Thinking of going BR

[jet]

Hi all.
Just a few queries about BR. I am currently off work on the sick. my insurances are paying for the mortgage and secured loan, however the loan cover pays a set amount which is £400 more than my loan payment. Will this be classed as income?
We are in a suspended IVA (due to me being off work and only on SSP) and the 6 months suspension is now over so obviously its going to fail. Is BR our only option?
Our motgage paymernt has just gone up by £200 per month due to interest rate rises, and my insurance wont pay the extra £200.
We have a little money saved in a Credit Union and are paying off a loan with them. Will this have to be declared?
How much are you allowed for housekeeping, shopping etc?
Any advice greatly welcomed.

[MelanieGiles]

If you have a surplus of income over expenditure then this will be used to assess whether you ought to pay under an Income Payments Agreement or Order if you decide that bankruptcy is the most sensible option. When are you hoping to return to work? If this is not envisaged in the near future, I suggest you discuss the options available to you with your own IP - but bankruptcy may be the most sensible route to get rid of debts you can clearly not afford to service. You will have to declare your savings - and ought to let your own IP know that you have these - and why are you paying a loan off with them when you are in an IVA?

[Reviva UK]

Hi Jet

Before assuming that Br is the right course it has got to be worth exploring other avenues with the IP.

How much are the monthly payments into the IVA/
When will you be back at work?
Will the insurance stop paying out soon?
What is your house worth?
What is the mortgage value ?

If Br is the right course you would be able to use some of the savings in the credit union account to pay for court fees.

Alrernatively depending upon the value of the above there may be other options.

Step 1 . speak to IP
Step 2. If the IP doesn't offer an IVA saving plan then come back to the forum or go to the sister site www.bankruptcyhelp.org.uk for specific advice re your potential Br position.

Good luck with the call

[jet]

Hi thanks for replying. My insurances will stop paying in September. It is most unlikely that I will be back at work until at the earliest next Feb. Monthly payment for IVA should be £420 per month. House is worth approx £135,000, mortgage of £104,000 but also a secured loan of £50,000.

What would happen with the secured loan if we go bankrupt then get repossesed?
Will they allow the Credit Union savings to be left for my stepdaughter? This is savings for her future.
Would I be likely to get in trouble if I used the inurance payment for the loan and mortgage to save for rented accomodation instead of paying the aforementioned?

[Reviva UK]

Hi Jet

thanks for getting back with the information. The situation is quite a lot different now with mortgages of 154k ( plus redemption penalties etc + costs of sale ) with a value of 135k.

we are looking at a negative equity position of approximately 25k plus.

If you were to go into bankruptcy with mortgage arrears and had already handed the house back then any negative equity etc would be wrapped up in the bankruptcy as would your debts covered by the IVA - currently suspended.

what sort of savings are in the account for your daughter?

you will also need to plan very carefully a imescale to have left the property BEFORE it is reposessed so that you van keep your dignity and control of the situation.

I suggest that you need to discuss the matter with your IP and see what he has to say then if nothing is promising ( suspect that it is not from what you say ) then you should seriously consider the Br route.

You can of course do this yourself by downloading court forms from hmcourts website but you need to carefully work through the time scales.

[jet]

Thanks again. Theres about £1000 in savings for her.
We are obviously looking carefully at what to do when etc.
One other question is that at the moment my insurance is paying the mortgage and secured loan with me being off work. If I stopped paying the mortgage and secured loan an used the payments from the insurance companies to save for rented accomodation could I be in trouble for this, ie fraud or something similar?
Realistically how long with making no payment to the IVA is it before one of the creditors were to file for our bankrupcy? Theres no funds kept by the IP for this.
If we did this for a few months then we'd be in arrears on mortgage and loan and hopefully have found rented home to move into, then hand the keys back to the motgage company then start sorting out bankrupcy. Does that make sense?
Thanks again.

[jet]

Oh one other quaetion that has been worrying me. Im off work and doesnt look like I'll be back for at least 12 months. If we go bankrupt and they set an IPA and then I go back to work what happens? Once you are dischartged can your IPA be changed? My job is open for me when I eventually get back to it and am worried about going back and an IPA soaring.

[chris.g]

Hiya Jet, if there is no IPA/IPO set before discharge, there will be nothing to pay after discharge. If there is an IPA/IPO set before discharge this is payable for 3 years. any change of circumstances can be reviewed throughout the 3 years.

[jet]

And discharge is usually 12 months?
So if I go back to work in month 11 they will give us an IPA if we didnt have one or increase the one we already had? And if I went back to work in month 13 they wouldnt?

[chris.g]

That's about it....I find it strange that the IPA runs for 36 months but the OR has only 12 mths to get it set up.

[jet]

Does seem a bit strange.
Thanks hugely.

[Reviva UK]

Hi Jet

if you have decided that you are going to go Br and that the house ( NOT HOME ) will go then is allowable that you get together a small deposit by not paying the mortgage. You might also consider that the 1000 in the savings acct would be better used now for court fees. You will have lots of time to recoup the savings after the br and in the new debt fre life.

Also don't worry about the fraud - it is not.

Just carefully plan out the time line for getting a deposit, finding a new home to rent, getting the court documents together etc.

However don't be surprisd it the mortgage company get a little grumpy and contact you a lot. Also if it takes you a long time to get the deposit together it is likely that you will have started posession / reposession proceedings.

[jet]

Hi thanks. We have already started looking at rented properties and Im going to contact some estate agents. If you could provide a garuantor would they still want 6 months rent in advance?
if we dont need the 6 months rent then we'll hopefully be moving in the next few months. We'll only be one month behind on loan and mortgage at the end of this month.
Do you have to have been served the repossesion order before you file for bankrupcy for the secured loan to go in with that?
i already feel like a weight has been lifted now we've made the decision. It was beginning to seem like an endless battle just to survive.
And people are right, it's just a house. Our home can be anywhere we make it.
Thanks so much.

[chris.g]

You don't need to be served, it will automatically go in providing, and you should, include it on your petition.
As for the guarataur, that would depend on the letting agents policy.
Just to let you know, before we moved in our rented home, we were so stressed and worried, always skrimping and scraping to try to make ends meet which obviously had an effect on the whole family. Our new home is a much happier and calmer place, infact it is a 'home'...

[jet]

Thanks Chris. Thsi is how we've been feeling. Its not worth it. I know we're mostly brought up with the ideas that you need to own a house etc.
But at least we can say we've tried. To be honest we've had that many personal problems and now my health problem, in the last 12 months. just annoys me sometimes that we tried to make a go of things but when things start to go a little 'wrong' theres not really anyone willing to realise that these things happen.
Now we've accepted it I already feel so much better. Im not laying awake all night wondering where money for mortgage etc is going to come from. im now looking forward and thinking what will our new life be like.
Anyone know if the letting agents were to say you need 6 months rent upfront, would a guarantor be an acceptable alternative??