www.iva.co.uk

My husband's IVA meeting is on the 25th, already had rejection letter from Cutoms & Excise along with list of properties to rent in area. They say husband's mortgage and secured loans are excessive and he should sell and rent. I though IVA was so you don't lose your property, no equity in property but we don't want to lose it, 3 kids settled. Lady says they want a better proposal, husband offered 40p to pound, with releasing any eaquity in 4th year. Proposal showed IVA more beneficial to them than Bankruptcy. Was this a letter to frighten you especially with property lettings?

Hi

Unfortunately whilst the general belief is that an IVA won't usually need sale of the home, that really only applies to the (overwhelming majority of) consumer cases. Basically that is what the new protocol provides.

With HM Customs & Excise having the power to approve or reject, you clearly have a non-protocol case. The reality is that HMRC generally drive a very hard bargain because they are like no other creditor. Unlike the banks, who won't lend you another penny, HMRC take the view that simply by living and working (particularly if you trade)in the UK you automatically incur further debt to them. If they make someone bankrupt it is generally for one reason only, to put the trader out of business and stop the debt continuing to accrue.

Whilst it may sound harsh, it would seem that what is being said to you by HMRC is that the IVA is only viable if you sell the property and rent. If you cut down your outgoings, there is then a better prospect of payment of contributions and (crucially from their point of view)payment of future tax liabilities on time. I get the feeling that they are saying that unless you do this there is a risk of incurring further tax debt that can't be paid.

I'm not going to say that this was foreseeable from the start as the position is far more sophisticated. So I get get a feel for this can you let me know:

What does your husband do
How much is the contribution
Total debt and %age owed to HMRC
How far back does the HMRC debt go
Value of House/ secured debt/monthly amount paid on mortgage.

Importantly, has the nominee made any suggestions on the matter?

Thanks

Ian

Ian makes some interesting points - from my experience HMRC simply want to see that you are putting best feet forward, and if your mortgage and secured loan repayments are excessive, perhaps they have a point that you ought to consider selling and moving into cheaper rented accomodation.

They are entitled to their opinion, and so are you to yours. Once they have a bee in their bonnet about something, they rarely budge, and if you have equity in the property (which may be unlikely given your secondary lending), then bankruptcy might also be an option - although this could affect your husband's ability to trade.

You also have the option of offering a debt management programme, but again HMRC can be awkward about accepting ongoing repayments, and may be likely to petition for your husband's bankruptcy as an alternative. Best to seek the advice of your own IP who has more detailed knowledge of your case than can be shared properly on the forum.

I agree that these things ought best to be discussed in private. However, Melanie, It seems that the poster has not had a proper explanation ("a better proposal" can be taken a couple of ways if you know what I mean) and I wonder whether the case is being handled by a specialist.

Ian

Yes - there could be several meanings to that, I took it that a better proposal meant more money to be derived from housing cost savings, but maybe they just don't like the proposal style!

And we really do need those earlier questions you asked answered to be able to give any sort of indication of a suggested way forward.

I assume we will hear something tommorrow. No doubt we will speak again then. Night!