Topic: A little bit of help

[[email protected]]

Could someone please answer a few questions?
 
We have been in an IVA for the last 2 1/2 years but had to take a 6 month break for my husband to have an operation.  My husband is now in full time employment and works away from home so I have taken a cut in hours to look after our children, but this has meant losing tax credits.  We are finding that we can no longer keep up the IVA payments and have more or less decided to fail the IVA.
 
The problem is we have our own house which has 15k equity in it, will we be made to sell it? If it has to go to auction surely it wouldn't sell for much and the fees would make it not worth selling.  Our car is also on finance and worth about 3k I've read on these forums that you can keep your car in certain circumstances but what is the likelyhood.  We have kept up mortgage and car payments but it is was the credit cards and loans that we failed on and it amounts to quite alot of money between us about 85k.
 
What realistically is the worse case scenario for us, things are getting really stressful and we are finding it hard to pay for anything other than everyday bills, let alone the IVA.
 
Trying to get an appointment with the CAB could take weeks and we can't pay the IVA again this month.
 
Any advice would be gratefully received.

[gordonblair81]

Jiles
 
your best bet is to arrange a meeting with the insolvency practitioner of the company administering your IVA as you will be bound by the terms of the IVA they are the only ones who are best to speak with.
 
CAB will tell you exactly the same thing.
 
Worst case scenario it could result in bankruptcy which in essence would mean your house being sold no matter what it goes for at auction wif the current value shows £15K equity it will be sold.
 
In regards t your car if there is more outstanding on finance than what it is valued at then my thoughts would be you will keep the vehicle.
 
Try not to be worried about the house being sold this is worst case scenario however would be a small price to pay to have £85K of debts cleared in bankruptcy.
 
My best and only advice would be to speak with the Insolvency practitioner hiding from the IVA is the worst thing you could do they will do as much as they can to help,  Possibly extend the IVA and lower monthly payments i cannot say as i am in Scotland and not England but speak with the company you took the IVA from.
 
Gordon blair

[Sovereign]

Hi Jlees33. Gordon is correct in his advice in that you must first of all contact your administrator and discuss it with them. However, in my experience they are unlikely to recommend the bankruptcy route and you will be left to arrange this yourself.
 
With regard to your assets, lets take a more positive route. Ask a local estate agent to come and value your house on the basis of an 'immediate sale today' as opposed to the usual three month route. That will reduce its value substantially. Then consider how much it will cost to sell the property and for you to locate. That will be around £5,000.00. As a result, has your house got positive equity or negative. If the latter, then bankruptcy should not cause you too much of a problem. Additionally, the OR is likely to give you the opportunity of arranging for a third party (such as Mum or Dad) to buy back the positive equity from them. They will not simply evict you. The OR or trustee in bankruptcy has three years to deal with the property thus giving you that time in which to rearrange your lives.
 
With regard to the car the same principle applies. If it is on finance and has negative equity then the OR will have no interest in it. Beware however, as I have seen instances of finance companies enforcing their agreement cancellation clauses and asking for financed vehicles to be returned to them.
 
It takes three missing monthly payments for an IVA to fail. No action, other than a few harrassing phone calls, will be taken in that time period again giving you time to consider your options. Post again with a few more details or [** sorry, no personal contact invitations allowed **] direct and I will help you as much as I can.  Best wishes.

[[email protected]]

Thanks for your reply.
 
We have contacted our IVA agency and they just recommended a review and making the arrangment over a longer period of time, but we are already 40 and don't want this to drag on until we are nearly 50!
 
We have had an estate agent out to get a realistic valuation of 165k to sell for 160k with a mortgage of 147k. So that only leaves 13K equity is this still enough for the OR to think it's worth selling?  What do you mean the OR has control of the house for 3 years? I thought it was that they give you a year to sort yourself out, what happens to the mortgage in this time do we still pay it?
 
Would we if we do lose the house ever be able to buy again? 
 
I have recently had a statement for our HP on the car and we still owe about 6k and the car is only worth about 3k.
 
I have read on some of these forums about attaching something to our earnings for a year what does this mean?
 
We are now 31/2 months behind and waiting for the IVA company to get back to us about the bankruptcy, but they don't seem to be responding to our calls, so we are not sure what to do now, nor are we sure how we will get the money together to go bankrupt.
 
Further advice would be really appreciated.
 

