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- Mon May 14, 2018 5:37 pm #473102 Hi all

I have phoned a few debt charities and nobody can give me a solid answer as I have already entered in to an IVA. I started my IVA in October last year and I have already been told by my IVA company that this will last for six years following 35k worth of debt. I was encouraged to enter in to an IVA as I was told that it would be better for career choices and finding a mortgage in the future. After having conversations with people and looking online I believe that bankruptcy would have in fact been the best option. My experience has been that an IVA and bankruptcy are both looked upon exactly the same when it comes to certain professions and mortgages, has anyone found this too? This month I was off for a week sick and as my company do not pay sick leave I am a weeks pay down. I told my insolvency company and they said they could only cut my IVA payment down by £100 this month (I will be £300 down) and that my other monthly payments would have to increase to cover this. I feel like this is unfair as I was under the impression that an IVA should reflect what you can manage and can be frozen if struggling. To be honest I am so miserable right now and the last few months have been agonising. Six years feels like forever and I am now wondering whether I should have applied for bankruptcy from day one. Has anyone had the experience of moving from an IVA to bankruptcy and what was this like? I am slightly scared to miss IVA payments incase I get angry phone calls and letters but I believe I need to do this in order to becom bankrupt? Do I have to tell my IVA company that I want to be bankrupt and that I will be missing payments or do I just cancel the direct debit? If anyone could give me any advice on this process I would really appreciate it. This is hugely embarrassing for me but I just want to get to the other side of the debt. I meant to say that I do not own a house or have any expensive assets. My car is worth £2000 and I rent accommodation with my partner who is the main tenant on the agreement

Thank you in advance for any help or advice

[JaneClack]

- Tue May 15, 2018 11:01 am #473104 You can certainly ask your IVA company to fail your IVA if you feel the payments are unsustainable as this is very soon after it started. Generally the creditors ask for no variations downwards in the first couple of years and it is unlikely that much if anything will have gone to the creditors at this stage. However, they cannot stop you filing for bankruptcy which is done online.

When you fill in your bankruptcy application online they do ask whether you have used any debt relief options in the past two years and if you have a disposable income of over £20 you will be asked to make an income payments arrangement which will last for 36 months - however, if your circumstances change this can go up or down as you have a duty to let them know of any changes within 28 days. You are also aware of the fee for doing this I assume.

Tell your supervisor that this is what you want to do as you do not feel your career or property status would be affected.

It is certainly true that when you have saved up a deposit unless the bankruptcy is still on your credit file as it will be for 6 years then you can apply although if asked the question, have you ever been made bankrupt or made arrangements with your creditors you have to answer truthfully. There are specialist mortgage brokers for this.

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- Tue May 15, 2018 2:09 pm #473105 Thank you very much Jane. In terms of an IVA and bankruptcy, do mortgage lenders look on an IVA more fondly than bankruptcy or are they both the same? I am still quite young so would like to be able to buy one day but if bankruptcy is going to make things harder for me then I would try and stick with the IVA

In terms of the income payment plan, is this worked out similarly to an IVA payment plan?

[JaneClack]

- Tue May 15, 2018 8:40 pm #473106 The Standard Financial Statement is going to be used by most IPs eventually and if not they are using the Common Financial Statement to prepare the budgets and the Insolvency Service uses the Standard Financial Statement. These have trigger figures for some items and if expenditure is above these then it needs to be justified. They are not available to the public as advisers are encouraged to get a realistic budget from the client and then discuss if there are items which may be regarded as too high when one is trying to get a creditor to write off debt. There should be no problem with a realistic budget.

In the grand scheme of things, think about it - credit rating in both is affected for 6 years but in an IVA you are paying for 5 and the most in bankruptcy would be for three. That gives you more time to save a deposit - in ten years time it does not matter really whether you did an IVA or DMP except in certain professions - and the earlier you apply for a mortgage after the six year period, the smaller deposit you may have and the higher interest you might have to pay to start with. An IVA does show however you have tried to pay something back as in bankruptcy the creditors would get very little if anything.

You really do need to be sure you can afford your IVA and discuss this with your provider - they should be honest with you and explain. In fact this should have been discussed before the proposals were put forward. If you really cannot afford to continue then bankruptcy is probably the best.

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