haven't spoken to my supervisor once

[Milly]

Hi there. I am in the Army and have entered into an IVA as of December last year. I have a number of questions and would be grateful for any answers.

1. I took out the IVA as a single person and since the start of the IVA I have got married. I understand the 50% ruling of monies over £XXXX per month. If I am posted abroad as a married man and receive LOA (Local Overseas Allowance) as per the family rate decided by my marital status and number of children will I only pay back %50 of the amount that is allocated to a single person of the same rank?

2. As I am recently married finances are still up in the air but I am still meeting the monthly payments. My wife has two children from a previous marriage whom I now assist in supporting. Would my change in circumstance warrant a successful variation on my IVA?

3. If, in the course of the IVA I manage to get a mortgage with the help of my wife, would the remortgage clause at the 4 year point of my IVA mean that I have to surrender all profit, all profit of my share or a particular amount predetermined by my creditors?

4. How difficult is it to get a mortgage once you enter into an IVA?

5. Can I stay in the Army if I go bankrupt?

I understand that there are quite a mixture of questions ranging from one extreme to the other. It's just I want to do this right and also I don't feel as if these questions have been answered when I've put them to my IVA company. I've only had the IVA 7 months and i'm on the third person who's dealing with my file. I haven't managed to speak to my supervisor once. I keep getting told that she oversees everything but others deal directly with clients due to the amount of people with IVA's she supervises. I look forward to your reply.

Regards,

Milly

[kandh]

Hi, sorry but I cant answer most of your questions apart from one. Unfortunately the armed forces take a very dim view of serving members going bankrupt and it can lead to immediate discharge for financial insecurity.

With an IVA, they will not know about this arrangement unless you for some reason leave the forces then join back up again or join the reserves as you are then required to fill out another new security questionnaire which will flag up this fact (OH has an IVA and he is in the Navy - he left then joined back up again and this happened to us. We then had to fill in another more detailed form of all our expenditure/income etc for me and OH. OH got his clearance eventually but they advised that everything would be reviewed again in 24 months and if nothing had changed then he may have had to have a face to face interview to assess his financial situation).

If you do feel that bankruptcy is the only way, then you are best speaking to your divisional Chaplain before you go any further who would be able to give confidential advice as to what you could do(the British Legion is also a good place as well as the army equivalent of the Navy White Ensign or benevolent fund).

Hopefully a more experienced person will be along soon to help with the other points. With point 1 however, although you will get extra separation allowance etc, will you incur extra food/accommodation charges/travelling etc during this time for yourselfas this would also be taken into account? Cant remember how this works although would be interested to find out as my OH will be going to Afghanistan in 6 months time so will be in the same situation as you. [:(]

K [:)]

[MelanieGiles]

As an Insolvency Practitioner, who is also ex-H M Forces, I will try and answer your questions in the order you have raised them:-

1) Your circmstances will be reviewed by your IP at the end of each year. LOA is not necessarily taken into account for 50% uplift purposes, but this will depend upon your overall financial circumstances and the area you are posted to.

2) I do not feel that your change in circumstances ought to warrant a variation in your IVA terms. You have chosen to take on a lady with commitments of her own, and your creditors will not be happy to see their position suffering as a result. Does she have any income of her own - I assume that she received child benefit and maintenance from the children's father, and you should also apply for family tax credits to see if you are entitled to pay anything.

3) How will you fund the deposit to buy a property, and justify the need to pay a mortgage which is bound to be much higher than you are paying for a married quarter. I think you need to put these plans on hold until the IVA has concluded, unless your wife is able to cover the uplift. If you do buy a house, the equity will not be required to be taken account of in your IVA.

4) It is not difficult but you will need a 10% to 15% deposit. Depending on how long you have served in the Army, you may be able to get an advance on your gratuity to fund this.

5) As you are probably aware, Queens Regualations make it an offence to enter into bankruptcy proceedings whilst a serving member of H M Forces, which could lead to dismissal. These regulations are quite outdated these days, and it might be worth you speaking to your Welfare Officer of Adjutant to see what the current attitude may be. If your position requires a higher level of security vetting, this could cause problems, and you will need to let your Commanding Officer know.

And if you need to speak to your Supervisor, you should insist that she takes your call. You are an important person to her - as you and her other clients are effectively keeping her in a job.

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

[kandh]

Melanie, you are ex forces as well?? Gosh, learn something new everyday![:D]

I am also ex Navy, along with my dad, brother and uncle! (Could say it was in the family!!! [:D]

I am interested to find out why the 50% wont necessarily be taken dependant upon whereabouts you are serving? Does it mean that if serving in say Basra or aghanistan would be looked differently upon compared to say a stint in Italy or German etc?

K

[MelanieGiles]

Hi there

LOA, as you know, is paid to adjust for differences in cost of living on overseas postings. The IP will review your change of circumstances upon each salary adjustment to ensure that creditors are still receiving a fair repayment.

It can be helfpful, therefore, to choose a practitioner with knowledge of these things, as it should be made clear within the IVA proposal, that incomes and expenditure will flucutate with each posting. Athough earnings whilst in Iraq or Afghanistan are now largely tax free, you may incur additional expenses such as childcare if your partner has been sharing these duties with you.

Hope this helps.

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

[Milly]

Thank you all for your responses!!

It has cleared a few things up but has generated a few more questions;

1. The example of LOA is as follows; I was single in Germany last year receiving an approximate tax free sum of £150.00 per month for the cost of living etc. If I'd been married with 2 children in Germany I would have received approximately £600 for the cost of FAMILY living.

My question is: If I was now in Germany receiving £600, knowing that the IVA was assessed with me being single am I right in thinking that if the 50% uplift came into effect it would only be for the relevant amount for a single person? That is 50% of the £150? I assume this because the remaining amount is for the family who are not part of the IVA.

2. Melanie, you mention about me possibly using the LSAP (Long Service Advance of Pay), currently up to a max of £8500 to assist with a mortgage. This is repaid by a minimum of 10% per month until you leave the Army and then any outstanding amount is cleared by your gratuity.

If I apply for this will it be seen as an application for credit which will forfeit my IVA?

As it is a lump sum could my creditors ask for 50% of it even thought the only thing the Army will release it for is first time buyer purchase?

My IVA company mentioned that any property bought would be subject to an equity release at the 4yr point. That is why I asked about how much equity would be released to my creditors if this happened when the property was in joint names even though the IVA is in my name. Basically I don't want to see my wife penalised for my previous mistakes.

The intended plan for my wife and I is for me to apply for the LSAP, purchase a property in joint names and then my wifes income pay the mortgage and me pay the 10% (£85) per month. I just don't want my wife to be penalised.

I do not think that I can get the LSAP unless it is a joint mortgage.

3. If my wife does earn enough to pay for the mortgage would she be required to show any information to MY creditors?

Any suggestions would be greatly appreciated.

[MelanieGiles]

Hi again

As you are now married your joint incomes will be takem into consideration, so if you are receiving £600 LOA then this will be included in your income calculation. Is your IP aware that you have married? If not, you must let them know about this as it is a material change of circumstances, and I suggest that you complete a new income and expenditure account to show your current surplus income. If I were your IP I would completely reassess your situation, rather than just taking 50% of the increased earnings, as this does not take account of increased expenditure.

With regard to your property owing ambitions, you would need to discuss these with your IP directly. I cannot see how the purchase of a property during an IVA falls into the 4th year revaluation and remortgage provision, but check the wording of youw own documents.

Your wife's income will now be taken into account, to show that you are paying a fair share of the household bills - based upon a ratio of your respective earnings.

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