New member & VERY confused about bankruptcy

[clezabell]

Afternoon all! This could turn into a very long post so i am apologising in advance!

me and my Husband entered an IVA last summer because we had over 40k worth of debt. We thought we were doing the right thing by doing this and for a while it did help us out alot! My husband changed jobs in october which required him to take a pay cut. We "thought" we could still manage to pay the IVA payments! In November or car died and we needed a new one for my husband to get to work his previous job was down the road from our house so we only spent a small amount on transport. His new job is around a 30 mile round trip in the car with no buses going near by! We contacted our IVA who were very kind and gave us 3 month grace on our payments to buy a new car. We didn't have the money up front so Husbands dad lent us the money to buy the car but we had to pay him back! We were going to use the IVA payments that we would of made to pay him back and then Christmas came. We didn't over spend but because of where Husband worked and the amount of diesel he was using it became a struggle to pay his dad the full payments we arrange. not only that but we fell behind with mortgage payments Gas elec and council tax payments. The 4 most important payments! We made arrangements with them to pay them off as well as his dad and now comes the time when we need to begin paying our IVA again and we've found that we cant make the full payments that were agreed only about a third of what we agreed. Even if we didn't have the extra payments on mortgage etc to pay we would still find it very difficult to make these payments given that our circumstances have changed some what.

I haven't rung the IVA company up as yet..........i'm far too scared to is the honest answer. Scared that they will say "tough you're still going to have to make the full payments" which i know we cant do.

To make the situation worse for them not us! I am currently 15 weeks pregnant which we are so so so happy about. I'll be going on maternity leave on 8th August and i know now that i wont be able to make any IVA payments due to being on the basic maternity pay of £112 a week!! not alot when you'll still be paying of Mortgage arrears plus Gas and Elec!

We are really considering Bankruptcy but i have no clue about it at all! I'm scared we will loose our house before baby arrives and i really wouldn't be able to handle the added pressure. I know for a fact that our house is in negative equity as we also have a secured loan on it and we'd probably be alright paying the normal monthly Mortgage payments and the secured loan payments! I've got to the point now where i think "I really couldn't give a s*@t what happens to our assests (if any) i just cant see a way out at the moment and feel like crying ALL the time which isn't good for my little baby! Where do i start? What do i do? HELP!!!!

thanks in advance Cleza xx

[MelanieGiles]

Hi clezabell and welcome to the forum

If you do decide that bankruptcy is the best option for you, and if you are already struggling with your IVA payments and there is a little one on the say, this might be sensible.

If your house is in negative equity, then it will not be affected under the bankruptcy, so long as you can afford the mortgage payments, and perhaps a friend or family member could aquire your beneficial interest for a nominal sum (usually £1 plus the legal costs of transfer) to remove it as an asset in the estate in case it goes up in value in the future.

Your usual household effects and personal assets are not usually affected under bankruptcy proceedings, so long as they are not of excessive value.

It would be sensible to discuss your options with your IP, particularly as your household budget will be affected by the arrival of the baby.

[clezabell]

Thank you for your reply. I'm a bit confused as to what the following means

and perhaps a friend or family member could aquire your beneficial interest for a nominal sum (usually £1 plus the legal costs of transfer) to remove it as an asset in the estate in case it goes up in value in the future.

I told you i was new too this ha ha!

Thanks in advance x

[MelanieGiles]

It can be confusing when you are not involved in this stuff, so I'll try and make it simpler!

When you own a property - you are the legal owners, and if you have a mortgage then the mortgage company acquire an interest in the property (equivalent to the amount they are owed, and you have a beneficial interest in the balance - ie the equity.

So for a house worth £100,000 and a mortgage of £80,000, the legal owners actually own £20,000 - ie the equity balance.

If the same house had a mortgage of £120,000, then there would be no equity, but the legal owners still have a beneficial interest, although this has little or no value. But if this is not dealt with in the bankruptcy, over the next three years the property could increase in value to a level which created equity, at which time the Trustee would be required to realise this (sell it) and pay the money over to creditors. To avoid this uncertainty, the Trustee will often sell this interest for a nominal sum - usually £1, in order to avoid the risk of the property having to be sold in the meantime.

