bankruptcy compared to iva lump sum ???

[depressed]

hi if i sell my property and cash in my endownment to offer my creditors around 38 p in the £ in a lump sum iva how is this better for the creditors than just making me bankrupt ,would they not receive the same if they were to make me bankrupt ? i don't really understand surely they would be able to get the same amount if they declared me bankrupt because they take all your assets anyway don't they ?? sorry if i sound thick !!!

[pbeck]

Normally creditors would only accept a lump sum IVA if it came from money that you were not already entitled to. They expect a better return from an IVA than from bankruptcy if they are to agree to it, and if you're offering them assets that they would already get in bankruptcy, then they'll reject it.

Philip Beck

Licensed Insolvency Practitioner and IVA specialist

[depressed]

hi ive been advised by my ip its a better deal for the creditors than bankrupcy ,our debt is £180,000 and we are selling our property ,cashing in our endowment and havent got much else that we can do we are offering everything we have ,we don't have any disposable income that could go towards an iva ! really worried .Why would our ip think it will be accepted then ? thankyou for your time .

[Cybus]

I am a little rusty on bankruptcy and so if this info is duff, someone will correct me I am sure ...

The Secretary of State charges a fee for the privilege of a trustee paying money in to the Insolvency Service Account. The first £2,000 paid in is exempt from deduction of that fee, the remainder paid in is subject to deduction of a whopping 17% fee up to a limit of £100,000.

So for instance if you were made bankrupt and your Trustee realised £50,000 from sale of the property and endowment realisations, he would have to deposit that in to the ISA.

The first £2,000 is exempt from deduction of the fee, but the balance of £48,000 in this example would have a deduction made of £8,160. So of your £50,000 creditors will automatically lose out on £8,160 in a 'Bank Charge'.

So in answer to your question, the return to creditors in bankruptcy would be greatly diminished.

Tell it like it is.

[depressed]

thanks so much cybus ,cheered me up a lot ,phew .

[Adam Davies]

Hi
I agree with Cybus
Creditors would receive far more in a voluntary f&f arrangement than in bankruptcy due to the costs.
Philips comments may be true if you are already in an IVA with your property pledged for equity release
Regards
Regards

Andy Davie
IVA.co.uk Spokesperson and Website Manager

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

[depressed]

hi is it also correct that our property would be sold at a loss in bankruptcy through an auction so they could loose out more this way than letting me try to sell it for a good price for the iva ? thanks for your advice .

[MelanieGiles]

Great post from Cybus clearly explaining the additional costs involved with bankrutpcy. Creditors simply do not get the same return under bankrutpcy proceedings from the same level of assets, as the Official Recievers fees and costs are high, coupled with the costs of a private sector Trustee.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp