www.iva.co.uk

Hi Everyone,

Myself and my husband have made the decision to go BR, after being told that we would not qualify for an IVA, just got a question?

We sometimes have some money left over at the end of the month which would mean we are not insolvent? So what is the criteria for going BR?

We have been told that you need to be more than £750 in debt and sought legal advise???

Thanks guys Lisse

PS. If Melanie is on be great to speak with you about this one...

Hi
You do need to be insolvent and have debts of at least £750.
Can you post details of your total unsecured debt and the equity in any property that you have
Regards

Lisse

Yes, your total debts must be at least £750 to make yourself bankrupt, although you don't need to have sought legal advice. I am not sure what you mean by "not insolvent" at the end of the month. Be aware that making yourself bankrupt costs around £500 each so if your debts are minimal perhaps it would not be suitable for you ?

Your local County Court will have a bankruptcy clerk (or if they don't they can point you to the one in the next larger town), who is an excellent source of advice on making yourself bankrupt and helping you to fill in the forms.

HI Andy,

Thanks for getting back to me: here it goes:

Morgage Secured:|£149,823 (flat now reduced in value to £145k)(flat has a tennant in it)
Mortgage Unsecured: £29,968
Egg: £14,431
Citi Financial £7000
Student Loan: £5959 (this is the only one that is not a joint loan)
Lloyds TSB O/D: £1500 husband £2500 me
Lloyds TSB Credit Card: £1500

Our joint income amount to £2300 per month and outgoings approximately £2213..

We did qualify for an IVA but it's not likely that NR will not accept the proposal because it is rented and the income doesn't cover the mortgage payment.

any help would be much appreciated...

Lisse

I assume that your outgoings of £2,213 per month are just living expenses and don't cover debt payments too ? If you only have under £100 left after your living expenses then that won't be enough to do an IVA.

You would have to save up around £500 each to pay for your bankruptcy petitions, as your flat is in negative equity already your easiest way of doing that will be to stop paying the mortgage and NR top-up loan. Once you went bankrupt you'd lose your interest in teh rented flat anyway so there wouldn't be much point in continuing to pay the mortgage.

Hi
If you have included minimum payments to unsecured creditors in your monthly expenditure then it may be worth taking a second opinion on the viability of an IVA.If you have not included your minimum payments then bankruptcy for both of you must be considered
Regards

Can I just point out that you do not have to have debts in excess of £750 to present a bankrutpcy petition, but it is hard to see why anyone would want to pay a further £500 for the privilege if they only owed such a small amount.

And also to say that the issue of Northern Rock should not necessarily preclude you from proposing an IVA, but a lack of disposable income would.

HI All,

Thank you for your responses.

The outgoing's stated does include all amounts payable to creditors inc mortgage, food, bills, rent etc

Therefore do you agree that we are insolvement??

I do get a bonus but it's irregular and not a huge amount.

Thanks L

Hi

We do qualify for an IVA, however we have been told that it is unlikely to be accepted by NR due to the property being in negative equity and the tentant's rent does not cover the mortgage payments.

I guess my main question is what criteris does the judge use in order to autorise an individual's request for bankruptcy?

Is the crieria as simple as "anyone with debts over £750 that cannot successfully make other alternative arrangements"?

If so, then we know our bankruptcy request should be accepted.

Thanks

L

No, the actual criterion under Section 272 of the Insolvency Act 1986 as grounds for a debtor to petition for their own bankruptcy is that "the debtor is unable to pay his debts". If you are still paying your creditors the contractual monthly payments without getting further into debt then it would seem that you are able to pay your debts and therefore a judge should not make a bankruptcy order.

If you petitioned for your own bankruptcy, then you would have a hearing before a District Court Judge where you would have to convince them that you were unable to pay your debts before they granted the bankruptcy order against you. For most people this is a formality as they fill in the forms and the Judge can see pretty quickly that they are hopelessly in debt, but if the Judge thinks that maybe bankruptcy is not the right move for you then they will tell you to think again.

If you wanted to do an IVA then you could try to get the flat repossessed by not paying the mortgage, once the flat had been repossessed and sold there would no longer be any issue about rent covering the mortgage, at that point NR's shortfall will have crystallised as an unsecured debt and they could decide whether they wanted a greater dividend from an IVA or just accept bankruptcy.