In IVA but considering bankruptcy

[NotSoBrightSpark]

Hello everyone,I've been a 'lurker' for a short while but now I think it's time to ask for some advice particular to our (me&my wifes) situation.

I'll try and be brief because there's an awful lot to say and plenty of information to divulge.

Right,

We owe between us over £70,000 in unsecured debts (don't know exact figure')

We have three separate charging orders on our property worth approx £25,000 (one of them for £5,500 is for our car which is worth around £3,000) The charging orders were placed on our property during a time when we were at our lowest ebb,we would have signed anything just to get the creditors off our backs.I'm sure you know what I mean.

Our house is valued at around £142,000.
Mortgage left to pay is about £108,000 but with charging orders I guess we only have equity worth around £9,000.
Mortgage payment is £641 per month.We have no arrears.

When we first realised/confronted our debt problems we used a debt management company , any debt management company again just to keep the wolf from the door.We then sought advice from the CAB,they were very helpful but it was very difficult to speak to someone as soften as we'd have liked.

Anyway,in June 2007 we entered into an IVA,the terms are -
£400 a month for 70 months
50% of any extra income/overtime (already £700 plus in arrears with this)
And the equity release after 4 years clause.

I have a full time job as an electrician I earn about £1200 per month after tax,my wife at the moment is on benefits because the stress of the whole situation made her bad with worry/stress/depression.I'm sure again you know what it's like.We have two children 16 and 14,both living at home with us.

We have met our first seven payments for the IVA (just) but just before Christmas I had to change jobs so therefore asked my IP for payment grace.They said yes no problem but for two months.We have just missed our third monthly payment in a row.I could probably just about find it but I'm holding it back for reasons I'll explain now.

I can't see any light at the end of the tunnel.We still have 62 months worth of payments to make.Five more years to exist but not live.I can't rememeber the last ime we went out,only to work.Is it worth staying in the IVA?

I spoke to my IP to voice some concerns and in turn they're very helpful and courteous.I proposed to her that we were prepared to sell the house and release the equity to the creditors if we could could come to some sort of 'final figure' arrangement (say the equity plas another years worth of payments or similar) She said that looking at the agreement that the creditors would want minimum 25p in the pound which means a lump sum of £22,500 or a lump sum of £18,400 and 16 more monthly payments.If we sold our house released the equity to the creditors we would still be left with another 42 months payments on the IVA.(these were the IP's figures and nothing has been proposed to any creditors yet)

We're in a position where we want rid of the debt now,or very soon.We can't take the burden much more I think we need a fresh start.

I may just ask my IP to propose to the creditors that I sell the house give them the equity and payments for another year making it clear that I'm seriously giving bankruptcy some thought .
In bankruptcy the creditors will receive 2p in the pound!!
We're willing to sell our house,I can't see what more we can do.Im sure that there must be a way to use the equity left in the property to appesae the creditors somewhat rather than just go bankrupt.Surely the creditors will see this?

If we were to go bankrupt I'd love to keep the house,not for me really but it's an important time for the kids at the moment with exams etc I would be able to pay the creditors their equity if we went bankrupt because we wouldn't be able to find the money,neither could we borrow from a friend or family member.

Can someone give us some advice please because I've been thinking what the best thing to do is virtually non stop since we missed the first IVA payment three months ago.

I'm a bit confused as to the best way forward for me and my family [:I]

Sorry for the long winded post and thanks for listening [:)][:p]

[Viki.W]

Hey NotSoBrightSpark,

Lots of the experts and forum members are at a meeting tonight but I'm sure someone will be able to help you tomorrow or maybe later on tonight. I just wanted to welcome you to the forum. It must be awful for you, I think everyone here knows how you feel. I'm sure there is a solution. Im sorry I can't help you further.Try to keep positive. Kind regards, v.w

[Clare73]

Hello NotSoBrightSpark,

I myself am a new member, only having joined yesterday but wanted to welcome you anyway. I would just like to say that you have absolutely done the right thing by joining this forum as the support and advice you will receive from the experts and other members will be invaluable.