[chris.g]

First of all, hello from me and welcome to the forum. You really will have to contact your IP as you need to discuss what your options are before you make any decisions.
However, bankruptcy isn't as scary as it first seems.
As for your first question, providing you keep up with your mortgage and any secured loans you have against the property, the official receiver usually allow the bankrupt to live in the house for upto 12mths. This way, it should give you enough time to find alternative accomodation.
There will be form filling, presenting at the county court, paying £485 fees, being declared bankrupt by a judge and then having a meeting with the official receiver dealing with your case. You are usually discharged after 12 mths. If there is any disposable income you will be required to pay into an IPA or IPO for 3yrs. You may have to change your bank account but you may already have a basic account anyhow as you are in an IVA. This may all sound too much to take in so it is better if you take it one step at a time.
Try not to worry too much, you have your baby to think about and that is the most important thing.
You could have a look on here, it may clear things up a bit for you,
http://www.insolvency.gov.uk/

[clezabell]

Thank you both so very very much! Yes it is very confusing. I think i'm trying to run before i can wal so to speak. I will be ringing my IP up on monday to discuss this matter and will tak it one step at a time!

I'll be sure to keep you all posted on what's what and i'll shout if i need any help!

Thank you again
Cleza x

[Skippy]

Hi Clezabell and welcome to the forum. As Chris says BR really isn't as scary as people think. The most important thing in all this is the health of you and your baby. Speak to your IP and get their opinion - there may be a way to make the IVA work. If not, you can go BR with your head held high knowing that you've tried your best.

Good luck, and please let us know how you get on x

[clezabell]

Thanks Skippy! I've read your blog and it put my mind at ease! I will indeed ring my IP and see what she says! you never know something could be done if not i will take your advice hold my head up high and proceed with BR! At least i would of tried eh!

Thanks all again and thank you for the very warm welcome!

[Dee]

Hi Clezabell and welcome to the forum. Congratulations on your upcoming event.I looked into the possibility of an IVA but due to personal circumstances was unable to proceed.

We have now decided to go down the bankruptcy route and are currently looking to give up our house and go into rented. Once you are clear what your options are things seem much better and easier to cope with.

We are all quite excited about our future and see this as a positive step. Keep thinking about the future with your baby and a time when you will be debt free and just deal with the the things that are going to get you to that place one thing at a time. I know that may be easier said than done but you will get there.

Keep in touch on this forum and keep asking questions (not too many experts on tonight as they are at a meeting). You will gain courage, confidence and knowledge from everyone on here.

Good Luck with everything and we all look forward to hearing how you get on.

Dee

[clezabell]

Thanks for replying Dee!
Well i rang the IVA company up and explained my current situation and they said that they would send out a new expeniture form for us to fill out and send back! We have to send off proof of any arreas we have and what we will be paying. Fingers crossed that they can help us. If not and the payments are still too high then we will definatly be looking at Bankruptcy.

Cleza x

[buggin29]

Hi Cleeza!! If it is any help we are in the same situation seriously looking at going BR, We have our house on the market and the more and more I think about it the more I think this would be the best option for us as all the pressure of debt will be gone and we will NEVER EVER EVER been in this situation again and I am going to make DAMN sure of that.
Being on this forum has really helped me to understand things and what is going to be best for me and my family and I have to say i am looking forward to a new life!! when that will be i don't know but congratulations on the baby, just keep calm and try not to worry and do what you feel is going to be best for you and your family xx

[buggin29]

Sorry I spelt your name wrong!!! Long day and I am tired!!

[clezabell]

Thanks Buggin.........No problem on spelling my name wrong. I didn't even notice until you pointed it out LOL.

Anyway bit of an update. I spoke to my IP and they have sent me out a new expenditure form to complete. I dont know i it's going to fail anyway because from my workings out the new expenditure only leaves us with about £100.00 a month not even half of what we are paying now. I will send it off to them though and see what will happen!!

[clezabell]

Little bit of an update.

I sent my expenditure form off and have had a phone call from my I.P. The surples money that is left over when we have paid all our bills isn't enough to pay our IVA the full amount not even 3/4. They have advised me to speak to the CAB and not to make another IVA payment. The IVA will of failed as of 27th May as we would be 3 months in arrears. My IP suggested either a debt management plan or Bankruptcy. They will contact my creitors who will then start hassling us again! Great joy eh! We think or should i say we know that we'll be going for bankruptcy but at this moment in time we don't have the funds to pay for it. I'm begining to worry again now and feel like i've hit a dead end!!