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Hi
Although my husband and I have been considering an IVA, and have been researching the pros and cons thanks to this site, we are now wondering whether we should consider bankruptcy instead?
Our house is worth approx £187500, and our mortgage (including redemption fees as we have a fixed 10 year rate) would be £186,500 to pay back, so £1000 equity. (not taking into account solicitors or estate agency fees!)
We have one car, worth about 8K which is used for work/kids etc (I do 20,000 miles a year, so need a reliable vehicle)
We owe approximately £84,000 to 8 creditors (increasing steadily month by month), and have a realistic disposable income of around £700 per month.
Anyone got any suggestions as to which would be our best course of action?
Thanks
Helhan

Hi Helhan

Under bankruptcy proceedings your property will be safe, providing your valuation is accurate, as there is little equity available for creditors and it is covered by "low-value" provisions within current insolvency legislation - ie a Court would not award a possession order. If you do go bankrupt, do make sure a quick deal is done with the Official Receiver for a family member to acquire your beneficial interest for a nominal sum - say £1 plus and undertaking to cover legal costs.

Your car would be taken from you, however, and you would be given a replacement allowance of up to £3,500.

It is only you who can decide your best course of action. With £700 per month you have the ability to offer a decent IVA, but this means entering into a five year arrangement to ensure that your debts are repaid.

Your decision should be made on the basis of the level of moral obligation you feel towards repaying your creditors. If you feel a low or little responsibility, then bankruptcy proceedings may be the best option for you, however if you really want to repay as much as you can, under a realistic time period, with some forgiveness granted by the creditors, then an IVA may be better.

Also please remember that bankruptcy is a privilage rather than a right. You still have to convince a judge that you require the protection of a bankruptcy order, and with that level of disposable income I rather think they might tell you to try an IVA first. I am seeing this happening more and more in the local Courts I deal with.


Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk