www.iva.co.uk

Here is my situation; I moved to the Philippines last year to set up a business and parallel foundation, (the idea being the business surplus could fund the foundation.) in order to do that I used borrowed money. I owe about £15,000 pounds to about 6 different creditors, two loans, three overdrafts and three credit cards. All that money has gone now.
the business failed, I owned a small bar which has been sold as it was making a loss, and the money I used to pay some of my debt off but obviously I’d prefer to eat before I make repayments. I’m currently trying to find work teaching English as a private tutor but its taking me a while to get going, in the meantime the children at the foundation and I are living off handouts. My monthly outgoings at today’s exchange rate are £440 a month. That includes absolutely everything except my repayment obligations which came in around £380 a month (with the charges accumulating now though I think it will be a lot more.)My income is currently next to nothing, but in the next three months I think I will be making enough to get by, probably with some surplus with which I can begin to pay my creditors. The problem I have is that the charges are compounding limiting my ability to pay the money back. I’ve tried to explain to the banks on several occasions that the money simply isn’t there and adding charges to my accounts isn’t going to make it any more ''there''. On the contrary it will probably make it less ''there'' as it will force me into bankruptcy. I have a few questions;
First given my situation what do you think the best option would be to pursue? Bankruptcy or an IVA? And what are the implications associated with both? (Apart from a terrible credit rating). Does my bad credit rating affect the ability of my parents (I''m registered at their address) to borrow? It’s unlikely I will be back in the UK for a long time (financial difficulties being the main reason) can I complete these processes from abroad?
Many thanks.
Tom

Hi Tom and a warm welcome to the forum. Setting up a foundation for local children to benefit from was a very worthwhile cause, and I do hope that you manage to keep it going in some shape or format.

With regard to your debts, so long as UK bankruptcy proceedings would not affect your ability to continue to live and work abroad, then this may be something worthy of serious consideration. You can do this from abroad, appointing someone in the UK as your power of attorney, and you will be generally discharged from bankruptcy at the end of one year.

Bankruptcy should not affect your parents, and if it does they could file notices of disassociation from you which ought to sort this out.

You could look at offering a formal or informal repayment plan from abroad, but to make this work you would need to demonstrate a regular source of income which I think you would find tricky at the moment. Given that you seem to have made your life elsewhere, I would have thought that bankruptcy may well be your best option.

Hi Melanie, thanks for the reply,
I have quite ambitious plans for the future and would like this thing to grow into something global; the stigma attached to bankruptcy doesn't really affect me, for I hear that it’s an entrepreneur’s obligation to go bankrupt at least once. I just wonder if the entrepreneurs that go bankrupt go bankrupt under a business name or if it’s personal bankruptcy. I'm an avid follower of economics and its my first consideration when making a project based decision, I’m aware that we're living through historic times in respect to the unprecedented multi decade credit boom we have seen in the west, and the unwinding of that will affect the whole world for a lot longer than most people imagine and in as yet unforeseen ways (just ask the Philippines about banking crises, they could write the manual!). I doubt any of the credit services that have become commonplace now will be happening again in the next six years anyway, and given these pivotal times my inclination was to think that that would be considered by institutions I want to do future business with.

Besides, as a child of that liquidity boom I think it’s important to learn the right lessons and build things up with a solid foundation of savings, instead of being at the mercy of creditors.

If I opted for an IVA is there anyway I could get them to freeze the charges while I sort myself out with an income? Because they are beginning to compound at an unplayable rate. How would I go about appointing someone as my power of attorney? And what would be the charges for that? And what does it mean when you say I will be discharged from bankruptcy at the end of one year?

My life is here at the moment but I do plan to live throughout the world when I can finish what I started here. In regard to your earlier comment, thank you for your support, the foundation will still be able to survive as at the moment it receives monthly donations from the states that cover the basic costs; rent food, education, etc.
One other question; during bankruptcy is it still possible to have a bank account?

Many thanks again
Kind regards
Tom

Hi Tom, and welcome from me too.

May I also say that I think that it is great what you are doing? I hope it does take off, big time.

I can't answer all of your questions, but I'll have a stab at a couple of them. I am sure Melanie will be on later for the rest.

You have to have a regular income for any IVA, but once you are in one, all interest and charges cease. You will be making payments for 5 years.

When you are made bankrupt, it is usual for you to be discharged, i.e. no longer bankrupt, after 12 months. If you have disposable income over £100 a month I think it is, you will be expected to make some payment toward the BR, If you have no income, then you make no payments.

Whichever option you choose, your credit rating will be shot for 6 years from either the date of BR or IVA. If asked, you would always have to declare that you had been bankrupt, this is not usually the case with IVA.

I think you can ask a friend or relative to have power of attorney for you, but I'm not 100% sure.

You can have a bank account, Co-op or Yorkshire Bank are usually good ones, but I do believe you have to go into the branch to open one.

Interest and charges cannot be stopped in the lead up to an IVA, but you may be able to arrest them for a short period by offering pro-rata payments under a DMP agreement.

Discharge from bankruptcy means that you are released from the restrictions that bankruptcy brings along and are no longer accountable to your Trustee for your income and expenditure or after acquired assets. And it is definately possible to have a bank account whilst bankrupt - of course at the discretion of the bank concerned.

If you wish to appoint a power of attorney, you will need to either approach a solicitor in the UK, or one of the bankruptcy assist companies - Paul Johns of Reviva who also posts on the forum might be a good first try.

Good luck with your ongoing work and finding a resolution to your debts.

Many thanks to you both for your help, your advice is much appreciated, when working from abroad these things seem to take a lot longer than going in and talking to somebody face to face, but I think its something thats quite inevitable now. I don't think it will be long now before my income stream starts to flow again, I've had quite a bit of interest in the private language tuition department, so I'm considering holding out for an IVA, would I need a power of attourney for that aswell? or for a DMP? I think I'm going to have to get someone to represent me one way or another, what would be the charges for that? and how would I be able to pay them from abroad? (considering my bank cards have now all been terminated and I'm living on borrowed handouts via western union).
Thanks again

You would not need a power of attorney, but you will need to demontrate that you have lived in the UK at some point in the three years leading up to your application.