Hi inlaws looking at Iva/bankruptcy?

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chestercity
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by chestercity » Mon Feb 12, 2018 8:41 am
Hi I successfully competed my Iva about 5 years ago and now my inlaws are going through the same thing. A lot of things seem to have changed since then so I’d thought I’d ask you guys some questions!

Inlaws owe £50k on credit cards only. Only income state pension no assets. On my workings out they could afford £100 a month towards an Iva......

1)is this viable
2) any recommendations for companies( I used Melanie’s but she seems to have disappeared )
3) I think bankruptcy would be better option but inlaws who are in their 70’s obviously worried about house. House value is 100k mortgage balance £80k and no way of further lending on it now or in the future...

Any help appreciated
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kallis3
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by kallis3 » Mon Feb 12, 2018 8:59 am
Hi,

I suggest they speak to one or two companies for advice. Melanie sold her part of the company to Creditfix who get mixed reviews on here.
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Lisa Thomas
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by Lisa Thomas » Mon Feb 12, 2018 9:37 am
Based on what you have stated the contributions would not seem to be viable.

The £20k equity is a concern as will be at risk in Bankruptcy.

When calculating the £100 contribution did they deduct all payments to creditors in their expenditure?
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chestercity
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by chestercity » Mon Feb 12, 2018 9:43 am
Hi Lisa

Thanks for the reply

Know they didn’t include current credit repayments! They’re monthly state pension income jointly is £1200 (no other source of income) and their monthly living costs comes just under £1100!
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chestercity
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by chestercity » Mon Feb 12, 2018 9:47 am
The equity element is what I need to get my head around! After fees etc they would probably be looking at £18000 equity but obviously would struggle to find a new house/rent on income levels. Is Any level of equity protected in bankruptcy? Obviously they may not have the option if circa £100 would not be acceptable to an Iva proposal.

Thanks
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Foggy
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by Foggy » Mon Feb 12, 2018 9:48 am
There are companies who will entertain £100 per month, which is close to the viability limit from the IP's point of view. However, the dividend might not ne enticing for creditors, as most of the payments will be eaten up in fees --- they might agree if the term is extended. As Lisa says, the house would be at risk in bankruptcy.

You need a full appraisal by an insolvency firm or two before you can plan a way forward.
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kallis3
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by kallis3 » Mon Feb 12, 2018 9:51 am
I think they need advice asap. I would also check with CAB to make sure they are getting all benefits they are entitled to.

Have they thought about equity release?
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chestercity
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by chestercity » Mon Feb 12, 2018 9:56 am
HI

Thanks for all your replies!

I don’t think equity release is an option as they are currently at 80% LTV and the bank won’t lend above this amount to 2 pensioners :shock:
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kallis3
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by kallis3 » Mon Feb 12, 2018 10:41 am
I was thinking more about equity release via the companies who advertise on tv. We did one and you continue to own your own home and no mortgage payments.. Just a thought.
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Lisa Thomas
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by Lisa Thomas » Mon Feb 12, 2018 10:46 am
chestercity wrote:
The equity element is what I need to get my head around! After fees etc they would probably be looking at £18000 equity but obviously would struggle to find a new house/rent on income levels. Is Any level of equity protected in bankruptcy?

Yes £1,000 or less so won't apply here.

Obviously they may not have the option if circa £100 would not be acceptable to an Iva proposal.

Thanks


Do they have any other assets or third parties to get a lump sum offer from?

If not might be best to try and get interest frozen and carry on as they are.
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chestercity
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by chestercity » Mon Feb 12, 2018 11:32 am
Hi

No assets and no one to help them with a lump sum offer. I’ve googled equity release schemes and only suitable for people with little or no outstanding mortgage balance and capped at 50% LTV......

Looking like bankruptcy but advising them to talk through figures with Iva company first
As nothing to lose

Thanks again
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Lisa Thomas
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by Lisa Thomas » Mon Feb 12, 2018 11:38 am
They will lose the house in Bankruptcy!.

If they are serious about selling the house then a lump sum IVA from the sale proceeds might work.

They seriously need to take advice.
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Keith White
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by Keith White » Mon Feb 12, 2018 12:33 pm
My own opinion is that under the circumstances an IVA at £100/mth may well be the best option. It would protect the property and be an affordable payment. It would be a low dividend for the creditors, but I think could work. It will mean they have the peace of mind to know the property is protected and an end date to the debt.
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kallis3
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by kallis3 » Mon Feb 12, 2018 1:13 pm
Contact Keith and see if he can help.
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luluj
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by luluj » Mon Feb 12, 2018 5:34 pm
Advice from 2 or 3 companies is best - if protecting the house is important then bankruptcy should be last resort.

We can all give our opinions but professional advice with all the facts and figures will be far better
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