On the face of it I would say that an IVA or Bankruptcy is clearly the best course of action.
I would also echo James’ comments about Bankruptcy being far less traumatic than it has historically been, and would urge you to take consideration on this option.
I understand Andy's comments about your creditors receiving more in an Informal plan, but feel that this is definitely not your best option. Creditors would always get more if they were to ask people to enter Informal Plans but this has not precluded people from having their IVAs accepted.
One of the main benefits of an IVA is that once accepted the agreement is legally binding on all your creditors, which means that interest and charges are stopped by law. In an informal plan this is not the case, and although you may be able to negotiate a stop to this, there is never any guarantee that all your creditors will keep to this agreement for the duration of the informal plan.
Also an IVA is a structured repayment module which means unless you miss a payment, you will have a finite number of payments to make (usually 60 months) after which any debt will be legally written off. An informal plan at this level of debt and with your DI would take six and a half years to pay off, if all interest and charges were to be frozen, a long period of time to stick to a strict budget. You have your debt spread over 8 creditors so negotiating a freeze in interest for 6 years will be problematic.
In our experience based on the figures you have given, the majority of creditors in the UK would agree to an IVA despite the fact that this would mean paying an insolvency practitioner. You can provide a good dividend (c45p in the £) and I feel that on the face of it you have a great case for an IVA. An example where creditors may hold out for an informal plan would be if there were only a small number of creditors (ie. 1-3) where it could be deemed reasonable to make an informal plan to pay the debts off. However, I would never advocate this option over an IVA unless someone could pay their debts off this way in less or roughly the same amount of time as an IVA.
Best Regards
Oliver
Thomas Charles and Co Ltd.
Experts in personal debt solutions.
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