Am I eligiable for a IVA

[zach.s]

Hi,

I have various debts of around £30k. My incoming is around £17,000 a year. I live with my mother in a council house and pay £450 a month rent. I have a car to get to and from work and my petrol for this is arount £200.00, as you can see this does not leave much for me to pay all my debts. They are only a couple of my out goings. Am I eligiable for a IVA and if so is there a rough estimate of how much I would have to pay back each and every month.

[go_4_broke]

Hello Zach

What you would pay into an IVA is your disposable income for the period of the IVA, normally 5 years. The combination of the available income and the makeup of the debts would determine whether you would be able to get an IVA.

You would probably be better off in bankruptcy if you could stomach it as you will only need to pay off around 75% of disposable income over 3 years, and you have no assets to lose.

You could probably keep your car if it was essential for work as long as it wasn't worth too much, if it was you may have to sell it and get a cheaper one.

Best Regards Simon

[MelanieGiles]

Hi zach and welcome to the forum

The first stage to considering whether an IVA is an appropriate solution for you is to work out what exactly you could afford to pay from your disposable income. This involves listing all of your income and deducting all of your expenditure - both known and contingent, leaving a little for sundry or unexpected expenditure.

A licensed insolvency practitioner can help you to work this out, and can also explain other options to you including bankruptcy proceedings - which could be a better option for you financially given that you appear to have no assets of material value. Alternatively a DMP could also work if you feel obliged to pay creditors back something - and importantly can afford to do so over an extended period.

[go_4_broke]

Hullo again

I'm working on a program to calculate just these comparisons, so here's what it tells me based on;

1) Disposable income of £300/month

DMP: Around 8 years
IVA: Dividend about 50p in the £
BR: Pay around £230/month for 3 years

2) Disposable income of £250/month

DMP: Around 10 years
IVA: Dividend about 43p in the £
BR: Pay around £190/month for 3 years

3) Disposable income of £200/month

DMP: Around 13 years
IVA: Dividend about 34p in the £
BR: Pay around £150/month for 3 years

You can see that at the £200 level the available dividend is getting into marginal territory for what is acceptable for an IVA but this also depends on many other factors.

You can also see clearly what Melanie means by an 'extended period' in relation to a DMP!

I should also add that these figures may be completely wrong so please don't rely on them and I would welcome and comments/cross-checks.

Best Regards, Simon

[MelanieGiles]

Technically, Simon, there are no longer hurdle rates for IVA's - unless you have HSBC as a material creditor, but my personal view is that a return of less than 20p in the £ has to be questionable on grounds of viability.

And I would personally work on the bankruptcy payments being 50% of the disposable income - but this is again entirely at the discretion of the examiner concerned - and there appears to be little consistency within the Insolvency Service on this point.

A very useful comparison - and one which could be taken further into a comparison table for a range of differing debt totals as well. Do you want to volunteer for that job!!

[go_4_broke]

Thanks for that Melanie !

Unfortunately having been away from the forum for some time I am out of date with some of the more recent developments in IVA's and other areas. Last time I looked IVA companies were getting their knuckles rapped for making claims of achieving write-offs above around 60%!

Also I am surprised at the 50% figure, it seems very low. I was working on a figure of around 60-80%, the upper figure being for single people and the lower for those with family commitments.

However it is easy to plug these figures into the program and allow a range to be used. Once I have got the basics sorted out it would certainly be possible to produce a comparison table for various purposes. I would also hope to make it available on the net in some way so folks can plug in their own numbers.

In the meantime a few folks on the forum may get to be guinea pigs !

Best Regards, Simon

[MelanieGiles]

That will be very useful, and I for one will use it in my own practice as a means of demonstration of the effects of the various options.

[go_4_broke]

No problem Melanie, I will keep you posted as to progress.

If you were interested in having some input to the program, I can provide a table of the business rules used and would be grateful for any comments you may have.

I envisage the program ultimately working at several levels and has the potential to be customised according to the practices of a particular organisation and it is a 2-way street.

I don't want to post the details directly on the forum at this stage but if you have a suitable e-mail address I can send them thru, directly or via Andy/Admin ?

Best Regards, Simon

[MelanieGiles]

Simon

Happy to help where I can. You can get me via my website.

[go_4_broke]

Many thanks Melanie.

[zach.s]

Hey guys,

Thanks for you help in my dlilema. You have given me some things I need to consider, in order for me to make a descion for the best.

Once again Thank you.

Zach