can i simply go bankrupt after one year into IVA

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Adam Davies

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Post by Adam Davies » Sun May 16, 2010 10:26 pm
Hi
So a court could refuse a debtors bankruptcy petition from someone who has failed their IVA ?
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Andam Davies
 
 

Adam Davies

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Post by Adam Davies » Sun May 16, 2010 10:29 pm
Hi
Surely someone can't be forced to continue with an IVA ?
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The Major

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Post by The Major » Sun May 16, 2010 10:36 pm
Andy

You are right no judge can force anyone down the IVA route,and deny them their basic human right if they are insolvent, if they qualify for an IVA they definitely qualify for bankruptcy, there is also nothing stopping anyone in a current IVA petitioning for their own bankruptcy, Kallis you giving an opinion only please quote more than an opinion to justify what you are saying.
 
 

kallis3

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Post by kallis3 » Sun May 16, 2010 10:48 pm
I am only quoting what has been said before.

As far as I am aware, a court cannot refuse a petition if the IVA has failed. If you are in an IVA then you have to let it fail before you declare BR.

I stand to be corrected though.
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The Major

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Post by The Major » Sun May 16, 2010 10:51 pm
Kallis

As you stand to be corrected, same as me, I salute you
 
 

Adam Davies

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Post by Adam Davies » Sun May 16, 2010 10:56 pm
Hi
So bankruptcy can't be refused if someone has a failed IVA ?
That is what I wanted to be sure of
The question of whether an IVA has to fail first before bankruptcy is approved for me is open to debate. I would imagine that the vast majority of people will just stop paying into their IVA and use the saved money to pay for their petition.
If the bankruptcy was refused because the IVA had not yet failed would the debtor lose their 600 pounds or would it be returned ?
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Andam Davies
 
 

MelanieGiles

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Post by MelanieGiles » Sun May 16, 2010 10:56 pm
The issue here is not about being forced to carry on with an IVA, but whether it is an automatic right to be granted a bankruptcy order. This lies within the Court's discretion, and I have certainly experienced instances where an Order has not been made.
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Adam Davies

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Post by Adam Davies » Sun May 16, 2010 10:58 pm
Hi
What grounds could the court refuse the petition Mel ?
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Andam Davies
 
 

MelanieGiles

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Post by MelanieGiles » Sun May 16, 2010 11:22 pm
Not believing that the debtor has good grounds for making the application. I dealt with a case last year where the District Judge refused to grant an order as he felt that the debtors could pay reasonable contributions to creditors from the surplus they were disclosing in their applications. He recommended that they seek the advice of an Insolvency Practitioner, as to whether a scheme of repayment could be made with creditors, and adjourned proceedings until this happened.

I assessed the case with these people, and it appeared that they could repay their debts in full within a nine year period. Matters were not helped by the fact that they had received an inheritance around six months prior to them making the application, which they had spent on a Caribbean Cruise!

These people had never heard of an IVA or debt management, and had not taken any professional advice before filing their bankruptcy petitions. They were happy to consider the alternatives, but unfortunately whilst we were in the process of proposing their IVAs one of them was made redundant and therefore their disposable income was lost.

They eventually returned to Court, along with a letter from me to confirm that given the change in circumstances it now appeared that bankruptcy was the only option for them - so an order was eventually made - but not automatically at the first attempt.

In Northern Ireland - where as you know I also practice - it is quite common for an order to be refused until further facts are known. And persons in Scotland cannot petition for their bankruptcies at all unless they are subject to legal action already in place against them.
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Adam Davies

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Post by Adam Davies » Sun May 16, 2010 11:38 pm
Hi
But if someone had recently failed an IVA it would be very unusual fort them to be refused their bankruptcy petition unless their circumstances had changed for the better ?
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Andam Davies
 
 

MelanieGiles

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Post by MelanieGiles » Sun May 16, 2010 11:41 pm
I am also dealing with a case where one did such that - and ended up paying a higher contribution to their IPA than they were paying into their IVA. So often the grass is not greener on the other side.

If IVAs are entered into properly - with knowledge of the full range of options available - and clients demonstrate that they are choosing an IVA for the right reasons, they should only really fail if there is a change of circumstances which means that dispsosable income is lowered or lost completely.
Regards, Melanie Giles, Insolvency Practitioner
 
 

jane.l

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Post by jane.l » Mon May 17, 2010 11:30 am
Interesting thread.

We went bankrupt after having an IVA proposal drawn up but at the last minute decided that we would rather go bankrupt, clean slate and all that.

We never even saw the judge and our petitions were granted no problem. Even though we technically could have tried the IVA, we chose not to but had no probs with the judge.
 
 

Adam Davies

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Post by Adam Davies » Mon May 17, 2010 11:52 am
Hi
I'm still none the clearer regarding this question.
I can understand a court not granting bankruptcy if the client can meet his/her payments but surely if someone is insolvent, e.g had been in an IVA, they have a right to declare bankruptcy ?
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Andam Davies
 
 

The Major

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Post by The Major » Mon May 17, 2010 12:56 pm
This thread started because someone in an IVA wanted to abandom the same and go bankrupt. He was told by Mel that he may have difficulty pursuading the Judge to grant the order as he had been maintaining his IVA payments. This is what I disagreed with, to grant a bankruptcy the Judge has to be satisfied the client cannot pay his debts understands the procedure, has taken advice, therefore qualifies for the order, which is his right if he is insolvent and anyone in an IVA is insolvent,

The thread progressed in that it was said that by several that no-one in a current IVA could petition for bankruptcy which is simply not the case. The procedure for anyone in a current IVA is that they petition the court where the IVA is registered present the paperwork pay the fees and swear the affradavit, and upon the court receiving the petition form 6.27 which details the IVA supervisor to whom the court will then write to giving at least 14 days notice of the hearing, the court then lists the case to be heard in 21 days time in order to comply with rule 6.42(2A) of the Insolvency Rules 1986. This means that anyone in a current IVA can petition for their own bankruptcy the court must though be aware that the IVA supervisor is aware of it.
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