How much debt can be written off?

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cj2300

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Post by cj2300 » Tue Sep 14, 2010 9:07 pm
Hi all,

Just a quick question, a family member is looking at an IVA and has been quoted a monthly repayment of £140 on 70k of debt.

Having completed an IVA of my own this figure seems a little low and I am just looking for some reassurance as to whether this can be correct.

The company concerned is very reputable, so I find myself wondering what the catch can be. There is a house with some equity however releasing this would be impossible due to the high cost of the mortgage and the persons age.

Any thoughts? or am i worrying over nothing?

Thanks
 
 

carlmcmullen

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Post by carlmcmullen » Tue Sep 14, 2010 9:15 pm
The answer to your quesiton is what you cant afford to repay back, dont be mislead by the adverts saying write of 75% of your debt, it is simply what you can afford to pay back and no set of circumstances are the same.

However, from what you are suggesting it does seem a little low to be honest, £140 over 5 years would give a dividend of about 8p in the £ which is not very good and unlikly creditors would accept this even if the IVA was over 6 years it would give a dividend of about 11p in the £, again not fantastic.

Are there any circumstances were the payment is likly to increase during the term, for example will a hire purhcase agreement come to end or mortgage arrears repaid meaning the payment can increase giving a better return to creditors ?
 
 

Adam Davies

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Post by Adam Davies » Tue Sep 14, 2010 9:16 pm
Hi
If it is the best offer available and will return more than bankruptcy then yes it is very possible
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Andam Davies
 
 

MelanieGiles

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Post by MelanieGiles » Tue Sep 14, 2010 10:25 pm
I don't think that offer is workable - but I'm very happy to ultimately be proven wrong. Let us know how your friend fares with their application.
Regards, Melanie Giles, Insolvency Practitioner
 
 

cj2300

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Post by cj2300 » Thu Sep 16, 2010 5:21 pm
Thanks for the replies, I have seen the paperwork today and it all looks ok. Definitely an IVA and not a DMP etc.

It is supposed to be this low because it is based on what can be afforded, the people are both retired so there is no chance of an increase in income.

I suppose what really worries me is that creditors will want them to go bankrupt so the house would be sold and they would get their money that way.

There is no way to release the equity in the property due to the ages of the people and the fact there is already a sizeable mortgage.

Any further thoughts?????
 
 

MelanieGiles

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Post by MelanieGiles » Thu Sep 16, 2010 8:20 pm
How much equity is there in the property?
Regards, Melanie Giles, Insolvency Practitioner
 
 

cj2300

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Post by cj2300 » Thu Sep 16, 2010 8:25 pm
There is about 80k equity
 
 

MelanieGiles

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Post by MelanieGiles » Thu Sep 16, 2010 8:58 pm
Difficult to see why creditors would be persuaded to accept payments of £140 for 60 months in settlement of their debts, when they could be repaid in full from the sale of the property.

If this offer is genuinely being made, and the figures being disclosed to creditors are as you say, I will look forward to hearing the outcome of this case with great interest. Having had a big row today with a certain creditor representative over a £7 per month breakdown allowance, it will be interesting to see how the voting goes in this case.
Regards, Melanie Giles, Insolvency Practitioner
 
 

carlmcmullen

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Post by carlmcmullen » Thu Sep 16, 2010 9:07 pm
I to would be interested in the outcome of this one.....

Just make sure that the proposal is not based on a projected dividend from equity realisation in the final year which clearly isn’t achievable from what you have said.

Last thing you want is 4 years worth of payments only to find they cant release the equity that was committed and could end up failing the IVA !!
 
 

cj2300

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Post by cj2300 » Thu Sep 16, 2010 9:18 pm
Thanks so much for the replies

I am getting so worried about this, do you think I should seek a second opinion on their behalf?

I just wonder what would be the point of proposing the IVA if it was doomed for failure, the company would get nothing so they must have an idea it will be ok?

It is DFD by the way
 
 

carlmcmullen

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Post by carlmcmullen » Thu Sep 16, 2010 9:22 pm
I would be tempted to get a second opinion, just to put your mind at ease.

It is very hard for anybody to give advice without knowing the full picutre, at least if you have a chat with somebody it would put your mind at ease.

Just out curiosity have your parents paid any money to DFD yet ?
 
 

cj2300

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Post by cj2300 » Thu Sep 16, 2010 9:28 pm
No they haven't and there has been no mention of it ...... so far

I hope that maybe it is their ages and the fact the house belongs to my mum alone and most of the debts are her husbands etc that makes the difference but I just can't help being worried
 
 

MelanieGiles

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Post by MelanieGiles » Thu Sep 16, 2010 10:49 pm
Why don't you give the IP a ring at DFD to express your concerns and see why they feel the IVA will be acceptable to creditors? If they are prepared to put their name behind it, it must have legs of some sort, but I have to say I am struggling to see the sense of an IVA from the bare facts you have described.

How much does your Mum actually owe to her own creditors, and how long have they been married?
Regards, Melanie Giles, Insolvency Practitioner
 
 

kallis3

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Post by kallis3 » Fri Sep 17, 2010 8:07 am
Perhaps Declan can pick this one up and assist?
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley.
http://kallis3.blogs.iva.co.uk
 
 

cj2300

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Post by cj2300 » Fri Sep 17, 2010 3:25 pm
Hi Melanie,

My Mum actually owes about 25k and they have been married just over 2 years. The house is my Mums and she owned and lived their long before meeting her husband.

This whole situation has arisen due to a change of their circumstances whereby they are now £500 per month worse off and hence cannot meet the bills.

Originally the idea was that Mums husband would go bankrupt because he had no property etc, however when they rand the CAB and were passed to DFD they were told this would mean the house being sold as they has been married over 2 years and the only way to move forward was a joint IVA
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