In IVA but considering bankruptcy

[NotSoBrightSpark]

Hello again,

Well we've been umming and ahhing on exactly what to do in our situation.

Anyway,the other week we received a letter from the tax credit people saying that we had been overpayed £7,000 [:(!] I don't know how and I'm sure we've done nothing wrong but they maintain that this is correct [:(] I know we could fight it but how long would that take? One year,four years? Plus we may not win anyway.

Point is,the money we were recieving off them has stopped and it has left us around £450 worse off per month [V]We also now have more outgoing than incoming [:(] I'm no mathematician but that's not good and is indeed how we got into debt in the first place.

We are still in the IVA,which is £400 per month and I've let our IP know about this by email because our case worker is on holiday but she is back now and I'm awaiting a phone call.Before she went on holiday she sent us an email briefly outling what she thought -

' I will need to see notification of your overpayment of tax credits as this may be something we can include within your Arrangement and get your regular entitlement reinstated. So long as the overpayment took place prior to the approval of your Arrangement it shouldn't be a problem. '

I don't understand this,how can we stay in the IVA whilst being in deficit each month?Anybody shed any light on this as I'm concerned as to what may happen and the right actions for us to take in our pickle.

Thanks

[;)]

[chris.g]

Not an expert on IVA's but as far as I know you can't continue your IVA. You will need to speak to someone urgently about it as you cannot make the payments.
Hopefully an expert will be akong soon to advise you of your options,
good luck

[NotSoBrightSpark]

Thanks Chris [:)]

I'm waiting for our IP's call,I've been waiting a while as it goes but her brief e-mail just before she went on holiday suggested the loss/overpayment of tax credits wouldn't matter as long as the overpayment was from a period before the IVA was agreed.
I don't really understand [:(]

Obviously the outcome of this is critical to the path ahead we choose [B)]

[chris.g]

I think that's because it could fall into the IVA but it still leaves you with a lot of less money a month, I would try to get to speak to someone asap,

[NotSoBrightSpark]

Thanks Chris.We're still waiting for our IP to contact us.

Do any experts have any guidance on what may be the possible/probable outcomes here please.

Regards
NSBS [:)]

[Adam Davies]

Hi
If you were overpaid prior to the IVA then this would be classed as a debt and could be included in your IVA,then your tax credit entitlement will be yours once again as it will not be used to pay back overpayments.
It sounds straightforward,in theory,but guess that it won't be in practise
Regards

[NotSoBrightSpark]

Thanks for the reply Andy.

I sort of understand what you mean.We were not (apparently) entitled to the money in the first place,so therefore the overpayment goes onto the debt,I understand that.BUT we are only making a tiny contribution at the moment towards paying the tax credits back.The point is we are about £450 per month worse off and we have more money going out now than coming in.
We still have to find the £400 per month for the IVA,are the Tax Credit people going to suddenly say 'oh you can continue to have the payments you were getting because you're in an IVA,even though you're not entitled to them anymore'

Thats the bit I don't understand.I really need to speak to our IP,been waiting for a phone call for two weeks now.I'm a bit frustrated.

Thanks for all your input.It helps [:)]

[NotSoBrightSpark]

An update with a few more questions.

Well the upshot of it all is that we have decided to go bankrupt.The tax people have been umming and ahhing for weeks over the withdrawal of the tax credits and we've finally had enough.Our bankruptcy hearing is on the 8th July.

We have decided to surrender the house and find rented accommodation (we've found a few decent ones already and much cheaper than our current mortgage which is due to end it's fixed rate term soon anyway)

I would like to ask a few questions to the knowledgeable folk on this site.

The house in the current market is worth around £135,000.We owe £110,000 on it but we have three charging orders on the property worth around £25,000.At what point do I inform the mortgage company that we want to give them the house back and what happens with the charging orders on the property? Who sorts out the payments to these companies? And what happens if when the mortgage company sells the house there isn't enough to pay off the charging orders?

Also there is a £5,500 mortgage redemption on our current mortgage which ends in November.When we go bankrupt will we still owe this amount to the mortgage company?

As you can probably tell,there's a lot of things going through my head at the minute.Just want to make sure we go about it the best way.

Any help appreciated.
[:)]

[MelanieGiles]

As your bankruptcy hearing is on 8 July 2008, I would wait until you can take directions from the Official Receiver as to the most appropriate way forward. It sounds that there is little or no equity in your property, so the most likely outcome is that the mortgage company will repossess it and arrange for it to be sold.

[NotSoBrightSpark]

Thanks for the swift reply Melanie.

As you can probably imagine we are a little concerned that even after we go bankrupt we may still be left with debt (which is the last thing we want).

We have actually found a house we like,at a price we like too [:D],but are a little unsure of how exactly to tackle things.

Thanks again,your help is much appreciated [:)]

[MelanieGiles]

So glad that you have faced this problem and, whilst it is never easy to give up a property and move on, a home is very easily located if you have your family and treasured possessions around you.

The very best of luch with everything, and be sure to let us know how Court and your chat with the OR eventually goes.

[NotSoBrightSpark]

Thanks again Melanie.

I shall definitely be on the site with updates and will report exactly what happens at court,with the OR etc and how everything eventually pans out.Hopefully,this information will then be of use to others in the same boat.

Best Regards and I'll be posting back soon.
[;)]NSBS

Sorry forgot to add,our IP through which we had our IVA is very sympathetic and helpful.She has offered us advice and said she will also help us with any further queries/questions we may have.She also agrees that bankruptcy is the best solution in our situation.

[facingittogether]

hi

good luck for the 8th!


i know it not easy for you and your family at the moment but i am sure you are doing the right thing and you will be able to put this nightmare behind you!

i am thinking of you all!

love barb x

[NotSoBrightSpark]

Thank you Barb for your kind words.

They are very much appreciated.
[;)]NSBS

[kallis3]

Best of luck NSBS. Hope it all works out for you and your family.