MBNA Rules advice

[MelanieGiles]

It is quite normal for other creditors to expect associated creditors to opt out from receiving dividends out of an IVA - and your IP ought to have warned you about this. It is also common knowledge that Northern Rock expect to see six year proposals - and again the Ip ought to have mentioned this. Most of my clients take the view that if they are paying for five years, then six is usually fine too - if the IVA is worth enough to them.

[Adam Davies]

Hi
NR should consider the options available.
45P in the £1 or several pence in the £ in bankruptcy.
How can you increase the dividend from 45p to 70p ?
What would Jo Public on the street say if they knew that NR rejected an offer of 45p dividend resulting in the debtor declaring bankruptcy and producing only a 5p dividend,for example?

[MelanieGiles]

Presumably by removing the father's debt and paying for an additional year?

[Joozee]

Hi and thanks for your responses...The extra year was explained to me and i've not really got a problem with that, as you say five years/six years is not a major issue.

My Dad is retired and needs the money back, I was paying him back £350 a month over 5 years so it's quite a sum to go completely missing. So obviously I would rather not leave him out completely.

The extra year would basically put my contributions up to 55p in the £1. I live in a shared equity house which has no equity in it of mine so making me bankrupt would get the 13p in the £1. Seems a no brainer to me but I suppose I do owe them a lot of money.

My IP is being good and helpful keeping me informed but they are not shifting.

[MelanieGiles]

If you go bankrupt, you will also not be allowed to pay your father back - but you will be left with disposable income of your own which could make some form or repayment - I doubt it would stretch to £350 though!

[ianmillington]

A few quick questions:

I assume your proposal provides for your dad to be a creditor rather than continuing to get so much per month? Can I assume his claim is for £21k?
What is your contribution into the IVA, and what percentage of your total debts is represented by your dad's claim.

If at all possible, I would be trying to find some middle ground here, because if you go bankrupt I think your dad will be the biggest loser as you won't be allowed to pay him anything at all.

Ian

[Joozee]

Yeah no problem...I aint got all the details with me now and it's complicated because I have a good job but i travel 100 miles a day round trip to work.

I owe my dad 18.5k and he is a creditor yes so has agreed to getting less than that. My total debt is aropund 67k, i owe Northern rock about 19k, I earn 2300 a month and the contribution on the table is 625 a month. I will have 3 kids in 2 months time and my wife is not working.

I'm trying to find some middle ground, my initial proposal was 575 so i have increased it to 625 and maybe could squeeze another 25 off my living costs. I can't cut my dad out of it though, it doesn't seem much of a compromise.

[ianmillington]

Hi again

Am I right in assuming that your dad is merely going to get paid as a creditor i.e by way of IVA as opposed to being provided for in the I&E?

Ian

[MelanieGiles]

I can't see them relaxing their view of your father's position, but I sincerely hope your IP manages to persuade them that this is fair and just. Why should your Dad suffer because he lent you money in good faith?

[Joozee]

Yes Ian...there is no provision for him in my IandE he has agreed to be dealt with as a normal creditor so he will only get back half of what i paid him in the agreement.

Like I said...to agree to the IVA without him as a creditor means I can't afford to pay him back anything at all for 6 years.

I suppose if the IVA fails and I am forced to go bankrupt, it might be over quicker so i could start to repay him again sooner.

I was a compulsive gambler, he has helped me so much to quit that it would be a huge kick in the teeth from me to agree to exclude him from the IVA. Maybe he would agree to it but it would certainly become a pressure on our relationship which has been at breaking point on a number of occasions and only just survived.

[ianmillington]

Yes, all too often creditors quite blindly expect associated creditors to take a back seat, possibly on the wrong assumption that they can afford it.

In view of what you say, it would appera that the only concession you can really make is to extend the IVA still further, which begins to sound a bit daft.

However, can I ask, the Northern Rock debt is presumably a Personal Loan. What was the initial period of the loan, and how long does it have left to run?

Ian

[s.b.w]

MBNA are the worst that I dealt with when setting up my IVA.

I was actually in hospital for a period during the set up and they called the ward! No joking, they got the nurse to put the call through to my bed!

This was 2 weeks before the proposal meeting and all they had to say was "this IVA will adversly affect your credit rating and that there was still time to sort something out directly with MBNA"! As if my credit rating hadn't already been effected!

Fingers crossed for you!

Shaz x

[Joozee]

I was thinking whether I should suggest to extend the payments even further, say another year.

The Northern Rock loan was for 120 months of which i'd made 23 monthly payments.

[ianmillington]

I suspect that might have something to do with it. Some creditors are reluctant to accept an IVA which is expected to run for a much shorter term than the loan they entered into. In this case the loan has 8 years to run. If you wanted to reach a deal with your dad still in I think the only way you will achieve it would be to offer say a 7 year IVA. I can understand you having concerns about this although NRs response to that would probably be that you were prepared to commit to a 10 year loan, which itself has 8 years yo go.

What do you think?

BTW you mention you have a good job. Forgive me if you have discussed it elsewhere, but would it be harmed by a bankruptcy?

Ian

[Joozee]

Yeah i can see what you are saying, I'm discussing the longer period with my IP at the moment over email as i'm at work. It's reasonable but 7 years seems such a long time to be in a legal agreement. Surely it's almost like a DMP as i get nearer to paying back the total less interest?

I have a feeling bankruptcy would not affect my Job, I produce computer games. I've not directly asked but therte is nothing in my contract, nor have I ever been asked about my financial situation.