Coco
It sounds like you have had a very rough ride and Northern Rock have basically bullied you into accepting a modified IVA payment which you could not afford. My feeling is that your IP should have advised you not to accept this at the time but I know this is more easily said than done when you are feeling desperate.
From what you have said, I feel bankruptcy is the right option. In terms of the car, as long as you need it for work, the Official receiver will normally allow you to keep the vehical and continue making the payments to the HP company. The HP company will be told but they normally do not care as long as you maintain the payments.
In terms of the house, you might loose it (but this is the worst case and you are resigned to it). Given that there is only £7500 equity, after forced sale value and costs (this is what the OR taks into consideration) there would be little or nothing left for the creditors. As such, you might well be able to offer a small sum to the OR to buy back the house at the very start of the bankrutpcy.
You do not have to wait for your IP to make you bankrupt, you can do it yourself. The downside to this is that you have to pay the Court Fee (can you believe it) which is currently £470 per person (discounted if you are on benefits). However, its a one off payment and that is it. The court is normally much more easy going than creditors in terms of monthly expenses so based on what you have said, once bankrupt I doubt whether you would have to make any monthly payments at all.
James Falla
Expert in IVA, Bankruptcy and informal Debt Management solutions, with extensive experience of solving personal debt problems over the past 10 years. My book, "IVA, Bankruptcy and Other Debt Solutions" was published in 2006. I have made numerous TV and radio appearances including BBC1 News, BBC News 24, Radio 4 and Wake up to Money.
Visit my blog at:
http://jamesfalla.blogs.iva.co.uk
