IVA Failing due to sick leave

[IVAHo]

Ive been in my IVA for 3 years but for the last year ive been on long term sick leave with mental health issues. I dont know when ill be returning to work.

My original contributions were agreed at £250pm but within 3 months i had a salary increase and have been contributing £445pm. However, since the beginning of this year my sick leave entitlement has run out and i cannot afford to make my contributions. I have been contributing £5 as a token gesture to show that i am trying. £5 out of the £300 i receive pm.

My IP advised to just continue paying token payment and phones me every few weeks to see if im back at work yet but noone can say the implications it will have on my IVA.

At the moment, my IP has only commited to saying my IVA will probably have to be extended for a year.

I live at home with no assets so no money would be gained through bankrupcy for my creditors. An IVA still running would perhaps give them a chance of me returning to work and contributing again.

Its my understanding that if i wanted to declare myself bankrupt then i would need to pay the fees for this. However this is not possible for me to do even if i wanted to. So, does anyone know that if my IP fails my IVA and my creditors say i have to go bankrupt whether i need to still pay the bankruptcy fees for this then or do they have to cover the costs?

[Adam Davies]

Hi
If your IVA fails it will be upto your creditors to fund a bankruptcy,they may do this through your IP if there was a clause to retain money for this purpose.As you are not a homeowner I doubt if they will petition for your bankruptcy.
It may be better for you to do this once you can raise the fee[approx £450] so that you can draw a line and move on.
Good luck

Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

[Skippy]

I was told that there was no provision in my IVA for my IP to petition for my BR and I would need to do it myself.

Yesterday is history, tomorrow is a mystery, today is the present - a gift to make the most of.

View my blog at http://skippy13.blogs.iva.co.uk/

[scaredkez]

maybe there will be for ivaho as they have paid into it for 3 yrs and as andy said there maybe a provision in there iva for the IP to petition for BR
kerri

Please view my blog at: http://scaredkez.blogs.iva.co.uk/

[Skippy]

Good point Kerri, I hadn't thought of that. My IVA had no provision for BR at any time, but I know they are all different.

Yesterday is history, tomorrow is a mystery, today is the present - a gift to make the most of.

View my blog at http://skippy13.blogs.iva.co.uk/

[MelanieGiles]

Do check the terms of your proposal to see whether there is provision for the Supervisor to petition for your bankruptcy in the event of a default. This is quite a usual term, but over the last couple of years the creditors have been modifying it out. As you are on sickness benefit, you ought to be able to have the bankruptcy fee reduced to £185.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[IVAHo]

Thank you all for your responses.

Ive been looking through my paperwork, and it says the following under my standard conditions:

"If the supervisor issues a certificate of non-compliance, he will petition for the debtors bankruptcy provided that there are sufficient funds within the IVA to meet all the costs of doing so. Should there be insufficient funds, before issuing a certificate of non-compliance, the supervisor will write to all creditors inviting them to contribute the costs of bankruptcy.
Only if insufficient funds available to the supervisor will a certificate of non compliance be issued without bankruptcy proceedings be instigated."

And then on the form with modifications made at the creditors meeting it says:

"Funds need not be retained for the petition of the debtor's bankruptcy"

Would this suggest i should carry on with IVA and if my supervisor says my IVA has failed and issues a certificate of non-compliance, either my creditors pay for me to go bankrupt and gain nothing from it or i just fail my IVA and its left there?

What happens after its failed. Is it then over?

Thanks, Emma

[Adam Davies]

Hi Emma
If your IVA fails then the IVA is finished,however your debts are still owed,less any dividend paid to your creditors.
regards


Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

[IVAHo]

Yikes. So bankruptcy would be the only solution when it reaches that point then.

Im still hoping and working towards returning to work to get back into paying full IVA conts but i cant commit to a timescale due to the nature of my illness. If they make me bankrupt while im on sick leave, theres nothing i can do about it. The best i can hope if that happens is that they pay for the costs. If not, Melanie has stated that i should be entitled to a lower charge for being on sickness benefits.

This should be stressing me out more then it is, but there comes a point when you just think some things are out of your control and until it happens i cant do anything about it. Worrying wont help at this stage.

Many Thanks for all your help and advise x

[MelanieGiles]

With that modification, I do not feel that your supervisor will petition for bankruptcy, but you do need to check. I am also certain that your creditors will not pay for a bankruptcy petition, they would rather pursue you outside the IVA, so I would try and get the money together and petition yourself if you feel that there is no way forward with the IVA.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk