Bankruptcy v IVA

[Skippy]

This is just a hypothetical question - if I was to struggle with my IVA payments and decided to petition for bankruptcy what would happen regarding monthly payments in bankruptcy?

If I understand it correctly I would be bankrupt for a year and would have to make payments for 3 years. Would I be expected to make the same payments as I do in an IVA, or would they be reduced?

Also, would any money that I had already paid into the IVA be taken into account?

I have no assets apart from my car, which is a Vauxhall Corsa valued at approx £4k.

Three down, fifty seven to go until freedom!

[Oliver]

In bankruptcy you would usually be discharged within 12 months. You are correct in saying that you could make 3 years worth of payments to your creditors and this would be worked out through your income and expenditure as in an IVA. However, in my experience the courts seem to be much more lenient on expenditure budgets in bankruptcy and you can often find that someone who would have been making disposable income payments in an IVA pays less or even on some occasions nothing through bankruptcy.

Any car valued above £3000 (thanks Mel) can be scrutinized in bankruptcy and the Official Receiver could ask you to sell the vehicle and downgrade. I think you would be fine with your car though as the actual "quick sale" trade value is probably less than you imagine.




Best Regards
Oliver

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

[MelanieGiles]

Ollie is right about the Income Payments Order in bankruptcy, however the Trustee will be interested to know what has happened to your disposable income and the reasons the IVA has failed. They will therefore use your IVA payments as a reference point, but there is no problem in you adjusting expenditure if things have been tight.

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

[Skippy]

Thanks Oliver. I am struggling with (mainly due to Christmas) but I am going to persevere with the IVA. It's good to know what would actually happen though - forewarned is forearmed and all that.

Sorry to keep on, but can I ask you another question:

I have found out that my company might be moving at the end of the year as the lease expires on the building. Obviously if they move locally I will stay, but if it means moving away I wouldn't. Would that be frowned upon by my creditors, especially if the company paid relocation? I am not in a situation where I could move as we both have elderly family.

Thanks again for all your help!

Three down, fifty seven to go until freedom!

[MelanieGiles]

Your creditors will have nothing to say about your employer's relocation, but they will be concerned as to whether you are able to find suitable alternative local employment so that your IVA could continue. They cannot force you to move if you don't want to!

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

[Skippy]

That's what worried me Melanie - I am paid very well for what I do. I have looked around and I can't find any jobs on a similar salary. Oh well, fingers crossed we don't go far!!!

Three down, fifty seven to go until freedom!