Apologies for the long winded post

[michael1982]

Hi

Apologies for the long winded post containing a lot of questions but i would be grateful if you could point me in the direction of the answers.

A little background.

I currently have an IVA to which i pay £235.00 per month on debts of about 28k. I have been in the IVA for 1 year and all payments are up to date.

My debts snowballed from College/Uni fee''''s and i found myself getting bigger loans to pay credit cards, then filling the credit cards back u to pay the loans and on and on until no more money was there.

I am 26 years old and live with parents, I have no assets.

Due to a new job and a little more cash available i investigated the idea of getting a mortgage. I enquired the possibilities of getting a mortgage with my girlfriend and using my father as guarantor. The response was with an IVA its a definite no, but if i was bankrupt it was possible. Several companies gave the reasoning of " Its because the IVA is voluntary and bankruptcy is not".

Now my parents have sat me down and said i need to seek alternate accommodation in January, they love and support me 100% but they feel its time me and my girlfriend started standing on our own two feet. I will be 30 in 4 years so i agree. They are aware of my financial problems and helped my gain the IVA in the first place.

I have started looking for rental property. Although the figures i have received show i can afford it, but would no longer be able to pay the full IVA payment, maybe half 1/3 if I''''m lucky. MY parents would never put me on the street but i do need to move, i have no choice.

Questions i need help with.

1. What will happen if i can no longer pay my IVA due to accommodation costs?

2. Would bankruptcy appear to be a better option anyway?

3. Can i keep my current bank account if made bankrupt? Held since before IVA and has no arrears.

4. Would i need to pay any monthly payments while bankrupt?

I hope you can help me decide what the next step is to be.

Thanks in advance

Michael

[liberta]

Hi Michael and welcome to the forum.

Firstly I am surprised that mortgage brokers have told you that you will not be able to get a mortgage while you are in IVA. That has never been my exprience with my clients.

Before I answer your questions, I would like to recommend that you speak to your IP and let him or her know about your situation before you do anything. If your parents have decided that it is time for you to move out and stand on your own two feet then you need to respect that. Obviously this will have implications for your VA and you need to let your IP know about the possibilities open to you.

It may be possible for your IP to return to your creditors, advise them of the change in your circumstances and ask them to accept a reduced offer. As long as your new expenses do not take up to much of your surplus income there is no reason why your arrangement should fail. You will after all, or I presume that you will, be sharing the costs of your new home with your girlfriend.

Now to answer your questions;

1/ Subject to the above, if you cannot pay your IVA then it will undoubtedly fail.

2/ If your arrangement fails then, I do not really see much option but for you to go bankrupt. A debt management plan would probably take you too long to pay off. You do need to be careful however that it will not affect your employment - check your contract of employment first. I would also advise you ask your IP to advise you on the full implications of bankruptcy.

3/ Yes you can in theory - it is really up to your bank. Initially your bank account would be frozen however, so you should ensure that you have enough cash to see you through a couple of weeks. Your bank account is automatically frozen by the bank to allow the OR to check the balance - obviously if there is more money in there than you need to live on until your next payday your OR will want it. The OR will normally give the bank his or her permission to unfreeze the account once he has checked the balance.

4/ If you have a surplus income then you will be asked to pay a proportion of it into the bankruptcy for three years.

Hope this helps

[michael1982]

Hi, thanks for the reply

With the information you have gave me i have come to decision on how to go forward.

In January i will start house hunting with my girlfriend, due to her low salary the bills we most likely be paid 60/40 my me to start. Putting some figures together it looks as though no expendable cash will be available for the IVA. So Looks like i will have to face the inevitable and make myself bankrupt.

I do however find it difficult discussing issues with my IP, I was made redundant 6 months ago and requested a one month payment break, i wouldn't have been able to meet the payment due to a sudden loss of income. They made me feel like a criminal for asking this and eventually agreed once i has forwarded them all the required proof. They have added a hefty premium on to my final two IVA payments so make up for this including admin charges and supervisor fee's.

So as you can imagine I'm sceptical about approaching them with this latest bombshell.

After my redundancy a smaller company was formed in the ashes and a scaled down team were put together to take the company forward, myself included. We are a close nit company and both directors are aware of my situation. We have discussed bankruptcy and my job is secure. I work in IT.

I would appreciate if you could give me and idea of the steps taken once i inform my IP i can no longer meet the payments?

Do they proceed with a bankruptcy order or do I?

Is it a fairly quick process?

P.s. When i enquired about a mortgage 9 months ago is was not a problem at all, even with most high street lenders who would offer me the best interest rate. But now its just a no go at all apparently, even with a 10k deposit and guarantor.

Thanks for all your help

[kallis3]

It's unlikely that they will make you bankrupt unless there is something in your report which states that funds will be kept back for that purpose. You need to have a read of that.

Once you stop paying your IVA it will fail.

You can petition for your own bankruptcy. It will cost you £495 court fees and the forms are available online to fill out.

The time scale depends on when you can get a court date once you have filled the forms in.