WHY DON'T IPAs LAST 5 YEARS??

[OPTIMIST12]

Just thought that I would pose this question with reference to the sometimes heard view that BR is taken as the "easy option".

I entered my IVA as a person with no assets (property etc.) and am now into my second year. What I dont quite understand is - if someone in a similar position to me (i.e. NO assets) - went Bankrupt at the same time as I started my IVA - why are they only subject to a 36 month IPA when I am paying a 60 month IVA? Yes - I know it is because that is what the legislation dictates - but why? I am very happy with my IVA - absolutely no complaints - but if me and Mr / Ms X were in exactly the same financial position at the same time (no property or major assets) - would it not be fairer all round for both me and them to make 60 payments of disposable income to our creditors?

Just a thought.

I know when I first started looking into an IVA I was told that - if I went down the BR route (this was never my intention) - the Court may demand to know why I had not gone for an IVA and may refuse any petition for BR. That sounded fair to me.

PS My IVA "Factory" (who started that silly phrase??) continue to provide me with an excellent service. I have received a copy of my Annual Report to Creditors less than three weeks after the anniversary of my Creditors Meeting.

Good Luck to everyone waiting for their Creditors meeting!!

[lily]

Just a thought, it might be that for some an IVA is unsustainable and therefor they may have already tried this route and then opt for BR due to changes in circumstances so may well still be paying for 5 or even 6 years and lose their assets at some point during. Or, another reason might be that there is simply not enough disposible income to fund an IVA therefore one has no choice in the matter. In BR you dont get to keep assets, in an IVA you do so maybe you are paying for that too.

It is totally a question of choice as to why someone with the same circumstances would choose either route. If you have a family, their needs and expenses are going to change throught the arrangement so with no assets it may be that the earlier release in BR is a much better option for all concerned.

[OPTIMIST12]

Hi lily -

I appreciate what you are saying but was thinking along the lines of someone in EXACTLY the same circumstances (salary, expenditure, committments etc.) at the time of embarking on an IVA / BR. Why should both not be required to pay for 60 months?

I am not talking about people who have tried an IVA and it has not worked out - and obviously if there is a change in circs then everyones case will go a different way.

BUT - if you had OPTIMIST 12 (A) and OPTIMIST 12 (B) living next door to each other with exactly the same income / outgoings and (A) goes for an IVA and (B) for BR at precisely the same time - then should not the initial requirement be that both make the same efforts to repay their Creditors over the same duration?

[lily]

I see, ooh I have no idea why but I would guess that the IVA is a given arrangement that you sign and agree to and is paid for (ie the company get paid for doing it). The other is a proceedure and the IPA is enforced and the OR isnt paid directly.

One is seen as a choice and the other the only option, maybe... hmmm.

[OPTIMIST12]

If you have two people with the same circumstances and both with the potential to join an IVA - then no it is not the only option for either. If one chooses IVA and one chooses BR do you not think they should both repay for the same period (whether or not the I+E is calculated on the same basis?).

Whatever the respective mechanics of IVAs / BR should not there be an equitable requirement in both to make the maximum return to Creditors if two debtors have exactly the same circumstances?

[lily]

To be honest and this is very honest, I dont care. If one wants to do an IVA good if the other wants to declare BR fine. Both are very hard. Neither can happen unless a person is insolvent and lived beyond their means for one reason or another and have fessed up.

The creditors will accept or decline each IVA on its merits and I guess its up to the IP and the creditors to decide how much can/should be paid back. I dont see how it helps anyone to make something happen, there has to be a degree of choice, we are all different (thank goodness) and different aspects will make one choose one option and another the other. If one feels hard done in one then they can choose the other.

Creditors agree to lend the money as a buisness arrangement and with that comes some risk, especially as they dont always consider debtors committments, well thats how it appears to me anyhow. They just keep upping the limit on cards and this has consequences for both. We dont always know our limits, do we????

We are all delt a different hand in life, this shapes our journey through life and therefore will affect the choices we make.

Our debt journeys, therefore will begin and end with the same thing, insolvency and freedom, whatever is in the middle are just details.

[Adam Davies]

Hi
Welcome back Optomist
The main difference is that an IVA is a voluntary arrangement whereas an income payment order in bankruptcy is not,so two people in the same position can choose to voluntary payments under an IVA over five years or mandatory payments over three years under bankruptcy
There is no doubt that the differences between IVAs and bankruptcy make for good debating,the next debt debate[May 2nd] where this is the theme should be very intersting
Regards

[OPTIMIST12]

I am not knocking anyone for choosing to go down either the IVA or BR route. It just seems strange to me that these legally enforceable options provide for such different paths for people without property or other assets whose circumstances may be otherwise identical.

