Official receivers costs

[sps]

Are an official receivers costs in bankruptcy more than an IP's for an IVA?

[MelanieGiles]

Hi sps

Generally they are a lot more, but as they are geared to a percentage of asset realisations then if there are no assets a flat fee of £1,625 is charged.

Where there are assets, the OR's costs are 17% of total realisations (after the first £2,000) together with the £1,625.

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

[sps]

Thanks Melanie So if I have calculated this correctly our creditors would only be getting about £1000 more back from us through an IVA than bankruptcy if our monthly payments were the same. We have no equity in our house but endowment policies worth approx £23000. Say our monthly payment was £200
IVA - £23000 +60X200 =35000-APPROX£9000ip fees =£26000
BANKRUPTCY- £17805(AFTER COSTS) +36x200(7200)= £25005

But I suppose an IVA is preferable for creditors as they would also get 50% of any overtime and bonuses.
Not sure if I have worked it out right just want to make sure we are doing the right thing by applying for an IVA

[MelanieGiles]

No sue

Also included in bankruptcy would be the costs of an independent Trustee (another insolvency practitioner). When the Official Receiver is appointed, he generally refers cases with assets out to private sector insolvency practitioners (just like me!) who will realise the assets and pay creditors.

So in your case, you should budget for additional fees in bankruptcy of at least £5,000 to cover that - and I think that it is unlikely that you would be required to make any monthly payments given that you only have £200 between you.

So, I calculate that in bankruptcy, there would only be approximately £11,000 available to your creditors - hence a substantial reduction.

Are you thinking of or in the process of applying for an 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

[sps]

Hi Melanie
We are in the very early stages of applying for an IVA haven't sent any paperwork or anything off yet. I thought an IVA would be the best thing for us to do but I really don't know now. This may sound silly but can you be turned down for bankruptcy. Is it better to try for an IVA and if your creditors don't agree then apply for bk where at least you can say you tried for an IVA. I am feeling very confused at the moment with it all

[MelanieGiles]

Hi again sue

What is making you think that an IVA is not a good solution for you? If you could tell me how much you actually owe to your creditors I may be able to help you explore all options further.

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

[sps]

Hi Melanie
I'm just scared we will make the wrong decision. We owe approx £73000 to about 10 creditors. I am only paid during term time so being realistic with our expenditure this would take our disposable income down to £200 per month but we do have the £23000 worth of policies to pay in.

[MelanieGiles]

Sue

The decision you should therefore make must balance the speed at which bankruptcy proceedings will remove your debt problems, against the uncertainty of proposing an IVA over five years with relatively low monthly payments once the endowment policies have been surrendered.

Have you thought about attempting to sell the policies? This generally yields a better return than surrendering, and could put you in a position to offer your creditors a full and final settlement in an IVA based upon the realisation of the policies without ongoing contributions.

If I were acting for you, I think that is what I would be looking at, but you may need to discuss this with your IP. Did they suggest this to you? This may not be possible if you owe HSBC or Northern Rock more than 25% of your aggregate debt, as they have higher dividend expectations.

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

[sps]

Thanks Melanie
Is this something our creditors would be likely to accept. We do not have Northern Rock or HSBC as a creditor. Could you remind me what a full and final settlement IVA entails please as I haven't really read about these as I didn't think we were in a position to offer one.
Sue

[MelanieGiles]

Hi again Sue

Quite probably, I do a lot of these types of IVA within my own practice quite successfully. Also in your case, I do not feel that it is terribly viable for creditors to continue the arrangement for five years, to collect payments of £200 per month.

Suggest you get a quote for those policies before making up your mind, but let me know if there is any further advice I can give.

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

[sps]

Melanie your advice has made me feel so much better as this is an option we had not considered. Being very realistic our income is reducing per month as my husband is losing all his shift pay so we may not even have £200 disposable income once he is on his basic pay. Our income has reduced by up to £1000 a month over the past year. Could you advise me the best places to get a quote for these policies please and would you be able to act for us if this is the best way forward.
Thanks again
Sue

[MelanieGiles]

Hi sue

If you type in "selling your endowment policy" into Google this will throw up a number of companies which specialise in this. Some of them even appear to give you on-line quotations. The amount you can be offered will be based upon the length of time the endowments have been going, and the number of payments remaining until maturity.

If you would like me to act for you, then I am happy to do so, but in this regard you can contact me via my website below.

Look forward to finding out how you get on. This may provide you with a credible solution to bankruptcy.

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

[sps]

Thanks again Melanie
I will try to get some quotes and then contact you
Sue

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