Questions you have before making a decision to go Bankrupt and the Bankruptcy process

Moderators: TalbotWoods, JaneClack

By ricardot
#219278 Hello all,
i am currently 20 payments into an iva, i pay £510 per month in to it and am struggling to make these repayments and am running out of money after 2 weeks after getting paid.

i have asked for a variation meeting and have been told that my iva would be extended by another 12 months.

even after the possible reduction i would still struggle so i am wondering if bankrupcy would be an option.

i have no assets, car worth less than £2000 and rent where i live.

i read the terms of my iva and it states that if i miss 3 payments, my iva will have failed and they will automatically file for bankrupcy on my behalf.

i would like to do the bankrupcy procedure myself as i feel the iva company could hinder my bankrupcy if they did it.

any advice would be much appreciated

many thanks

r.t
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By JaneClack
#219282 If you have no assets then bankruptcy - unless it would affect your job or where you live - is the quickest and cheapest way of getting out of debt. You should have discussed this before any IVA was started and this should have been explained.

If you do wish to go bankrupt you will probably have an income payments arrangement to make but these only last for 36 months and would only be a proportion of your surplus income.

Talk to your supervisor - if they cannot vary the terms to suit you then petition for bankruptcy!!!
By ricardot
#219284 HI,
AS REGARDS TO GOING FOR BANKRUPCY, CAN I STILL PETITION FOR BANKRUPCY MYSELF OR DO THE IP'S DO IT AS IT STATES IN MY PAPERWORK I HAVE OFF THEM?
ID RATHER DO IT MYSELF BUT JUST WONDERED WHERE I STOOD..
RT
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By TalbotWoods
#219287 Hi RT

Before you can petition for bankruptcy you IVA must have failed, if it is still legally running then the court will reject your bankruptcy application.

Normally your IVA supervisor will fail the IVA after three months of arrears, however, some are not doing this for a further 2 - 3 months, so you need to make sure this has happened, before doing the deed.

With regards to who pays, thats a catch 22 question, in your IVA it will say the IVA providor will do this for you, but dont be surprised if they say that there is insufficent funds in the pot to pay for your bankruptcy, so expect to have to pay for this yourself, as many others have had to do!

Tim
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By TalbotWoods
#219310 Following on from a conversation I've had since my last post, what I have said is technically what you are meant to do, that is before you enter into bankruptcy you SHOULD have your notification that the IVA has been failed.

However, it appears that this is being less rigidly adhered to and people are entering bankruptcy without the formal notification, leaving the OR to sort everything out.

A possible reason for this, is that so many people were 'talked' into an IVA when the last thing they should have entered into is an IVA, that they just cannot even meet minimum living standards. So it is very possible that we will see more and more people accepted by the County Courts for bankruptcy, without the correct notifications, but you should be aware that the Judge can bounce the petition!!

Tim
By ricardot
#219311 HI TIM,
THANKS FOR YOUR REPLY,
WHEN YOU SAID SOME JUDGES WERE BOUNCING PETITIONS, WAS THAT EVEN WITH THE CORRECT NOTIFICATIONS TO SAY THAT THE IVA HAS FAILED?
LIKE YOU SAID, I WAS TALKED INTO TAKING ON THE IVA AND THERE WAS NO MENTION OF BANKRUPCY WHATSOEVER, I ASSUME THE IVA COMPANIES MUST MAKE A GOOD PROFIT FROM THEM...

THANKS

RT
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By JaneClack
#219313 If you were not told about bankruptcy before you started your IVA then you have very very good grounds for complaint to the Ombudsman - so write and make your complaint to the IVA company.

By law they have to discuss bankruptcy with you and you should have been sent an R3leaflet entitled Is an IVA right for me? - and had to sign and date the last page and give to the insolvency practitioner. It is only in the last year or so you have not had to send it in but you still have to read and there should be a discussion about this and bankruptcy during the setting up stage.
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By TalbotWoods
#219315 Hi RT

If you have the correct paperwork the judge wont bounce it, and as I have said there is now more and more incidental evidence that, even without the notice of failure, it seems more judges are accepting.. However, you do need to be aware that without the correct paperwork the judge COULD bounce it back to the IP.

Sarah has brought up a very good point in her post, a LOT of IVA companies talk people into IVAs rather than discussing the bankruptcy option, as IVA's bring in a LOT of money for them, whereas bankruptcy will bring in now't.

Unfortunately, to an extent there still is (and certainly was) a culture with some companies either not discussing or 'persuading' people not to enter into bankruptcy (even if this was the correct and often the ethical route) so that the companies could profit from your loss, a tactic I absolutely hate. It has been known for some IVA companies to talk families on low incomes into IVAs, leaving teh whole family less to live on than a single person on basic JSA.

Any rate 'nuff said me thinks

Tim
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By Ransid
#219343 If the IVA has not failed I understand most DJ's will, at a minimum, expect there to be some information from the supervisor about the prospect of the IVA continuing submitted with the petition by you, or will refuse to make the order without such being provided (if you are lucky they might simply adjourn the hearing of the petition to a later date).

Again - refer back to Sarah's comments - it may be that the trustee in bankruptcy would assess you as being eligible to make an IPA payment from your earnings (and this could last for 3 years)

You would be best served by doing some sums about which would be the best route for you.

If the supervisor is proposing extending for another year (on a reduced sum) then I'm assuming he has acted professionally and done some calculations based on your income and expenditure to confirm that you can afford that, rather than thinking about protecting his fee income. If he hasn't you should ask why not - especially if you are clearly indicating to him that you can't afford that, and think about complaining to his authorising body if so.

Any amendments should be showing why it would be beneficial to the creditor for you stay in the IVA (eg they get a years worth of reduced premiums, or nothing in a bankrutpcy!)

Hope that helps
By ricardot
#219361 hello again all, thanks for your helpful replies..

this morning i spoke to the national debt helpline and am now under the impression that if and when my iva fails i will receive notification that it has failed from my ip and it is very unlikely that they will petition for bankrupcy on my behalf as it will cost them money so i will need to do this myself after i have the notification.

i hope i understood this as being right, if not, feel free to correct me and add anything extra that i may need to know.

many thanks, richard
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By TalbotWoods
#219363 Hi Richard

Yes your understanding is correct.

Tim