Current IVA, not sure if its for me

[Jhonnie]

Hi Im new to this site and thought i had posted a question for an expert to answer but i have had nothing back so guess i did it wrong, if this is wrong i would appriciate some help.

My IVA was approved in Jan of this year. The total creditors claim is £73700, estimated dividend 44p in the £. My contributions are 60 payments at £714.

I started making payments in June 2006 after paying a fee to the consultancy of £950. I was orinially quoted payments of £460 only to find that now i am to pay over £700.

I feel that i was misadvised when i took the IVA out. My state of mind at the time was one of wanting the debt sorted and not really fully understanding what an IVA was or what bankruptcy involved.

What i want to know is:

In my situation is bankruptcy an option? I have no assests.
Will the payments i have already made go towards paying off my debt?
How will bankruptcy affect me when wanting a mortgage?

I would really appriciate your advice on this.

regards

Jhonnie

[lily]

Hi there and welcome to the forum

I am not an expert but I am a person with debts who has been a member here for a long time.

I am not sure why you had to pay for consultancy and why you believed your payments are almost double what they should be, it seems there is a breakdown of communication somewhere. Were all of the options explained to you?? What company did you use??

I am not sure where the amount of monay already paid into the IVA would go, it may be up to the Official Reciever, one of the forum experts would be able to answer you with this.

With such a high level of debt a DMP is not really an option and if you cannot afford the monthly payments and have no assets to protect then Bankruptcy would seem the obvious answer, unless your profession is in question as an undischarged bankrupt. It is possible to obtain a mortgage after going through and being discharged from bankruptcy but by using a sub prime lender at a higher interest rate.

lily

[MelanieGiles]

Hi there Jhonnnie

Curious to know how your payments increased from £460 to £714! How did this happen - presumably with your knowledge. Did the creditors increase your contributions at the creditors meeting? What thought did you give as to how you would afford the payments?

If you are struggling to make the payments now, you could ask your IP to consider calling a creditors meeting to see whether lower payments would now be accpetable, or declare yourself bankrupt. As you have no assets which would be affected, this could be the best option for you.

The monies you have already paid are held in trust for the creditors bound by the IVA, and you will not be able to apply for a mortgage until you have received your discharge from bankruptcy - usually after one year.

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

[Jhonnie]

Hi Lily

Thank you for replying, its good to know youre not alone.

I imagine that all the options were explained, i remember that when bankruptcy was mentioned because i knew very little it sounded awful but the woman from the consultancy, Synergi by the way said that i should not go for that as it was a last resort.

I was very upset when i found out the payments doubled but thought they were doing me a favour.

Regards

Jhonnie

[MelanieGiles]

Bankruptcy should not be treated as a "last resort" but as a sanctuary away from debts you cannot afford to repay. I suspect that, yet again, you are the victim of clever IVA marketing. Were you led to believe and IVA was the only option available to you?

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

[Jhonnie]

Hi Melanie

Thank you for your reply. The initial payment of £460 was given to me by the company after seeing a consultant, i had to tell them my salary and an estimated amount of what i owed. I then had to submit all my wage slips and debts and the figures then came back as £739, this then got reduced to £714 because i of a bill that wasnt included.

Could the court say no to me for bankruptcy because i earn a high amount?

regards

Jhonnie

[Jhonnie]

Melanie

I was lead to beliveve that in my situation an IVA would be the best for me because i was willing to pay and realised i had done wrong.

It was not a good time for me at all and was grateful that someone was listening.

Regards

Jhonnie

[MelanieGiles]

I am afraid that a lot of people seemed to get lulled into a false sense of security when they feel that they are being properly advised.

If you feel that bankruptcy is the best option, the judge is unlikely to be affected by the level of your salary, but you may need to explain why you do not feel that you can carry on with the IVA. Why not try a variation, to see if the payments could be reduced first?

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

[Jhonnie]

Melanie

I feel the reason i cant go on with my IVA is:

I was misinformed and not given the full story.
Bankruptcy would be finished sooner and i can get on with my life.
I worry that the payments will get higher.
I dont have any social life because i cant afford it.

Regards

Jhonnie

[MelanieGiles]

Then I think that those are very good reasons for you to seriously consider bankruptcy, Jhonnie. You, and everyone else reading, should remember that the decisions you make with regard to a debt repayment strategy must be right for you, and not based upon what you think you ought to do. Entering into an IVA is never an easy option, neither is filing for bankruptcy. But it appears that you have given this matter great thought, and I send you my sincere best wishes for the future.

This is a lesson to all forum readers to be absolutely sure that you are taking the right decision, and have received the most appropriate advice, before choosing a route for repayment. How anyones disposable income could go from £460 to £700 is beyond belief.

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

[Jhonnie]

Hi Melanie

Sorry to keep asking you questions, i feel very bad about wanting to do this, what would be the next step and what amount would i be expected to pay if i were to go bankrupt?

Regards

Jhonnie

[catullus]

Jhonnie

You've clearly been through a process that you really didn't understand, and that was your mistake and yes, it has to be said, your fault.

You are now in the hands of an Insolvency Practitioner who has a professional duty to answer your questions and give you advice on how you should proceed.You should use that to your advantage.

Your circumstances are probably too complex for anyone on this board to give you the right advice and you should ask to speak to your IP DIRECTLY, not one of his staff, to discuss your current position and what are your options.

You can always use this forum as a sounding board but the most informed advice that you will get will be from your IP and you should not be afraid to ask to speak to him/her.

The most valuable thing that this forum can do for you is give you practical experience from people have gone through similar difficulties.

There is always an answer to the problem but the first step is understanding your position and you'll get that from your current IP. You'll then get loads of helpful advice from this forum.

[MelanieGiles]

This is what we are here for Jhonnie, so ask away as much as you like.

The next step should be to discuss your thoughts with your own IP, and advise him/her that you are unwilling to continue with the IVA for the reasons you identified above. This is more out of courtesy, if you have really made up your mind about bankruptcy proceedings.

Next step then is to download the bankruptcy application forms from the Insolvency Service's website and have a good look through them. Look at the on-line section and follow the easy steps through. Then ring up the local County Court to make an appointment, at which you will have to have the £485 in cash, and your bankruptcy order ought to be one of formality.

Do let us know how you get on, and if you have any more questions we have a team of bankruptcy experts to assist- there is no better advice than that received from people who have been there themselves.

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

[Jhonnie]

Hi Catullus

Thanks for that reply, having read your profile i now understand your style of reply.

I am well aware that it is my fault and i made a mistake but now i am doing something about it i can explore the options and i feel that my consultant should have taken more time to explain my options.

Thank you for your honesty.

Regards

Jhonnie

[Jhonnie]

Hi Melanie

So if i speak to them and advise them of what i want to do i will stop the payments? I simply dont have the money to pay the court that money.

Regards

Jhonnie