Impartial advice?

[steviebluenose]

I am still confused as to whether I am getting impartial advice on whether to get an IVA.

I cant seem to find anyone who will talk in favour of Bankruptcy for my situation (£57K debt, no equity on house,£3K+ take home pay per month, £1600 mortgage).

People have told me that the government scheme means you shouldnt need to pay anyone for advice in setting up an IVA. Is that true? Does the IP take a percentage of the agreed monthly fee?

I would like someone without a vested interest, to tell me whether bankruptcy is a viable option, or whether an IVA is the best option. I understand some of the disadvantages of Bankruptcy, but I can also see that other people have taken bankruptcy,kept their home, and got everything sorted quicker .... and ended up with more money in their pocket after a few months, rather than a few years ...

Sorry if this is a recurring question, but I dont know where to go for impartial advice......

[Cybus]

Basically, someone in your position should have each of the available options explained to you. This should include the respective advantages and disadvantages of each of those options.

It is then for you to decide on what course you feel best suits you.

In discussing those options, the other person needs to be given as much information as possible.

The property for instance jointly or solely owned?

Whose name appears on the mortgage, joint or sole? If sole I think, from the perspective of an IVA, creditors may have issues with such a high proportion of your income being paid to secured creditors.

Without knowing anything about the property and who lives in it / who owns it / the level of negative equity or who pays the mortgage, I'm afraid it's nigh on impossible to offer advice on the information provided. How many people have you spoken to? What disposable income do you have?

You seem particularly keen on the idea of going bankrupt. I wonder what your thinking is behind it? If you feel you have not been given enough information about bankruptcy, have a look here

http://www.insolvency.gov.uk/bankruptcy ... ruptcy.htm

[steviebluenose]

Thanks for the reply.

I dont particularly want to go bankrupt but I would like to see if someone could give me advice that I can be sure is 'impartial' and I am not sure it is at the moment.

My wife and I have joint ownership of the house/mortgage. And i get the feeling that as we have no equity on the house (the house is worth about £230K, which is the same as the mortgage) then we would keep the house whichever option we took.

Also I get the feeling that if we went BR, then we would be debt free in 1yr (rather than 5) and then we could live off our income without having to give up £300 to an IVA every month for 4 extra years.

Either way we wont be allowed credit, or more importantly we dont want any credit. Although long term we would be able to get credit again easier if we went for IVA.

I have a reasonably secure job, and we have a reasonably high income of £3K per month, so we are luckier than lots of people on this forum.


I think that our options seem to be pay more for longer in an IVA vs. Not having the stigma of going publicly bankrupt.

But all I want is to keep my family together in our house (if possible).

Can anyone reassure me that the advice I am having is 'probably' impartial? The guy I am dealing with has been fabulous so far this week.

[Skippy]

Can I just point out that if you do go BR and you have more than £100 surplus income a month you will get an Income Payment Agreement. This means that you would pay a percentage of your surplus income to the OR for 36 months. There is a table in my blog showing how much you would be expected to pay.

[Cybus]

If you have only spoken to one person, then my advice would be to seek two or three other opinions. You will not be able to gauge if the advice given to you already is impartial unless you do that.

In bankruptcy, although the house might have negative equity, the Trustee will still seek to realise your share of the property. That does not mean losing the property! Usually, your wife might be expected to make an offer to purchase your interest in the property. If you look at the link I posted above and then at the booklet 'What Will Happen To My Home?'

I get the impression that, if at all possible, you don't actually want to pay anything back to the people who have loaned you the money?

I can't speak for lenders and how they view lending to people who have been in Bankruptcy or an IVA.

Common sense might suggest that they would look more favourably on you if you had made an attempt to pay them something back, say through either an IVA or debt management, whereas in bankruptcy you chose to walk away and make no attempt to repay the amounts you borrowed.

If I were a lender in that position I know how I would consider a loan application. But I am not the bank and as we have recently discovered, the banks have been quite irresponsible in their lendings over the last few years. Now the taxpayer is having to bail them out. Surely their attitude to loaning money must now change and they are going to be a lot more cautious?

