much needed help

[georgie14]

hi i am new to this website and wanted some help and advice.

we have been toying between bankruptcy and IVA however we are really not wanting to go bankrupt but we thought that was our only option but now think IVA might be better option.

we have taken advice from CCCS and that recommend IVA however as we have no equity we thought bankruptcy was a better option but we have since ready up more on IVA.

sorry i am rambling i am just trying to get my head round everything.

working out our figures we could afford to pay £250.00 a month in IVA on debts of 55,000 plus shortfall from mortgage - we have already moved out in to rented.

my questions with IVA are -

1) we are both paid on a lower basic with commission what figures do they take when working out if IVA is feasible? i have tried working on the lowest figures hence why £250 but some months we can afford more but not all months so what do they do?

2) we have found ourself in this horrible position so quickly due to ill health and job loss (both not foreseen) but prior to that (less that 3 months ago) we had very healthy wages and lived a lifestyle where we paid a lot on creidt as always paid it back how will the creditors look at this? I am so worried as we had not planned to do IVA or bankruptcy but if they see we were on holiday beginning of the year and spent freely on our cc then will they reject iva? will we get in trouble? also when husband was paid off his job prior to illness we used some of that money to pay our parents who had loaned us some money a year ago - will we get in trouble for this as prefering a creditor?

3) the mortgage shortfall if this amount is not known can it still be included in a IVA?

i am sorry for all the questions but we are still trying to get our heads around the best option and really struggling to see light at the end

thanks again

[lem]

Hi Lola and welcome.

An IVA would be proposed on your basic salaries, any extra you earned would probably be dealt with by you being allowed to keep the first 10% above your basic salary and dividing the rest 50/50 between what you can keep and what would need to go into your IVA, so for instance, if your IVA payment was £250 your take home pay was £1000 but one month you earned £1200, then you would get to keep the first 10% which would be £100 and the remaining £100 would be divided so you would keep another £50 and £50 would be added to the £250 to go to your creditors.

Don't worry too much about the credit you have been using up to this point, but if you now recognise you are insolvent and are considering options, it is important you don't use credit moving forward, if this means stopping your creditor payments so you can stick to living with your means then that is fine.

The mortgage shortfall can be included, but you really need to speak to a couple of companies first to get an idea of whether an IVA is the right path for you

good luck x

[kallis3]

Hi and welcome to the forum.

So sorry to hear of the job loss and ill health.

You are doing the right thing by addressing your debts and your creditors will not be worried that your have been spending, particularly as the circumstances that have brought you here were unforeseen. You can spend redundancy money on whatever you like prior to an IVA. It is the creditors outstanding at the moment who are the priority.

As to your wages, your payments should be done on basic pay, anything your earn over that is usually split 10% over basic pay plus 50/50.

The forum is also here for any advice and support you need.

I would suggest that you speak to a couple more companies before making a decision. Either contact one of the experts who post on here (details can be found under the 'Ask a Question' link on the left) or visit www.iva.com for a list of companies and reviews and speak to one or two. The advice is free and impartial.

[ginger3232]

Lolagrace - I can only add support to what the others have said.

Can i ask though - why you have ruled out Bankruptcy? -

[georgie14]

we were thinking that we can afford some payments so would like to pay as much back as we can and i was under the impression that the restrictions on IVA were not as tough. e.g renting a property, keeping car (Which is on hire purchase needed for work) also bankruptcy may effect my husband future job prospects.

if an IVA wasnt accepted and that was our only option then we would have to look at bankruptcy but i at least want to try to be more proactive in terms of paying off as much as we can.

will you IP (if thats the name - sorry really new to this) tell you if they think there is a high chance creidtors wont accept IVA so make us go bankrupt?

i seem to get one question answered then have 10 more.

i am just worried that because our spending was excessive the beginning of the year and we paid parents etc that they will come down really hard on us, but i am hoping that they can see we could afford this at the time, even though it was only a few months ago. our circumstances have changed so quickly. do they scrutenise your statements and do you have to justify all spending prior to IVA being agreed?

thanks again

[kallis3]

Don't worry about the spending - we've all done it and you had no idea what was going to happen.

An IP will go over everything with you and work out what you can afford to pay. They will let you know if an IVA is the right thing for you.

An IVA is less restrictive but the allowances are quite strict. Just make sure that you put down everything you spend - things like meals for work, hairdresser, dental and prescriptions. A good IP will go through the lot with you.

Please feel free to ask away whatever you like - someone will know the answer. We're a great friendly bunch on here.

[Shining]

Hi all excellent advice above and a great link posted, it's always advisable to contact 2 or 3 companies to ensure you receive case specific impartial advice. You'll know when you find the right company, also make sure their contactable as this is very important both during the set up and after the acceptance of your IVA.

[lem]

Don't worry lola, we got a loan to buy a car only 4 months before we realised we had taken on too much and couldn't cope with the level of debt we were in anymore, I think we only made 3 payments towards that loan which is now part of our IVA and I worried so much at the time about that.

A good IP will not propose an IVA that they do not believe will be accepted, although nothing is guaranteed, it's a lot of work for any IP to do and if it doesn't get accepted, they don't get paid so it's in their interests to be totally honest with you from the outset.

[footiemad]

Hi Lola - don't worry about the fact that you paid your family back. I paid a loan back to my sister before applying for an IVA and it went through without any problems. Just make sure that you are upfront with your IP about everything and he/she will show you the best way forward. Best of luck to you x

[georgie14]

hi footie mad - do you mind me asking how much you paid your sister back? and why did you not get in trouble? surely this is favoring one creditor over another or am i missing something

thanks

[kallis3]

If it's paid back before an IVA is applied for then there shouldn't be a problem. It's only once you start on that road that you can't favour one creditor over another.

[georgie14]

so let me get this right if i pay my parents back prior to entering into an IVA this is ok? will the IP not wonder why i have favored them and will i get in trouble?

[kallis3]

I think you will be ok - your IP will only want to know about the creditors you have now, not any that you have paid off recently.

[MelanieGiles]

Sorry - that is not true. As part of the IVA you have to make a declaration that you have not paid back any creditors in priority to the others, and you will be asked about this by your IP. The situation worsens if the loan repaid is to an associate - ie someone to whom you are linked from a relationship perspective.

[Foggy]

Mel, surely in this case where the repayment was made before they realised they were insolvent this should have no adverse bearing. As far as I read it they repaid the parents before illness brought matters financial to a head.