Just begun an IVA but considering BR

[collyp]

Hello.
I've just started an IVA, but didn't want to tell my partner of my horrific debt situation until I'd sorted out a plan.
Now I have explained it all to her, and we've had a long chat about our future together.
She doesn't live with me yet, but we're thinking that she may move in soon, and we agree that to commit to a 5-year plan, AND then face the prospect of giving up a lot of equity in year 4 is just too much.
I know I'm likely to lose my home altogether if I went bankrupt, but are there any circumstances under which I may be able to keep it?
And would I be frowned upon if, having just started an IVA, I then apply for bankruptcy? Or, as bankruptcy is seen as the last resort anyway, would there be no adverse affect of moving from an IVA?

[Adam Davies]

Hi
If you have no equity in your home or can find a third party to buy your equity out then you should be able to retain the house in bankruptcy.
Bear in mind that you will probably have to pay a three year income order in bankruptcy.
There is no problem with declaring bankruptcy,just be sure that it is the right option for you as it can be possible to vary your IVA as your life changes
Regards

[collyp]

Many thanks for this, Andy - at the moment there's virtually zero equity in my home. How long after I apply for BR could the Receiver hang on to my home in a bid to raise equity before selling it and forcing me out?

[Adam Davies]

Hi
The OR can hang onto a property for three years but it is normal practice for them to want to tie things up quickly.
Take advise from an Insolvency practitioner before proceeding so that you are totally clear of the procedure
Regards

[MelanieGiles]

What a shame that this was not thought through properly before you decided to enter into the agreement. Whilst I accept that your own future is the most important thing to you, as professional has obviously done a lot of work on your behalf for which they will probably not be paid.

[collyp]

Believe me, I have thought about virtually nothing else than all the options since I decided to go down this route several months ago. I ruled out BR initially as I wanted to hang on to my home, but now that my relationship is developing, it is unfair on her to have this whole situation hanging over our heads for 5 years+.

[ianmillington]

At first sight this would appear to be a no-brainer, however:

1. If there is zero equity in the property now, particularly given the current climate, it might be worth asking whether there is likely to be sufficient equity in it in year 4 so as to justify equity release anyhow?

2. I'm not the worlds greatest expert on credit ratings but assume that the bankruptcy will re-start the 6 year "blight".

You have a bit of thinking to do, I would suggest.

[Reviva UK]

Hi

why don't you post details of the house so we can give you some advice re this

i.e.

mortgage value
house value
monthly payment
redemption penalty

look forward to giving more advice re br if appropriate

[collyp]

As requested by Reviva:
mortgage currently around £155,000,
house value around £160,000, but current ER penalties would amount to around £5,000;
monthly payments: £1,030

Also, when Ian said at first this appeared to be a 'no brainer' - by that do you mean BR appeared the best option?

[MelanieGiles]

As a professional, I just find it strange that this was not thought through before you started the IVA process.

You can afford to pay substantial payments, and a substantial amount of work has been carried out on your behalf by someone who may not get paid for their efforts. Under bankruptcy proceedings, as a single person, you will be required to pay over a substantial amount of your current disposable income, and the OR is bound to be concerned about the fact that the IVA is so recent and now you have changed your mind.

I suspect that given the circumstances, you may stuggle to persuade a District Judge to allow a bankruptcy order when you can clearly repay a substantial sum each month. What period were the loans and credit cards you have taken over - more or less than five years?

Bankruptcy might appear to be an easier option, and I appreciate that your circumstances have changed and you want to focus on your new relationship, but it is not an automatic right to be granted a bankruptcy order.

[Reviva UK]

As requested by Reviva:
mortgage currently around £155,000,
house value around £160,000, but current ER penalties would amount to around £5,000;
monthly payments: £1,030

Also, when Ian said at first this appeared to be a 'no brainer' - by that do you mean BR appeared the best option?

HI collyp

Couple of things regarding the situation. In an IVA or Br when your partner moves in the disposable income in the household would actually increase so the payments in an IVA AND an IPA in BR would als increase.

what are you curently paying per month in te IVA and what whas the level of debt.

I should have asked for the IVA payments before - sorry

[collyp]

I feel as though I am getting a very hard time from you, Melanie. If you had any idea how this dominates my life right now (and every other person in this situation), you'd be a little more symathetic. The people who set-up my IVA have been very helpful, but you are not telling me that each person working for that firm does not still receive their salary regardless? I have held my hands up and admitted to my debt, and I'm trying to do my best to address this - and if you think that the prospect of losing my home doesn't make me ill, then think again.
Anway, whatever you think, my priority HAS to be for my partner and I.
In response to Reviva, my IVA payments are £815 - my earlier 'monthly payment' figure related to my mortgage.

[MelanieGiles]

Collyp

I work with people in distressed situations every single day of my working life, and believe me I am very sympathetic to all cases where people find themselves in financial difficulties through no fault of their own.

I am sorry if you find my comments harsh, they are not meant to be, and are based upon extensive factual knowledge and experience of the Court process in post-IVAs bankruptcies. I am simply trying to manage your expectations of the process. You asked if your actions would be frowned upon - and I have simply answered that question.

I personally find it very pleasant that you are putting your relationship at a top priority, after all it is your life, and if your IP firm is being supportive of your change of plan perhaps you should proceed without further ado.

[Lisa2009]

Hi collyp
The only way your partner would be affected would be to accertain that household expenses are split between you on an even basis.
My hubby was in an IVA and i wasnt and all they did with my income was make sure i paid my fair share towards the household.
We released some equity 2 years early and completed hubbys IVA and i jave to say its the best thing we ever did.

There is no reason why you shouldnt have both. At least that way your home is safe.
They certainly wouldnt take all your partners cirplus income if thats whats worrying you.

Nobody means to give you a hard time, just honest experienced advice.

[collyp]

Many thanks for this, Melanie - I do appreciate your expertise ... and having read lots and lots of other postings on here, I know how much your advice is respected.
I must add that if I were still single, I'd be prepared to carry on with the IVA until its completion. Indeed, if I'd won the Lotto drawn just a few minutes ago, I'd happily pay off everything I owe. I am not taking a cavalier approach, but merely putting my relationship first - after all, the debt I've built-up has absolutely nothing to do with her.