I am sure that you are feeling pretty lousy at the moment, but try to stay focused - we are all in or have been in the same boat and it's pretty tough going sometimes. Hang in there and I am sure the best solution will present itself.

Sorry I can't help with your query.

Regards
Clare

Regards

[neil277]

Hi

I feel you need to take legal advice and consider bankruptcy as your first option, another 62 months paying into an IVA will not be good for your wife and yourself.

As you are an electrician have you thought about working for an agency or subcontracting from another company i would try to keep away from monthly pay. Try to find work which gives you seven days a week it will be hard, if you can do this for 6 months then you can pay into your bankruptcy at least £20000.

I feel you don't have many options but you need to take action soon not for yourself but for your children as there lives are just starting with exams.

There is always light at the end of the Tunnel.

Best of Luck

Neil

[sjw]

hi your in the best place for advice, here are some great experts of here im in the same position as you at the momemt and have just decided to go bankrupt as no enough spare income for iva. i actually feel better now i have make to decicion as we have had countless sleepless nights and started to have collections men at the door its the worse time of my life put hopefully they be an end soon. my kids are the same age as yours and i know what you mean about the house you just dont want them effected and i feel that if we stay where we are they we not be so aware of whats going on as its our mess not theres -- good luck am sure you will get the help you need on here.

[sjw]

neil, what the point of working of his but off to earn money for bankruptcy the whole point of it ,is that you have not got any money, all you need to do is get the £495 each to pay the court , personally i would just find your fees to go br and put it all behind you. you do not need to raise money for br as they can not take what you do not have. x

[NotSoBrightSpark]

Firstly,thank you all for your replies.It really is helpful just to know that people are reading my post.
I'm new to the forum and just by reading through previous posts I have gathered a wealth of information which I didn't know.All of it useful.

And SJW good luck with the bankruptcy.Hope everything works out for you.

As I say a big thank you to everyone who has replied.I'm still not sure what is best for us but I think I'm edging toward bankruptcy and hopefully a fresh start.

[chris.g]

Hiya Notsobrightspark, it sounds as if you are really struggling already in your IVA. One thing I'm not quite sure on is that you say you are willing to sell your house but if you go bankrupt you would like to keep it.... If you want to keep the house you will have to 'buy' your share of the equity, continue to pay the mortgage and any payments for the charges on the property. If you fall behind with any of the secured debt, as you will already know, they can force the sale of your house. I really can't see the point of struggling for longer than you need to. If you are going to declare br you may as well draw a line under everything and make a complete fresh start. I understand about your kids, but kids are adaptable and they will be ok. The experts will be able to advise you better regarding your IVA.

[NotSoBrightSpark]

Hi Chris,

I think my original post may have been a bit confusing simply because there was such a lot of information to give out.I knew I'd muddle it up somewhere [:p]

With regards to the house,what I meant was - I would be prepared to sell the house and pay the creditors the equity if it meant then becoming debt free. (I know there isn't anywhere near enough equity to cover even 25p in the pound for the creditors but it's still more than the 2p in the pound the creditors would get in bankruptcy)

If we are to go bankrupt then I would like to be given the chance to find the extra money to pay the creditors and stay in the house.I can't borrow the money from anyone.I'm not sure I want to either.Does anyone know if it may be possible during bankruptcy for me to negotiate with the OR an extended period of time in which to find/save the money needed to cover the creditors share of equity? It's a long shot I know but I really am racking my brains trying to find solutions.

I think the charging orders (one of whom is Northern Rock for £8000) only come into play if we sell/remortgage the house.

We can afford the mortgage,we are not in arrears.We can also afford to pay the bills and eat and not much more really.I can get the IVA figure per month down slightly but it just increases the term.Exactly what I don't want.

I fear the IVA is a huge millstone around our necks for the next six years one which may eventually bring us down so that is why I'm trying to find a solution and a conclusion to the issue NOW.

Still searching for the best way forward....[:)]

[sjw]

when the official reciever looks at your house in br they value it at quick sale price so you may have less equity than you think and if you have no or negitive equity you can stay in your house as long as you buy back the benificial interest which i believe is £1 plus fees (about a few hundred) x

[neil277]

Hi SJW

Going bankrupt you still have to pay off your debts this can last up to one year, if the banks refuse to accept the offical reciever letter after one year you may have to make a token payment for upto three years.

Yes of course if there is no money left over after you do your budget sheet then you wont pay a penny.

But in this guys interest to get back to normal life he will have to play ball with the Courts.

My letter goes to my IP tommorow and i will attach my other letter from the IVA Council for his comments, i will miss 3 payments as advised by debtline and pertition my own bankruptcy.

I owe my ip £7500 and debts of £30000 with interest frozen the more i'm honest with the official reciever the quciker my debt will be cancelled, it could be over in 6 months.

If you are an electrician like myself you can earn good money its only my opinion sometime its better to make a fresh start than be tied up into an iva for upto 7 years without knowing where to turn next

[mish1953]

Hi - ultimately it's your decision .

Can you really afford to pay out £400 a month - guess not , so how much can you afford ?

Let me explain, I was BR ( now discharged ), Im a single dad , one 15 yr old living with me, I bring home about £1400 a month. Im paying £80 a month IPA for the next 2 and a bit years. Ive lost my house and am renting. Im paying £80 a month so I have a low surplus after my income & expenditure is worked out. My bank account is in the black every month now, only just .. I have no overdraft, no loans, no credit cards, no mortgage - Im 54 .

I still worry about money , always will, like my car tax/ mot are due in april, Im ferocious about not spending money , anything I have gets spent on my daughter.

How much can you 'really' afford to pay your creditors ? In my view my family come first.

The house - this is a mindset thing, will you ever own it outright ?
Yep its the family home , but in the mind of your creditors its nothing other than an asset, renting isn't a bad thing just different.

Your choice , your decision , do whats best for you and yours.

Good Luck
Mish

[sjw]

i understand your point neil but you should not work yourself into the ground to do it, in bankruptcy you need to put down average monthly pay and expenditure they then decide if you have enough deposible imcome to make a monthly payment order if there is not evough you do not pay , my point is why work seven days a week it will show inflated unsubstanable wages and increase to chances of paying an order for three years.

[chris.g]

I know it's very hard and very confusing, we were the same, searching for a way to keep our house but I don't think it's really possible unless it's in negative equity.
From the figures you have given your beneficial interest will be around £4500, how will you raise that money if you cannot get it from family/friends? When you are br you will not be able to borrow more than £500 without informing the OR anyhow so you could not borrow it.
The charges will come into play when you sell your house but interest still continues to acrue which will result in the debt being more than the original amount. We had a charge on our prperty, by RBS, and they requested a monthly payment to cover it, because we couldn't pay it they have pushed for a force of sale, pointless really because we are now br and have surrendered the house back to Halifax. We, like you, could also afford our mortgage and secured loan..providing hubby was in permanant work, he is bricklayer so sometmes employment was very hitty missy.
I had visions of us being destitute and homeless because we had to declare ourselves bankrupt. Very much not the case. We moved into our new rented home before we filed and we were £200+ better off straight away. [^]
As you say the IVA is a huge commitment and if you are struggling at this early stage it seems doomed to fail, resulting in br anyhow. I would suggest you contact your IP to discuss your options, something you will need to do anyhow because of the payment situation.
Try not to worry too much, things will get sorted out. [:)]

[NotSoBrightSpark]

Thank you for all your replies again.

I'd like to add some information that I think may be relevant to our situation.

Under the terms of the IVA the total amount we weill have paid back is around £28,000.

£17000 to creditors,£11000 to our IP. I would imagine this is quite normal.

But my point is,equity in the property plus another year or two of payments to the IVA and the creditors wouldn't be far off receiving the figure the ywill eventually receive after six years anyway.I understand that IP has to earn money as do we all.
If the IP wants a fee to arrange such a deal i'm open to negotiation with them

Property prices in the area are quite stagnant at the moment and I realise the amount of equity may be lower than I think as pointed out by SJW.

Thank you all again.