[Sovereign]

Hello again,

You are right to refute the IVA review. This will drag on for many more years and you are not realistically debt free for all of that time.

With regard to your home, by the time you have sold and deducted ALL of the sale and removal costs you will probably only have £155,000 and thus equity of just £9k. The OR does have three years in which to deal with your property but is likely to give you or a third party the opportunity of buying back the beneficial interest for £9k or less. You may have family or friends who could help you in this respect. You are obliged to pay the mortgage at all times unless you give up possession to the lender. You will probably not be able to get another mortgage if you do give up the house by selling or handing it back to the lender for many years.

With regard to the car, if there is negative equity there then the Receiver will not be interested but please be aware that a few finance companies will recover the car from you if you go BR. Most prefer to let you keep the car if you keep up the repayments.

With regard to your income and expenditure, in BR you may be asked to enter into an agreement to make payments to your creditors for a three year period. This is call an Income Payment Agreement. Depending on your figures, the Receivers will make a payment calculation of around 60% of your disposable income. However, unlike an IVA, you are allowed contingencies in these figures for items such as dry cleaning and hairdressing and with the help of an expert (there are many on this forum) you can bring your dispoable income down to a manageable figure. Can I ask how much you pay each month into your IVA?

The IVA company will not assist you with BR, it is not in their interest to do so. As to funding for the BR application, this is acheivable with the right advice.

Hope all of this helps.

Regards,

Steven 

[[email protected]]

Thanks for your help.
 
We have been paying £430 a month, at first this seemed managable compaired to our outgoings and it was a relief to have it all sorted, but due to changes in circumstances we don't carn't manage it anymore.  The IVA company seem to want new information every few months and don't listen when we tell them about our change in circumstances, infact due to the fact we are behind with payments they have asked us to increase our payment to £480.
 
In our current expenditure forms we already have hairdressing allowance etc each month, which have made things easier at times, but our oldest child is going to college soon and that is more expensive than school.
 
There doesn't seem to be much flexibility when we have big bills to pay like car repairs or even buying a new vacum cleaner!!
 
We are really worried about going bankrupt but after our inital relief that the IVA would solve our problems it seems that wasn't to last and bankruptcy is our only option.
 
Will the IVA company inform us if they decide to fail the IVA?
 
Thanks again for your help!

[Sovereign]

Hello,

A monthly payment of £430.00 per month can be a struggle particularly in the current economic circumstances. One of the problems with an IVA is that your debts do not simply go away and the inability of some IVA companies to recognise when people are in trouble never ceases to amaze me. I have had to help several people this year in converting their IVA to bankruptcy and those guys have never looked back.

The immediate difference between an IVA and an income payment agreement in bankruptcy is that in an IVA, your creditors demand the whole of your disposable income whereas in BR a payment of between 50% and 70% (usually 60%) is agreed. For you, that would mean an IPA of around £258.00 if your IVA figures are still correct. Also, should your circumstances change at any time during the three year period, the agreement can be altered to reflect those changes easily.

An expert will undoubtedly increase your expenditure to the maximum allowed by the Insolvency Service and this will reduce your monthly agreed payment substantially. If your circumstances have drastically changed then you may not have to make any payments to your creditors at all.

Both the reduced percentage taken and the appropriate adjustments will allow you to budget for repairs, car MOT's and vacuum cleaners and you can even include a monthly amount in your expenditure sheet for an annual family holiday!   

It is unlikely that the IVA company will inform you that the IVA has failed and they may take Bankruptcy procedings against you within the next month or so. That will save you the Court fee in BR but you will still need advice for your Receivers meeting and subsequent matters.

Hope this helps.

Best wishes,

Steven

[Steven Jackson]

Hello jlees33
 
In agree with Sovereign that it seems as though allowing your IVA to fail and then going down the bankrutpcy route is the best way forward.
 
In my experiance however, I think that your IVA supervisor will make you bankrupt. The reason for this is that if you have equity in your property as you have described, they have a duty to realise this for your creditors and therefore force you down the bankruptcy route.
 
An IVA supervisor will generally leave you to your own devices only if you have no assets which they have to realise.
 
My suggestion is that you inform the supervisor of your decision not to continue to make any IVA payments. They will fail your IVA soon enough.
 
This situation is just aweful because you are likely to loose your house. However, the official receiver will give you plently of time to find alternative suitable rented accommodation. And as Sovereign says, if your car is worth less than £1500 after the outstanding finance is deducted, there should be no issue with you keeping it.

