BR vs IVA... Just can't decide!!

[lee27]

Hi all,

This is a duplication of a post I have made on the bankruptcy sister site. I am interested to hear the perspective of people from the IVA camp too.

I have posted on here before with a few questions about BR over the last year but forgot my username etc. so I have rejoined. A good few months have elapsed since I last posted and I haven't done anything about my situation because my creditors haven't really bothered me, even though I owe over 75k and haven't paid anything for about 3 years!

I have also been considering the IVA route and am also a frequent reader of the iva forum that partners this site.

The story of my debt started in early 2008, I split up with my then partner with whom I owned a home. She basically did one, and I couldn't afford the mortgage, I let it default and the house was reposessed, and sold leaving a 20k shortfall. We also had a joint unsecured loan of 25k that was also defaulted and left. I basically had a mini breakdown, and became very reckless with money, sacked off my responsibilities and rented a city centre bachelor pad that was probably beyond my means that made me feel better. After the split, I also stopped paying my car lease I had, which at £387 a month became too high when a double income became a single. I got a car on HP after this which was a more manageable £270 a month, although I missed a couple of payments on this in 2009 and they arranged a plan for me to catch up that was again near £400 a month....I tried but soon defaulted and this car was also reposessed. The shortfalls on the two cars were 7k and 8k respectively.
In addition to all of this, I had a loan with first direct that basically was a consolidation of all of my debts from younger life, before I even met the person I got the mortgage etc. with. This loan is about 18k. I know, I'm such an idiot! Then came the wilderness, I moved several times, living with friends and entering into professional house shares. My movements over this period seem to have shaken off the creditors so I have been enjoying a fake debt-free life.

Currently I am living with a new partner, who bought the house with her own mortgage and a 17k investment from her grandmother as deposit, we have been here 4 months and I have of course been contributing to the household bills. I am nit on the deeds, she is the sole mortgagee, and my only contribution has been half of 4 mortgage payments, so if I did choose BR I think the OR would be hard pushed to see any BI. I have a ridiculous car (an mgf convertible...I'm not even a hairdresser!) that I paid 2k for about 8 months ago, but is now worth about half that and is costing me a fortune to repair and maintain...another great "Lee Decision" there! (given that I could have got something more reliable and practical with 2k). I am working, I earn about 25k as a sales manager for a retailer, so I take home around 1600 a month, with my contribution to the household and my own things, my DI is about £700.

With my DI as high as it is, I know I could get an IVA, and what appeals is that I could probably lease a decent-ish car from a company like Duncton (whom I hear a lot of good about on the iva forum) and still have enough left for an IVA. But....an IVA is for 5 years and I worry I might struggle with self discipline, and my job isn't exactly cast iron secure in today's climate, I don't remember the last time I hit my targets! With BR, I worry that the OR will take a dim view of me not trying an IVA given my DI, and I'd have to keep this s***ty car! I know I'd have an IPA and I'd be perfectly happy to pay it. I think I'm also put off BR because of the intrusiveness of having to send in bank statements for the last 2 years etc. and having to explain where every £ went. Because my partner gets paid weekly, I pay her about £700 at the beginning of the month which she uses to pay the mortgage and bills, then she pays me back her half 'cash in hand' throughout the course of the month, another thing I'd have to explain!

I just need some advice so I can stop all this procrastination. Thanks for reading I know it's a bit of an epic tale!

[thefsg]

Hi Lee. It was a difficult decision for me too and I toyed with both options but elected for IVA because I didn't want to risk losing our house.

In addition I do want to pay back my debts and will come close to doing that I hope in another three and half years, but on the other hand my view is that in business these are the risks you take, i.e. non-payment is one of the problems of lending money and they factor this into their overall interest rates and charges (amazing how so many people's credit card rates are now at ridiculous multiples of the base rate).

My impression of BR is that it is more of a short, sharp, shock but it is over more quickly - there are other posters here who chose BR and are better able to comment I'm sure.

I don't know whether this really makes any sense but it seems that BR is still an option if you go for an IVA and it doesn't work out for you, whereas I can't think of how it could happen the other way round.

Overall though, it's a hard decision and you may be best speaking to a few experts whose experience will no doubt help you to the right decision.

[liamjames]

Hi Lee,

It's a very interesting story, and thank you so much for sharing it in such detail. If you have survived for so long without being "found out", can I ask what's inspired you to now deal with your debts?

[kallis3]

The two more 'well known' BR posters on here were forced down that route as the IVA failed.

I do recommend that you speak to an expert Lee - visit www.iva.com for a list of companies and reviews. Speak to as many as you need to for free and impartial advice.

Ultimately, only you can make that decision.

[lee27]

Hi Lee,

It's a very interesting story, and thank you so much for sharing it in such detail. If you have survived for so long without being "found out", can I ask what's inspired you to now deal with your debts?

Yes Liam...I am with a new partner now, and she knows this story and is supportive, but it has made me realise that if I am to have a normal future, then I need to put this behind me. I am 30 years old, and I know that I can be debt free and (almost) credit repaired by 35...then I can do crazy stuff like save and invest! I can't run forever.

[canaries]

I haven't heard anything re the OR in BR asking for 2 yrs bank statements, that seems to be excessive unless they suspect some wrong doing i.e hiding assets, my research (I,m no expert quite the opposite)
had led me to 3mths statements normally.

[kallis3]

I think you have to provide more than three months to the OR, and they can go back a fair few years if needs be.

It is probably all individual though, depending upon circumstances.

[Adam Davies]

Hi
My gut feeling is bankruptcy, give yourself a total fresh start. Things can change in five years and if your IVA fails you will be back to square one. With an IPA if your income drops you stop paying and your debts are still long gone.
The one thing that you must do is to take action now, either the IVA or bankruptcy
Good luck
Regards

[MelanieGiles]

You should only enter into an IVA if you are committed to effecting a maximum repayment to creditors over a five year period from your disposable income, and have a desire to see your creditors repaid. It strikes me that you have nothing really to lose in bankruptcy, but if repaying your creditors is important then you should also look into an IVA or a DMP.

[Skippy]

I had to provide 1 year's worth of bank statements to the OR but that was nearly 4 years ago and I have heard of people being asked for more.