Debt Questions forum. General questions on debt issues.

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By ed1979
#1391 Hi,

With regard to an IVA, I understand that your creditors pretty much want as much money as they can from you - and that after you have paid your essential bills (rent etc) every month, you can pretty much only keep what the Bank of England states you require to live on each week.

Does this mean you have only this ammount of cash to live off each month for the duration of your IVA? As from the I&E form things such as social life, smoking etc dont count as essential expenditure - meaning even if I started to make a lot more money, I would still just be living off the same ammount each month with the extra cash going to creditors?

I'm just thinking no holidays or weekend for the next 5 years or so.

Hope this makes sense.

cheers
ByDavidc
#1392
ed1979 wrote:Hi,

With regard to an IVA, I understand that your creditors pretty much want as much money as they can from you - and that after you have paid your essential bills (rent etc) every month, you can pretty much only keep what the Bank of England states you require to live on each week.

Does this mean you have only this ammount of cash to live off each month for the duration of your IVA? As from the I&E form things such as social life, smoking etc dont count as essential expenditure - meaning even if I started to make a lot more money, I would still just be living off the same ammount each month with the extra cash going to creditors?

I'm just thinking no holidays or weekend for the next 5 years or so.

Hope this makes sense.

cheers

Well I don't know where the Bank of England comes into it? You living costs are what they are. However if they appear to be excessive they would be scrutinised and may not be accepted. But they will want all of your surplus income for the next 5 years . That is why unless you have property to protect or your career is in jepordy most of us opt for bankrupcy wherebye you will only have to pay via IPA or IPO 40-50%
of your surplus income for 3 years.
David
By keepchinup
#1394 Hi,

I just want to point out that this percentage I keep hearing that an IPA or IPO will be 40-70% of disposable income will be taken, isn't always the case. My IPA started out at 80% of disposable taken, which I managed to reduce slightly. Granted, I did have quite a bit of disposable left. In the case of bankruptcy the OR has a chart he consults based on the amount left.

Don't forget you can and must make provision for standard things you probably don't currently spend money on now - 'cos of your debt - but would do if you were leading a "normal" life. Examples include monthly provision for dentist, optician, prescriptions, parking, train fares if necessary for work. I believe a small monthly provision for socialising can be allowed. Smoking and booze is definitely out-of-the-question. A small saving towards a UK holiday might be allowed - it does everyone good to get away, not just people who don't have debt!

Don't forget your TV license, Pay-As-You-Go mobile phone (for security after all), and an occasional hair-cut.

All the normal stuff a good debt-adviser would tell you to mention.

Hope this is helpful.
By ed1979
#1397 Thanks for the quick response.

Any ideas on how old a loan or credit card has to be in order for it too be considered for bankrupcy?

only ask as I have a loan and CC that are less than 6 months old.
By keepchinup
#1398 I don't think there is an age limit. As yours are "new", the only problem you might have with bankruptcy is the Official Receiver thinking you were reckless in taking them out if you knew you couldn't pay them. In any case even then all you'll get is something called a Bankruptcy Restriction Order (BRO) which means although you still get discharged after a year, the conditions (such as no credit >£500 without telling creditor) remain for the specified period. BRO's can by anywhere between 2 and 15 years. I believe the higher 10-15 year stuff is for criminal acts, such as Chairmen of big companies deceiving workers and shareholders.

They can only consider reckless behaviour since April 04.

The Insolvency Service is quoted as saying they expected between 7-12% of bankruptcies will result in a BRO.
ByDavidc
#1399
ed1979 wrote:Thanks for the quick response.

Any ideas on how old a loan or credit card has to be in order for it too be considered for bankrupcy?

only ask as I have a loan and CC that are less than 6 months old.


Everthing goes in the pot, however new loans or agreements will be given a degree of scrutiny as to where the money went and if when you applied you were aware that you were insolvant. If so you may be considered to have been reckless & or culpable and a BRO may be made.
David
ByDavidc
#1400
keepchinup wrote:I don't think there is an age limit. As yours are "new", the only problem you might have with bankruptcy is the Official Receiver thinking you were reckless in taking them out if you knew you couldn't pay them. In any case even then all you'll get is something called a Bankruptcy Restriction Order (BRO) which means although you still get discharged after a year, the conditions (such as no credit >£500 without telling creditor) remain for the specified period. BRO's can by anywhere between 2 and 15 years. I believe the higher 10-15 year stuff is for criminal acts, such as Chairmen of big companies deceiving workers and shareholders.

They can only consider reckless behaviour since April 04.

The Insolvency Service is quoted as saying they expected between 7-12% of bankruptcies will result in a BRO.


You beat me to the post.
But I think we are singing from the same songsheet.
David
By ed1979
#1402 thanks for all this,

I just got to thinking about IVA, and the thought of trying to keep as much surplus income as I can for the next 5 years - trying to justify living cost and the rest would be a real stain - specially if i do get a well paid job and see all my cash going the wrong way.

Also as I have no house, car, or anything of value I'm thinking maybe bankrupcy would be the key, as the restraint of backruptcies doesn't really put me off as long as i can get my life sorted out.

Thanks again......
User avatar
By chillychicky
#1417 ed,

Get some free unbiased advice from your local CAB or speak to the National Debtline and/or the Consumer Credit Conselling Service. & make sure you get a 2nd, maybe 3rd opinion. I too thought an IVA was the way to go (because of my career), but having now looked into it further it is not.

IVAs are very restrictive. You have to give them 100% of your surplus income as well as bonuses/OT within the IVA (you have to send your payslips so there's no getting out of it!) I spoke to Shaws (an IP) and was told that I was not able to have a social life, newspapers, gym etc. You are only allowed basic living costs. There is no flexibility so you need to know that your circumstances are not going to change dramatically in the future (move home, kids etc). If you cannot honour the payments in the future, the IVA will fail & you will most prob be made bancrupt anyway. This is the price to pay for your creds writing off whatever is left of the debt at the end of the 5 years.

Remember, there are only 3 options - DMP, IVA or the big B. All have their pros & cons depending on your circumstances. Just make sure you go into it with your eyes open & get as much advice as possible.

Good luck

:)
User avatar
By MAT_FINK
#1420
Davidc wrote:
ed1979 wrote:Hi,



Well I don't know where the Bank of England comes into it? You living costs are what they are. However if they appear to be excessive they would be scrutinised and may not be accepted. David


Expenditure is often measured in the industry against figures agreed with the British Bankers Association which in turn bases its figures on the Office on National Statistics reports.