a right mess

[abcdefgh]

My IVA company have been pretty evasive in the past and some independent advice will be appreciated.

I have just completed my first year in an IVA. My payments have gone up - fair enough - due to my annual increment at work. Now I am told my department is closing in 13 weeks and my new salary within my company will be c £185 less a month nett. I have been advised that a new creditors meeting will most likely be called when this happens and my IVA will also most likely be extended. Before the IVA I spent a year with the same debt management company and paid several thousand (the equivalent to 1 years payments in my current IVA arrangement)to my creditors without further expenditure on my part before they got their act together and got me the IVA. I have no house etc and my possessions total probably less than £250 max.

Therefore can I make an application to go bankrupt whilst in an IVA? Also how long can these people extend my IVA - I thought the whole point was that 5 years was a fixed term, with a possible 1 year extension in exceptional circumstances. I feel I have been far too trusting in dealing with my financial problems through this well known company and any advice would be welcome as an extension to my IVA without an alternative way to end this mess is soul destroying.

[Oliver]

Hello

Sorry to hear that you are having a tough time with your IVA. One of the best things about IVA's is that they offer light at the end of the tunnel for people in debt difficulty. However, from your post I get the impression that you have almost had enough and after 2 years of trying to solve your debt solution you are now facing another 5 years before you are debt free. As IVA's are Individual agreements they can last for any length of time, although the norm definitely is 60 months with a possible 6-12 month extension in exceptional circumstances.

If you decide that you can no longer cope with your IVA and stop paying your monthly installments, your IP will be duty bound to petition the courts for your bankruptcy. It is important to remember though that you may have to make 3 years worth of Disposable income payments to your creditors through the bankruptcy. It is also important to investigate whether you will be able to continue in your present employment if you were to be made bankrupt.



Best Regards
Oliver

Thomas Charles and Co Ltd.
Experts in personal debt solutions.
Read customer feedback at: www.thomascharles.com/about_us.asp

[MelanieGiles]

Hi abcdefg

One thing all of you chaps should remember is that it is your IVA, and therefore you are still in control of your destiny and not your IP. Your IP is there to ensure the IVA works in accordance with its terms and conditions, but you are the one in control and it is your life!

If you feel that bankruptcy is a better option, then you are free to make your own application at Court. At least you can do that with your head held up high as you have tried to repay the debts, and through no fault of your own you have been forced to take a salary cut. It is quite simple to make an application, and I suggest you contact the bankruptcy clerk at your local County Court (the one your IVA is being monitored by) for further details. Further advice on this is available on the DTI website under www.insolvency.gov.uk.

Before you leap into bankruptcy though, have you gone through your finances to see whether it is viable for the IVA to be continued. If you can post your current disposable income, together with the level of outstanding debt and the amount you have paid so far into the IVA, we can all have a look at it further. In my experience, creditors take little interest in variations, and we are usually able to secure an acceptance vote from someone - but it must be the right way forward for you - as it is your future and no-one elses.

Hope you are able to make the right decision soon.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.
View my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[jamesfalla]

The advice already given here is quite correct.

At the end of the day, the IVA is designed to help resolve your debt problem and return as much as you can to your creditors, but not cripple you in the process.

If your income falls, you are always free to ask your IP to propose a variation to your creditors to reduce your payments. I believe that it is worth doing this. However, I feel that if your creditors will only accept reduced payments if you also extend your IVA, then this seems unreasonable.

If this happens, as Melanie says, you can always decide to declare your self bankrupt. You do not have to wait for your IP to do this. As you are not a home owner and have no assets then you have nothing to loose. The bankruptcy itself will last only 12 months. If you are required to make monthly payments to the court these will only be for 3 years max and will almost certainly be less than what you are required to pay into your IVA.

James Falla

Expert in IVA, Bankruptcy and informal Debt Management solutions, with extensive experience of solving personal debt problems over the past 10 years. I am regularly featured on BBC News, Finance Programs and Radio.

Visit my blog at: http://jamesfalla.blogs.iva.co.uk

[abcdefgh]

Thank you for the advice - appreciated and very helpful in clarifying matters for me.