Topic: Help!

[Aligaz]

Hi, I am new here and I'm currently in an IVA which started December 2010. I am struggling to make the payments, constantly juggling what I have and I cannot remember the last time i had a reasonably comfortable month where I did not have to do this. I have missed 3 payments since the start and will almost certainly have to miss Decembers payment.  I am a single mum to a little girl and full time registered nurse. I am considering bankruptcy, because I cannot see how I will manage for a further 4yrs. I rent our home from a housing association I do have some arrears with them which I am paying monthly. I have had to resort to using a payday loan company which I will pay and try not to use again.  I feel desperate and have no clue as to what to do and would appreciate any advice. Thank you

[James Falla]

Hi Aligaz
 
Sorry for my slow response. I cannot always manage to post on this forum every day. If you have rent arrears and are having to borrow from a payday loan company then it sounds as though your IVA is not working for you. How much are you currently paying into the agreement each month?
 
My first thought would be that you should contact your IP and discuss the problem and request that your monthly payment is reduced. However if this is not possible and you feel that you cannot carry on then as you do not own a house then you could certainly allow your IVA to fail and go bankrupt. You will only have to pay what you can afford and any payments you have to make will only last for three years compared to the four you have left on your IVA. However before going down this route I would recommend that you speak to an advisor so you are clear on the consequences.

[Debt advisor]

HI, this is to agree with James Falla. obviously consult the company you have received the IVA from to lower your payments but instead of being declared bankrupt there are other informal solutions such as debt management plans which can help reduce your monthly repayment and freeze interest but also do not have the effect on your credit rating as being declared bankrupt.

[James Falla]

Hi Debt Advisor, you are right to point out the option of a Debt Management plan. However the issue that I suspect Aligaz will find is that to make a DMP work you need to make a reasonable payment each month and this is what they are currently struggling to do. If such a payment could be made then the IVA would not be at risk....  Even if you can afford to make a sensible monthly payment into a DMP, repaying the debt in full can take many years which I suspect was what they were trying to avoid by doing an IVA.
 
In terms of how a credit rating is affected, bankruptcy will be registered on your file for 6 years. However if you start a debt management plan your credit rating will be poor until your debt are paid in full which could take much longer. As such, given there is no property to lose I still suspect Bankruptcy is Aligaz's best option if the IVA payments can not be reduced.