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

Moderators: TalbotWoods, JaneClack

By paulb
#3398 hi
just been looking through this forumas i am trying to decide between an iva or bankruptcy.i have been in touch with fcl and been advised tothink about these two options.
i amforty three thousand pounds in debt with little inthe way of assets one caravan i paid 5000 for and my car worth about 2000 that i use for work.
iwouldhave about 300 pound spare after all living expenses .any advice and or experiences would be helpful thanks.
User avatar
By JaneClack
#3401 Well, unless you are living in the caravan that will go as it would be regarded as a realisable asset in both scenarios - car would be OK in IVA but OR in bankruptcy might want some money in compensation as cars over £1500 generally are at risk. So if you wanted to hang onto that you would need to look at a debt management scenario.

IVAs are useful when you have a home you wish to protect - although creditors want compensation for the equity; if your job prohibits bankruptcy or you do not wish it to appear (at the back in the legal notices!) in the paper. Debt management is an option when you wish to pay back the whole debt and totally exclude all assets but no-one can ever guarantee that interest and charges will be frozen and if it is going to take over 7 years or so to repay theoretically, the other options should be considered.

We would be grateful for other people's opinions here as anecdotal evidence is usually compelling!
#3419 Hello

Here's some anecdotal advice:

- well as Sarah says debt management could be an option, but even though you have a relatively high surplus income, it would still take you close to 10 years to pay off all your debts ( and that's asuming interest and charges are cancelled/frozen), so personally speaking I wouldn't go for that one.

- with an IVA you'd pay ALL of your surplus income for 5 years, then any debt after that would be written off. The IVA would stay on your credit file for 6 years from the date it began, so although it may not be quite as 'damaging' as having bankruptcy recorded on there, you still might have problems obtaining credit again for a few years.
The advantage of your IVA, of course is that you'd be able to keep your caravan which is possibly an 'assett' you'd lose in bankruptcy.

- if you go bankrupt, there'd be an announcement in the paper and in 'The London Gazette', there are certain jobs/offices you cannot hold when bankrupt, and you'd have to check very carefully that it would not affect your job or where you live (some employers/landlords will not allow bankrupted employees/tennants).
On the plus side, your debts would be written off, you may have to pay an IPA (Income payments agreement) for up to 3 years - BUT the insolvency service are A LOT more generous with what you can live on than any of your creditors would be, and would not expect you to pay all your surplus income.

So in summary, I guess it depends on whether you've got assetts or a job to protect?
User avatar
By JaneClack
#3423 Just to support Sadnskint - a fact that I discovered after ringing two of the CRAs. An IVA goes onto the credit file for six years after it has been approved - it doesn't stay on for another six years after it has been satisfied. I contacted them as we were not sure either!

So bankruptcy - on credit file for six years in total; IVA for six years in total.

You could not guarantee that the caravan would be safe in an IVA as it would be regarded as a realisable asset.