Hi, am in turmoil & desperate for the right advice. I am only 7mths into an IVA for £26k & my payments are £312 per mth & its a struggle. My circumstances are going to change dramatically from nxt mth & I am going to be approx £350 per mth worse off so how on earth do I afford my payments? I was advised by an independent debt advisor that there was a possibility that I could revert back to a DMP & possibly pay £100-£150 per mth which I desperately want to do, then I was told by another that if I did so I would be made bankrupt & the reason I don't want to go bankrupt is that I have up to £70k equity in my property & that is my pension, my worry is that if I let my IVA fail that there are no other options open to me & I am losing sleep over this. I can't lose my home, what can I do??
If your current disposable income is £312 and your anticipated salary reduction is £350, how on earth does the "independent debt advisor" believe you will be able to pay £150 to £100 into a DMP?
With such high equity in your property, and relatively low debts, I would be inclined to consider selling your property and buying somewhere cheaper, thus releasing sufficient money to pay your debts off in full.
Thanks Melanie, I appreciate your advice but unfortunately that is not going to happen overnight & property is not selling well at all round here at the moment. My shortfall in income is due to my daughter finishing college & her father stopping her maintenance, plus I will also lose tax credit for her & child benefit, she has no income at the moment & even if she does get a job she can't be expected to pay what I'll lose but I would be happy to try to manage around her paying approx £200 per month IF she gets a job!! (Hence the £100-£150 figure)
I appreciate at some point I am going to need to sell my house but was hoping to wait until my girls had flown the nest & I have a younger daughter aged 16 still at home. Can I be forced into bankruptcy if I let my IVA fail? Have looked at the IVA small print etc & they valued my property at £159k, not the £200k I paid for it 5yrs ago. My mortgage outstanding is £135k. I'm sooo confused & now wish that I had not entered into the IVA as I don't think now that it was the best debt solution for me.
Was this reduction in income not anticipated when you entered into your IVA? I always am careful to understand the future plans of adult children with regard to the completion of further eduction, which can often seriously affect a parent's income - and the fact that you have only been in your IVA for 7 months would indicate that maybe this was overlooked - or has your daughter changed her mind about continuing in education?
I very much doubt whether bankruptcy will be required if your IVA fails - but you will need to check the terms of your arrangement to be sure or confirm this with your IP. These days creditors rarely plump for this option, but with such high equity in your property which would enable creditors to probably be repaid in full in the event of successful possession proceedings, it cannot be ruled out.
If you enter into a DMP you would have no protection from creditors who may be inclined to seek charging orders against the property as well - but on reading the last line of your post it seems that perhaps the equity is not as much as you thought. I would get an updated professional valuation to be sure - was one carried out when you entered into your IVA?
I have absolutely no idea where that figure came from Melanie in all honesty, my daughter's education & reduction in maintenance was not discussed & I didn't have enough foresight at the time to consider it as enough of a potential problem.
So what do I do from here? If I tell my IP my IVA is likely to fail can he instruct my creditors to go for bankrupcy before the 3 failed payments? Surely if I go back to a DMP immediately by the time the IVA fails my creditors will be getting contributions & isn't that favourable? I really don't want to lose my home
I think that your IP ought to have had more foresight when they were putting forward your proposal - as the loss of this income almosts suggest that this was a doomed arrangement from day 1!
Personally I would get that property revalued, and at least you will know what equity there is within. And rather than a neverending DMP, get your IP to put forward a variation with you paying reduced payments of £150 per month. Let them explain to creditors why this has gone horribly wrong in the first year - but of course do be sure that your daughter is going to be earning, as without her contribution you are left with no disposable income at all.