[Sovereign]

Hello again,

I agree with Steven that the IVA supervisor will take them down the bankruptcy route but in my own experience, were they to petition for bankruptcy themselves, they would take control of their own position and be able to negotiate with the OR to buy back the beneficial interest. On their own petition, the OR would have 3 years in which to deal with their property and I feel that it is unlikely that they would lose their home if a third party could raise the appropriate funds.

So Jlees, you must take some action in order to protect your position NOW .......

Best wishes,

Steve

[Steven Jackson]

Hi Steve
 
Why do you not think that jlees33 would not be able to buy back the beneficial interest in their property if their IVA supervisor made them bankrupt? I know a number of people who have unfortunately been in a similar position and have been able to do so where funds have been available from a third party.
 
At the end of the day, whoever has initiated the bankruptcy, the OR is always going to go down the path of least resistance. If they can avoid having to force the sale of the house because someone can make a reasonable offer for the interest they will always choose to take this.
 
As such, my view would be for jlees33 to let their IVA supervisor pay for the bankruptcy saving them £600 per person (£1200 for two people). Of course, being able to buy back the beneficial interest will be reliant on jlees33 being able to raise the necessary funds anyway.

[Sovereign]

Hi Steven,

I am sure that Jlees could buy the BI from the OR on a creds petition but my own preference if people can raise the funds is to declare themselves BR on a debtors petition and take control of their own position.

Regards,

Steve

[Steven Jackson]

Interesting Steve
 
At the end of the day, I guess it boils down to whether the individual can get together the bankruptcy fee required. If this is going to be difficult, my preference would be let the IVA supervisor pay for it.

[[email protected]]

It certainly seems we made a mistake taking the IVA looking at out paper work the last year of the IVA we would have been paying £600 per month and provided the housing market increases would have been remortgaging for around 30k, this probably wouldn't have happened anyway with the housing market like it is.
 
With regards to the earnings,will it be like it is with the IVA were we would have to do an income and expenditure every year and if we were earning more they would take more?
 
And I think we signed the deeds to the house over to the IVA which I believe was to stop us selling it, what happens to these now?
 
Still very worried about losing the house with having 3 kids to find somewhere to live.  Will we be given the best advice by whoever takes the case on will we have to make sure we know what were doing before it goes ahead?
 
 

[Sovereign]

Hi Jlees,


With BR you complete an initial income and expenditure sheet and submit this with your statement of affairs. If the Receiver accepts it, then any payments that you make would be based on these figures. Sometimes, the Receiver will ask for a second statement prior to your discharge from BR. You are simply obliged to inform him or your Trustee (if appointed) of any changes in your circumstances. If you have pay rises then you should declare them and complete a new i/e sheet. if you have a downtrun in incoem then the same applies.


One BIG difference in BR is that the recevier can only take 50-70% of your disposable income. The average is 60%. If your disposable income is below £100.00, then you will not need to make payments. With an IVA, 100% of your disposable income is applied to your creditors.


Unlike an IVA, you can include hairdressing, dry cleaning, car MOT and even an annual holiday in your figures! I have prepared many statements showing losses per month once all of your allowable items are included.


With regard to your house, a restriction would have been placed on the property by your supervisor. This will be overwritten by one placed on the property by the Receiver. Whether you can ultimately keep your home depends on whether you are able to raise third party funds to buy back the equitable interest. If you can, you should not have a problem.


Hope all of this helps.


Steve

[Steven Jackson]

Hello Jlees33
 
Bankruptcy is a very different process to an IVA. Firstly, it will only last for 1 year. After 12 months you are discharged and no longer bankrupt.
 
Your income and outgoings will be presented to the official receiver and they will consider if it is reasonable or not. If you can afford to do so, they may ask you to make payments every month. These payments would last for a maximum of 3 years. However, if you can not afford to pay anything, you do not have to. There are no further reviews once you are discharged.
 
As Sovereign says, the restriction order currently on your property will be lifted but the official receiver will place a  new one on your property so that they have control.

Given you have £13000 of equity in the property, I think the official receiver will want to realise it. One option as has already been said is to raise some funds from friends or family to make an offer to buy back this equity. You would then be able to keep you home for sure.
 
If this is not possible, then although it is aweful you may well loose the house. However, you wil be debt free and this wil all be behind you. Why not have a little look at the rental property in the local area to find out a bit more about the options available for you for renting.