Lily - I note that you dont care about this and I respect your opinion. However - this is a forum and I think that it is a legitimate point to raise!!!!!

[OPTIMIST12]

Hello Andy - and Thank You.

I dont think I have quite got over the exact point I am trying to make here(!) - my fault - but there is a serious point in there somewhere!!!

And Thank You to Lily for your assertive response - I appreciate your different point of view.

[lily]

I am not trying to be assertive or contradict your point in any way Optimist, I do find you very difficult sometimes, I admit that. Nor was I being flippant about the point youre trying to make and I said as much as Andy did in an earlier post but I was guessing.

Its just that I dont think it all comes down to money, there is a human cost to consider and I feel many BR's here might feel like a failure compared to those like you in an IVA.

Its a fact there is a differance but I cant see how that matters if there is a choice. I hope that explains where I am coming from.

I dont have any assets but still chose the IVA route first but my circumstances are different and quite unique and I doubt if any two peoples circumstances are going to be identical to make the comparison you mentioned.

[ladyc]

I agree with Lily. No two circumstances are ever completely the same. They are all unique. There can be all sorts of non apparant differences. This also includes mental state.

[OPTIMIST12]

Lily - I know many of my views are a bit "off-centre" compared to many on the Forum - but I think there is an important point here.

I am under no illusion - if something goes wrong in my life and my IVA fails then I will have no option but to go BR. No way should people who have been compelled to go BR feel a failure in any way - I would never suggest that in a million years.

My example is overly simplistic I know but - my point is that people who CHOOSE to go BR when an IVA would be a perfectly possible option should initially be expected to enter a comparable repayment term to someone in an IVA. If someone has tried to do an IVA and failed then no way should they be criticised. If an IVA is not an option from the start then the same applies.

But I have read much of these "mis-selling" cases where people without property or assets have been told that BR would be their best course. I am in my IVA to repay the max - if people choose to go BR when they could just as well proceed with their IVA I think the IPA should run for a similar term. Some people seem to laugh at the "moral" argument for repaying as much as you can - I do not subscribe to that.

If a person chooses Bankruptcy as it is the only option then they have my 100% respect. And I do appreciate that every case is different.

[lily]

I do hear what you are saying but if you were to enforce an IVA then you would have all sorts of problems. I am sure that you are aware of the vast difference in IVA companies who will make a profit on IVA's and this could be exploited. I dont know enough about OR's or BR or the policing of it all but they must have their resons and I respect that.

I am certainly not laughing at IVA morality. I, like most of us here had never missed a payment on mine and took it very seriously when I couldnt pay.

If you feel that someone in your cicumstances should morally take the IVA route rather than the BR route out of moral duty then that is your opinion and I respect that.

Youre obviously very happy with your IVA and it seems to give you a good sense of 'doing the right thing' perhaps someone in the same circumstances wouldnt get that or maybe its not as important to them as it is to you. Likewise someone may have been through such a tough time before the issue that they 'just want it to end' and are not psycological able to cope with IVA. I just wouldnt judge either as I havent walked in their shoes.

[go_4_broke]

Evening All

The legislation on which IVA's are based doesn't specify any particular time period or amount of repayment. I don't think it specifies much at all except that the offer, whatever it is, must be acceptable to the voting majority of creditors.

The five year thing has simply evolved as the industry norm over time.

When you make an offer to creditors via an IVA you are basically saying to them 'What price is it to keep me out of bankruptcy ?' and naturally they will make it as high as they can get away with.

An IVA is essentially a private arrangement and the content is up to the parties concerned at the end of the day. Bankruptcy is a much more of a 'public' facility with a standard set of rules.

Best Regards, Simon

[MelanieGiles]

Hi Optimist and great to see you back

The comparisons here are like comparing apples and pears. Bankrupty timescales are stipulated in statute, and are the actual authority on which IVA payments began. So IVA's until the late 1990's were for three years as well.

As Simon stated, the five year tradition has come from custom and practice but is not a statutory requirement - indeed IVAs can be over whatever time period debtor and creditors are bound to agree. Other things have also crept in over the years via custom and practice - such as the 50% uplift provision, final year equity release clause and now IP fee structures.