, it becomes much more of a grey area. I have spoken to a couple of mortgage advisors I know, and they have said that as long as it's more than 6 years ago, the lenders rarely pay any attention to a prior bankruptcy. So yes, you are technically correct that you should declare it, however there is no legal requirement to do so, and it is as much the lender's responsibility to verify the information as it is the borrower's to declare.0 -
Thank you all. Phil - my main problem is that StepChange calculation of £145 monthly leaves me with a very tight budget, which will most likely cause issues as for example my rent goes up by £45 annually, as well as my income likely to be reduced by a bit in the next year or so. I don't think an IVA would be sustainable long term should I go with StepChange, whereas with PayPlan's amount it would be workable and would leave me with room for any increase of expenses in the near future.
My main worries are:
- Accommodation: currently renting privately and will need to move in the next two years max due to lack of space. With an IVA this will cause issues as it will be difficult to find an understanding landlord in the next five years, however should I plunge for BR I only need to stay put for one year after which it should be ok to rent through an agency with no issues as I understand it? (rent up to date btw and have always paid on time).
- Sustainability long term: an IVA seems like the least severe solution however I worry any changes on circumstances will put it in danger. I am also in receipt of benefits (as well as child maintenance), not sure whether I would still need to pay an amount for three years with BR? If yes, I probably need to find out what that amount would be...
- Car. A much lesser worry, but it's likely that I'll be able to keep my car (worth just over 5k) with an IVA, whereas with BR I would need to give it up, making my life very difficult (food shopping etc using public transport with three little ones is challenging but not enough to justify keeping it if going for BR).
I keep swaying from IVA to BR, really not sure what to do . I'm a single parent so feeling very overwhelmed about what the right choice is... I could perhaps go with PayPlan hoping it gets approved and if it doesn't go for BR? Or is BR the best option as it will be likely done and dusted in a year and I can start with a clean slate sooner?. Any help would be much appreciated, thank you.
My point is that Payplan will hook you with a low monthly payment (£85), then uplift it at the creditors' meeting to get the votes through on the basis that most people, once they've got that far, won't want to back out.
Because all Inc. and Exp. calculations are based on the same set of guidelines, it doesn't matter where you go. Sooner or later your contributions will be aligned to the same guidelines.0 -
Ah, I can see how those words caused the confusion.My mistake - you were describing a self-administered Debt Management Plan, not a voluntary arrangement. Two very different things.
Not normal criminal law relating to false statements on credit applications?There is no legislation for you to declare your bankruptcy at any point after discharge
It's interesting that I couldn't find a definitive statement about this so if you're aware of any authoritative source for one that might perhaps be a useful reference to use in later posts.
I expect that the brokers are right. Six years is long enough for other things to matter more, like whether bankruptcy did its job of helping the person to make a fresh start.however while it is on your credit file it is obviously sensible to do so. Once it has been removed from your credit file, it becomes much more of a grey area. I have spoken to a couple of mortgage advisors I know, and they have said that as long as it's more than 6 years ago, the lenders rarely pay any attention to a prior bankruptcy.
In general there seems to be a trend for people to be afraid of bankruptcy even when it would be the best solution to get that fresh start. Unfortunate.0
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