My husband and I are in the process of applying for an IVA. We got into financial difficulties when I was unemployed for a year. We borrowed on credit cards, believing that we would be able to repay them once we sold our house. We now have £73,000 of unsecured debts.
With market conditions our property is now only valued at £175,000. We have a mortgage and a loan secured on the property totalling £187,000.
We are now both in full time permanent employment. Our disposable income after deduction of bills and living expenses, in line with CCCS guidelines, is £180 per month. We have been advised that this is not enough to offer our creditors in an IVA.
As we had been trying to sell the house anyway, our insolvency practitioner advised that any shortfall could be included in the IVA. However, he has estimated a shortfall of £30,000, taking into account a reduced price at auction and costs and expenses (solicitors, estate agents, etc). This would increase our total debt from £73,000 to £103,000. We have never defaulted on any of our mortgage payments and it does not seem right that we should create a debt to a secured creditor in order to pay a higher dividend to unsecured creditors.
We are worried about being able to rent if we go down this route. We would be grateful for any advice you could give us on problems we are likely to have when trying to rent a property (we do not have anyone that we could ask to be guarantor).
Although we wanted to avoid the stigma of bankruptcy, we wonder if this is a better option in our circumstances. Could you advise whether we would be forced to sell our house given that the market value is £12,000 less than the combined mortgages? Would we be expected to pay more than the £180 disposable income into a bankruptcy? We also have 2 cars worth aprox £600 each which we need to travel to work. Would we be expected to sell these?
Any advice you can give us would be greatly appreciated.
"It's better to be in control on a small budget than to be out of control on a large budget."
Isn't bankruptcy a better option for you if you have negative equity? Then you would not need to sell the house, unless you are finding the mortgage payments unaffordable.
Under bankruptcy proceedings you may only have to pay around £100 per month for three years - and your cars would be safe. This may be a more tempting option for you, and your IP ought to give you advice on all solutions.
The £180 is certainly enough of a contribution if you went to a low cost IVA provider.
This is what you might need and subject to giving all facts and figures maybe the most appropriate solution for you.
You need to have a chat with another IP and give him/her details of all your personal and financial circumstances and particulars.
Visit www.iva.com for reviews on firms and practitioners (especially the low cost providers) and select one or two to have a chat with. They will give you
the most appropriate advice and it is free.
Let us know how you get on.
Last edited by David Mond on Thu Apr 16, 2009 2:44 am, edited 1 time in total.
Regards, David Mond, Insolvency Practitioner for over 46 years. Personal Insolvency Practitioner of the year 2012, Personal Insolvency Practitioner of the year finalist 2013 & 2014 awarded by Insolvency & Rescue Magazine and 2015 finalist for Personal Insolvency Firm of the Year.
Surely with negative equity going down the Bankruptcy route would be a better option and not a low cost IVA where the IP fees would take up half the money put into the IVA??
Discharged today the 8th feb 2012. View is much brighter now.
Continuing to rebuild our credit worthiness.
I think I have provided info re all your comments below.
We have been told that because our secured borrowing repayments are 56% of our income, our creditors will force us to sell our house with an IVA, although we can build in 12 months to sell the property before we have to voluntarily have it repossessed.
We are worried that we may have problems renting as we have been advised by local estate agents that we will probably have to pay 6 months rent in advance because we have no guarantor.
Our IP says that they can factor the advance rent into an IVA.
We were trying to avoid bankruptcy because of the stigma. Trouble is we only have 5-10 years before my husband retires and we are worried that we will have to rent for the rest of our lives. Even if we can keep the house, we will still have to sell it when we retire but at least we may get something out of it and will be able to buy something cheaper.
On discussing this further with our IP, they have said that we will still have to sell the house if we go bankrupt because of the 56%.
If we would definitely be able to keep the house (we have no problems with the mortgage payements), we would seriously consider swallowing our pride and going bankrupt.
We have 13 creditors including overdrafts. Our IP has quoted costs of £3000 for nominee's fee, £10,000 for supervisor's fee + VAT £2275.
We are looking for the most pain free option but are not trying to get out of paying our debts.
"It's better to be in control on a small budget than to be out of control on a large budget."
I am unsure why you would be forced to sell up,it benefits no one. Who is the IP you have been dealing with?
Dont concern yourself too much with the stigma of BR. It isnt as bad as it used to be and they stopped flogging you in public several years ago.
Given that you have 5 to 10 years before Hubby retires it sounds like a good time to sort things out.
Have a look at some of the blogs on going Bankrupt,it makes it a little less scarey.
Remembver that some IP's wont want to suggest bankruptcy as they lose out on fees,and not all Ip's are as good as Mel and David and a few others who post on here.
Paul
Discharged today the 8th feb 2012. View is much brighter now.
Continuing to rebuild our credit worthiness.
Without giving too much away what is it you do? There are not many careers that are affected by BR and usually an anonimous call to your HR dept to ask the question or a look at your terms of contract should put your mind at ease.
Discharged today the 8th feb 2012. View is much brighter now.
Continuing to rebuild our credit worthiness.
I'm afraid, anaonymous isn't an option for my husband and they definetly don't have a PR department. It's a very small private educational establishment.
I work for an LEA. I don't think I would be affected but I've not been there that long although I will check both our contracts.
We couldn't risk losing a job - that's what got us into this mess in the first place!
For us, the possibility of people finding out is still a big issue, call us old fashioned!
We think an IVA will be the best for us but want to make sure we have explored all the options before we comit to anything.
Our main worry with an IVA is the problem with renting. If we could keep our house with an IVA we would serioulsy consider it.
"It's better to be in control on a small budget than to be out of control on a large budget."
I think your concerns have been answered on a different thread.
Regards, David Mond, Insolvency Practitioner for over 46 years. Personal Insolvency Practitioner of the year 2012, Personal Insolvency Practitioner of the year finalist 2013 & 2014 awarded by Insolvency & Rescue Magazine and 2015 finalist for Personal Insolvency Firm of the Year.
i am with DFD, but i deal with a company called tenon,why i dont know, but they have been very good, good luck to you, people are fantastic on this forum ,mel and david always very helpful
Thanks to everyone for your replies (on all the threads I've been commenting on).
I found loads of information on the Official Recievers website last night. It has convinced me that DFD have given us the best advice for our circumstances based on the disucssions we have had with them.
We feel for us an IVA is still the most desirable and least painful route although it might cost us more in the longrun. We will just wait to hear from our secured creditors before the offer is finalised.
Thanks again for all your advice. Wish we'd found this site earlier - would definitely gone to David or Melanie for that personal touch.
"It's better to be in control on a small budget than to be out of control on a large budget."
