4 yrs and 6 months into an IVA

[d.p]

Hello, I am 4 yrs and 6 months into an IVA. At the start of the IVA I had to pay half the value of the equity of a house for which I pay the mortgage. This I did. However, I am now going to really struggle to meet the last few payments of the IVA (I'm on a £2800 per month arrangement so it's fairly crippling). I've had the odd missed month - probably 4 or 5 over the course of the last 4 and a half years. The question is, if i default and bankruptcy is enforced (I'm at the point where I'd rather it was), is the house free from the debtors grasp at all - I no longer live there but my ex-wife still does - but I have paid the mortgage as she is unable to work?

[Adam Davies]

Hi
In bankruptcy your property would be in danger,no doubt about that.
You are so close,spaeak with your IP and see if you can come to an agreement for the remaining payments to be spread a little longer.
Regards

[ianmillington]

Depends on a number of factors, in particular what is in the proposal and Chairmans Report. It would be a terrible shame for you to get this far and for things to go pear-shaped now.

Basically if you can't get help from your Supervisor I would see if you could get a meeting with a local IP who can look at the documents for you and advise. Only someone who knows the whole story and has access to all the papers can give you the advice you need, in view of the potential implications of getting things wrong. You shouldn't be asked to pay for this advice.

Hope this helps

Ian

[MelanieGiles]

That's good advice from Ian to get a second opinion from someone local to you. Personally if you were my client, and the reasons for your problems were justified, I would seek the agreement from creditors to accept what you had paid to date in full and final settlement. i have successfully done this on several occasions and have always found creditors fairly accomodating in this regard.

[d.p]

Thank you for the advice on this one. It's much appreciated. I'm doing all I can but the Revenue seem relentless and it is they with whom I have the IVA. Whenever I've been late on a tax return, a current tax payment on account or indeed any delayed monthly IVA payment they threaten bankruptcy straightaway without delay, warning, or anything else for that matter. Completing the iVA itself may not be so difficult, it is completing it whilst meeting the existing ongoing tax obligation that has worn me down. I've had the joy of my Administrator threatening the bankruptcy as well because I was late with an IVA payment! Nothing appears negotiable. Are they all pretty short or have I just got a particularly annoying/unhelpful one?

[ianmillington]

Ah, you have added a new dimension here. When you mention the Revenue you have a whole different set of issues. The position here is that HMRC are generally quite willing to give an IVA a chance but unlike say the Banks (who won't lend you another penny) by allowing you to stay in business you keep running up credit with them as a natural event.

As a result, they expect the proposal to provide pretty stringent provisions as regards your ongoing Tax compliance. If an IVA fails, the HMRC preferred exit route will almost always be bankruptcy, especially if you are still trading, to stop any ongoing debt accruing. Based upon what you say I suspect that the threats of bankruptcy are examples of waving the big stick to get you in line, but believe me if you do not get back in line they will bankrupt you, or will require the Supervisor to do so.

From working with HMRC on IVAs for many years I can tell you that the single biggest irritation of all to them is the person who maintains their IVA payments at the expense of running up a further tax bill or running into arrears with post-VA Tax Returns. Have you spoken to the person handling the matter at Worthing? My experience is that so long as you demonstrate that you don't have your head in the sand and genuinely wish to sort out the problem they will try to help you. Quite often they will give you a bit of time to pay so long as they think you will.

Your worst case scenario is doing the 5 year IVA stint and then being bankrupted for post-VA Tax Arrears. Find out what they need. If your tax and VA arrears are not significant if you show willing it may be possible to accomodate you. For example a little extra time to pay and a short extension to the VA might be all that you need to solve it. If you can't make headway with either HMRC or your Supervisor then you need to discuss your affairs in detail and with some privacy with an independent IP because you need to know where you stand.

Hope this helps

Ian

[MelanieGiles]

I couldn't agree more with Ian - the Voluntary Arrangements Service at Worthing are immensly supportive of the IVA procedure, but woe betide debtors who continue to fail to submit returns of payments post-VA. In my practice we regularly check that this has been done as part of our supervisory process.

Could you confirm the reasons for the post-IVA non compliance with regard to your taxation affairs?

[d.p]

I must admit the concept of "post IVA" is one I struggle with, when I am still "in IVA" as it were...

I'm sure there is a reason! Anyway, put simply, I've been late with returns and payment - not by much and I've met the payments due, but after reminders and so on. This year will be no exception and I won't be able to pay the tax due on account by 31st January - more likely early March. I wonder whether I am better paying off settling the IVA in one hit - something I could do today for example - and then negotiating a position on the tax due on account and any ongoing tax as a consequence, just to be rid of the IVA and have that threat removed, but I guess the risk is I am unable to negotiate on the tax due.

It's all a question in my case of having to rob Peter to pay Paul, except both Peter and Paul seem to be working for the same employer in this case!

Anyway, I was using the forum only for some guidance and it looks likely that bankruptcy would be enforced whichever way I were to try and do this. With that in mind I guess I should chat to someone who knows how to best manage that process so if anyone has any pointers, please feel free to suggest...

[MelanieGiles]

You are in an IVA for the debts that you owed prior to entering into that, and creditor acceptance was based upon the fact that you would get any outstanding returns submitted to HMRC within 3 months of the creditors meeting, and continue to pay ongoing liabilities when they fell due.

How would you be able to "settle the IVA is one big bit" now, but you cannot pay your taxes? The best person to chat to is your own IP, as they have detailed knowledge of your case.

[ianmillington]

Based upon what you say I don't see bankruptcy as being inevitable.

First - to clarify I use the terminology "post-IVA" simply to differentiate from "pre-IVA". I have interpreted that you are not actually in default with your IVA payments and your only Tax default is in respect of your 31 January obligations. Is that right? If so, I believe this is fixable. So long as you maintain your contractual payments, and get an agreement from HMRC that you can have until early March to bring things up to date, and you adhere to that deadline, then you ought to stave off the threat of Bankruptcy.

As regards your proposal to settle the VA, I suspect that because of the conditions that will have been imposed by HMRC, it will not be possible for the Supervisor to consider your VA to be satisfactorily concluded whilst you have outstanding Tax obligations.