How does it work

[lloyd01]

I am coming to the end of my first year of an IVA, as such my IP has asked me to complete an I&E form and also advise them of any changes in circumstances to I&E. They have also asked for 12 months payslips. I know over the 12 months my salary has been more some months than others and i have also had a change in expenditure due to a lodger leaving.What happens if when they review everything and they think you should have been paying more, (i.e due to extra overtime earnt etc). How can you afford to payback any discrepency? If you have maintained your payments to date is there a way round this, can you pay extra months at the end etc???

[Adam Davies]

Hi
It depends on the wording of the chairmans report,but usually the clause is that 50% of any overtime earned goes into the IVA.Most IPs check income on a quarterly basis and ask for payment after each review.
If your IP feels that payment is due then they can ask you to increase your monthly payment next year,it could also be possible that you could argue that your expenditure has increased in the year and that you ha had to use your overtime to compensate for this.
It really is only your own IP who can help you with this
Regards

[lloyd01]

Thanks Andy appreciate your advice. Its amazing how many questions i have regarding my IVA and i think this forum is great for getting impartial advice as i wonder if your my own IP would give this. Can you answer another couple for me, some people often say you would be better off going bankrupt?? Is there any truth in that?? Why would it not be better? Also if you failed to keep up payments on an IVA and it was defaulted, what would happen then???

[Adam Davies]

Hi
In bankruptcy you would pay an income order for three years,this would be a maximumof 70% of your disposible income but more likely to be 50/60%.When you compare that in an IVA you pay 100% for five years you can understand why,in some cases,bankruptcy is better.However if you are a homeowner with equity you will lose this under bankruptcy if you do not have a third party able to buy this equity from the OR.In an IVA you keep control of your house but will possibly have to release some equity.
If you failed to keep up payments in an IVA your IVA would fail and you would,normally,be back to square one.In some instances your IP will petition for your bankruptcy under instructions from your creditors
Regards

[MelanieGiles]

Most IPs do speak to their clients regularly, Lloyd, well I certainly do with my own if they need guidance and support. Hopefully yours will give you some time to deal with your queries. But do use the forum as well as you will find good support here too!

The only person who can determine whether your would be "better off" going bankrupt is yourself. And to do that you would need to define what you mean as better off - financially or morally.

[Skippy]

I agree with Melanie - you need to decide whether you would be better off financially or morally.

I went BR a year ago as I couldn't afford my IVA repayments, and I am financially better off as I'm paying a lot less into my IPA (Income Payment Agreement) than into my IVA.

However, morally I know that I borrowed the money and I do wish I could have repaid it and if I could have afforded the IVA repayments I would have carried on.

[ianmillington]

Yes, a far more positive "spin" is put on Bankruptcy nowadays and it is correct that, taking solely their own financial interests into account, many people who are in IVAs would be better off bankrupt in so far as they would pay less and over a shorter term. About 50% of my clients are actually told this but for their own reasons (pride, a desire to retain an element of privacy etc) they wish to avoid it if they can. There is also a hardcore of people who would lose their jobs if they were to go bankrupt, possibly because their contract says so or they feel that bankruptcy would make them the first to get laid off. Also homeowners with equity generally find an IVA a better option than bankruptcy.

What you need to do is reflect on what influenced you into going into your IVA in the first place. Also, I note you are 1 year into an IVA, so you have 4 to go. Were you to go bankrupt now, you would have to find the money to do it (£500 approx) and then probably make payments for 3 years. The longer your IVA goes on, the more questionable any perceived benefit of bankruptcy becomes.

One final point:- Whilst the Official Receiver promotes a much more "touchy-feely" image nowadays you will note from posts on this forum that there is an element of "luck of the draw" when it comes to the treatment you actually receive as a Bankrupt.

Ian

[Reviva UK]

I agree with Ian in that the longer the IVA goes on the nearer you are to the end point end it becomes a real shame if you have to change plans so far down the track.

Good luck with the decision

[lloyd01]

Thanks all, really appreciate any advice i can get. I agree about the moral aspect of bankruptcy however, i also feel that majority of the debt i accrued was because i had bad credit and i had to take out loans with companies with high rates, my view is they pray on people in the position i was in by constantly calling me to take out top up loans and spread the payment. In addition when the figure was calculated for how much debt i owed for my IVA a lot of the loans had the interest added at the start which meant the figure that was viewed as being owed included £1000's of interest. So for that reason I personally dont feel that obliged to pay back every penny. I guess everybodies situation is different though.

[Reviva UK]

If the moral thing os sorted in your own mind you are left with the academic decision.

For you what would be the best solution financially and what impact would that have on your future.