am considering IVA or BR.

[tor]

Hi
I have debts to 9 lenders of about 50k, and am considering IVA or BR. I am married and working (28.5K year about 1.5k/month TH) my current wife owned house before we met, it is all in her name and we filed paperwork with solisitor before we married 14 months ago to state that it would remain her property. I was divorced a few of years back and have a stake of about 25K in my previous house, i am unable to realise this money unit my daughter is 18 (9 years time) my question is that if i go for BR (which would seem best as i have no assets) will they chase my investment in previous property even though it is fully in my ex wifes name?

[MelanieGiles]

Hi tor

If you go bankrupt, and still have an interest in a former matrimonial home, then this will vest in the Trustee in bankruptcy and it will form an asset of the estate. The fact that you cannot realise the interest for 9 years, will mean that it will be dealt with as an "unrealised asset", and be held by the Official Reciever, to be realised when your daughter is 18.

It may be possible to propose an IVA by excluding this asset, but it must be properly disclosed so that creditors can take a commercial view as to the merits of your proposal. How much disposable income do you have to offer to creditors on a monthly basis?

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[tor]

I have commitments of £260 maintainance and the usual gas electricity etc on top, could easily afford 450 - 500 month for iva. however can not afford the 900 a month payments at prestent

[MelanieGiles]

Then I think that an IVA would work for you if that is what you decide you would like to do.

I have recently dealt with a very similar case to yours, and creditors were happy to accept the offer on the basis that they did not want to hang around and wait for the next 10 years until the property asset could be realised.

Morally, I expect that you will leave this money with your ex-wife in any case perhaps?

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[tor]

The money will more than likley go toward my daughters education.

Can you give me an idea of how many pence in the pound is generally acceptable as an offer to creditors?

What is my next step? I feel I need to move things quite quickly as I have missed some payments already.

[kezza]

that would depend on who your creditors are, and when the credit was taken.

The normal acceptance rate is 25P upwards, if you have HSBC, Northern Rock as a creditor their minimum is 40P

[Adam Davies]

Tor
On the info that you supply and by paying £500 a month into your IVA you would return approx 22k to creditors and this would be a 44p dividend.
Hope this helps

Andy Davie
IVA.co.uk Spokesperson and site manager
(aka Neverending)

Please check out my blog: http://andydavie.blogs.iva.co.uk

View my profile here:
http://www.iva.co.uk/andy_davie_profile.asp

[tor]

Creditors are
Egg Credit Card -£5,893.45
Nationwide Credit card -£8,899.93
Nationwide Flex Account -£1,687.99
Barclaycard -£7,959.34
Morgan Stanley Credit Card -£6,320.14
Capital One Credit Card -£4,685.65
Halifax Credit Card -£4,014.27
Egg Loan -£6,062.90
Tesco Credit Card -£4,106.72

Any problems with any of these?

[jamesfalla]

Tor

It looks like your list of creditors are all reasonable creditors and would all accept a sensible IVA proposal. Based on the disposable income you say you might be able to offer, an IVA certaily looks possible.

I agree with Melanie, it is likely that through an IVA, money in the short term would tempt the creditors to waive their claim on your property as they would not be able to get their hands on it for 9 years.

James Falla

Expert in IVA, Bankruptcy and informal Debt Management solutions for over 10 years.

For more information visit www.jamesfalla.com and visit my blog at: http://jamesfalla.blogs.iva.co.uk

[tor]

Thanks, what is my next step? I was considering contacting the CAB, or should i seek more specialist help? If so how much should i expect to pay for this and how long will the whole process take?

[go_4_broke]

Hi tor,

I don't want to worry you but there are a few things about this that don't seem to quite add up.

I guess that the restriction on not realising the 25k in the former marital home results from a divorce settlement. Although this may be binding in terms of the settlement I know of nothing that would make it binding on the Official Receiver, who would therefore technically be able to realize your stake in the property in bankruptcy.

As a trustee would probably be appointed, it seems to rely on the discretion of the trustee that the settlement would not be violated.

However you say in the property is 'fully in your ex-wifes name' which makes me wonder what is actually protecting your interest in it - I assume it must be by way of a some kind of legal charge, but I do not know how the OR would deal with that.

You also say this was done 'a few years back'. In bankruptcy terms the OR cannot pursue a transfer that is older than 5 years or older than 2 years if you were not insolvent at the time.

Therefore exactly what would be the postion of the OR/trustee in a bankruptcy would seem to depend on exactly how the settlement was structured.

-Best

Please view my blog at www.go4broke.blogs.iva.co.uk

'6 years sticking my head into the Lion's mouth of debt !'

[MelanieGiles]

A bankruptcy Trustee has no discretion as to whether to pursue this asset. It is an asset which vests in him and has to be realised for the benefit of creditors.

These types of settlement, where young children are involved are very common, and so long as neither party has uncontrollable debts they are fairly sensible agreements. The interest in the property has been confirmed via a matrimonial settlement with a deferred realisation period. It will vest in the bankruptcy estate.

Tor, I suggest that you take professional advice from a licensed insolvency practitioner with regard to your circumstances.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[go_4_broke]

Hi Melanie

My understanding is that as the home of a former spouse the OR/trustee has a maximum of three years to realize any interest in the property and that the provisions of the original settlement (not allowing the asset to be realized until the child is of age) are not binding on the OR or trustee putting the property at risk in bankruptcy well within the 9 year period.

The nature of the property transaction does not seem entirely clear and the holding of 'a stake' is at odds with 'it is fully in my ex wifes name'.

If there was a deemed transfer of equity this could be viewed as undervalue and fall into the 5 year/2 year time periods described above.

-Best

Please view my blog at www.go4broke.blogs.iva.co.uk

'6 years sticking my head into the Lion's mouth of debt !'

[MelanieGiles]

If there is a matrimonial settlement, which provides for a deferred interest in a property such as is evident in this case, this asset vests in the Trustee and will be realised when appropriate. The Trustee will secure his interest by obtaining a charge in accordance with Section 313 of the Insolvency Act 1986.

The 3 year rule to which you refer, only relates to a property which is the principle residence of the bankrupt - not a former spouse - and in any case only refer to the commencement of proceedings. A Trustee can obtain a suspended possession order or even a charge giving an infinite time period in which to realise his interest. So the provisions of the settlement are absolutely binding, and will be secured by the Trustee in the interests of creditors.

Legal ownership of the property may well be transferred to the party who is to remain resident in the property with the children, however this does not excuse the securing of a beneficial interest in the equity as set by the agreement.

If the transaction was deemed to be at undervalue, the 5 year provisions would apply - but no Trustee worth their onions would fail secure the position for the benefit of creditors.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[go_4_broke]

Yes fair enough, if it is assumed that the beneficial interest is secured by charge and all (including the OR/trustee) are bound by the conditions of the charge it makes a lot more sense, and assuming a fair apportionment was made, there is no danger of a claim at undervalue anyway.

According to the insolvency service the three year rule applies to

a dwelling house, which at the date of the bankruptcy order was the sole or principal residence of:
the bankrupt, or
the bankrupt’s spouse or civil partner, or
the former spouse or civil partner of the bankrupt

although I appreciate things may work out differently in practice.

-Best

Please view my blog at www.go4broke.blogs.iva.co.uk

'6 years sticking my head into the Lion's mouth of debt !'