[PoorbutHappy]

Yeah IP's take fees from what you pay them, they usually take the form of a set up fee and an amount per year. They form part of the IVA agreement which the creditors agree to. If they dont like them, they will modify them.

We dont own our own house so have never had the mortgage issue.

However I seem to recall:
1. Have you switched to interest only? Dunno if this is still viable but used to be wanted?
2. I seem to recall something about how much income is "reasonable" to go on mortgage? £1.6K might be seen as high? Especially if you could rent somewhere for less?

You can always shop around for a IP, and go with whoever you feel best with (see www.iva.com - has lots listed, and reviews etc).

At the end of the day you may have to live with your decision for 5 years.

[plasticdaft]

Why not go into a citizens advice bureau?? Thats the 1st place I went for guarentee'd impartial advice. They can look at your income and expediture and discuss your options. The only pain is these places are busy,I waited for almost 2 hours to speak to someone but boy am I glad I waited. I havent looked back since following their advice. Give them a go,I know what you mean when you say that you dont know that companies who would gain from you being in an IVA can be seen as impartial. Ip firms are run to make profits,that can never be forgotten.

Good luck in whatever action you take,but please make sure you do take some action because burying head in the sand only makes things worse!!

Paul.

[steviebluenose]

Thanks everyone.
WIll go to Citizens Advice tomorrow.

Steve

[kallis3]

Whoever you speak to will not charge you for initial advice. All IP companies will tell you of all your options and discuss them thoroughly with you.

Just give one or two of the ones on iva.com a ring and see what they say.

[Andrew Graveson]

Hi steviebluenose,

In bankruptcy you are likely to have to pay what you can afford towards the debts for three years.

In an IVA you are likely to have to pay what you can afford towards the debts for five years.

In a DMP you will repay the debts for as long as it takes to repay the debts.

In terms of your credit rating now and in the future there is little difference between bankruptcy and an IVA. Both will be serious given the current credit environment. A DMP will affect you but in a less certain but possibly less serious manner.

In terms of certainty of arrangement you will know where you stand better in an IVA or bankruptcy better than you will in a DMP.

In terms of your home an IVA or bankruptcy will consider the value of your home now and towards the end of the arrangement. In a DMP your home may be dragged into it if a creditor seeks to persue that path legally but otherwise it may be left out.

As with others who have contributed to this post I'd suggest you speak with people from a variety of backgrounds so you can make an informed decision that you feel comfortable with.

[MelanieGiles]

One problem that you are likely to encounter if you pursue the IVA route, is the high ratio of your mortgage payment compared to your income - ie over 50%. The mortgage payment you are making, will be compared to the equivalent cost of renting a property in the same locality, abd this could provide cause for rejection votes from some of your creditors.

An insolvency practitioner will be able to advise you on this particular aspect more thoroughly, but this might make a DMP or even bankruptcy proceedings more attractive, where there appears to be little concern over the level of secured borrowing.

[ianmillington]

Take advice from a couple of sources. Don't give your business to anyone who cannot explain to you the various options available to you. If you only get one option explained, or if the explanation of other options is perfunctory, then you are probably speaking to a telesales person rather than an advisor.

I would expect the CAB to be impartial, frankly the only non Insolvency service people who are formally qualified in insolvency are Insolvency Practitioners. As a consequence there may be some areas where a CAB advisor might not be able to properly answer all your questions.

When speaking to an insolvency firm ask to speak to one of the IPs or senior management. The response will be illuminating!

[MelanieGiles]

That is good advice from Ian. If you cannot reach the IP - or at least one of his/her senior managers at the outset, it is likely that this will prove very difficult throughout the IVA - and with some things only the organ grinder will do!

[steviebluenose]

Is it normasl to pay a couple of months of fees (£259 each month) before the IVA gets agreed and comes into effect?

[james.c]

I had 28k of debt, a house with no equity and i owned nothing, i went through an IVA, just done a full and final settlement.

If i could go back and do it differently i would go bankcrupt