www.iva.co.uk

Hypothetically if a family of 4 needed to relocate but did not have enough equity in there property to be able to afford the deposit and costs and had loan and several credit card debts and no money left over about mid to end month - would their best option best to sell one of their cars to be able to pay for rent deposit and first months rent as they have no money at all - relocate and then give back the flat with mortgage and secured loan (to render it unsecured) and then either propose an IVA or bankruptcy as they are not sure if one of them will be able to get a job although the main earner has the job up there.

Many thanks,
Lou

It looks a potentially viable game-plan Lou although as always the devil would be in the detail i.e the numbers, I&E, number and value of creditors etc.

I assume that the car to be sold will be surplus to requirements? How much do you think it will fetch, given that in a bankruptcy it would form part of the estate?

Ian

The car would be surplus to requirements as it was brought for the commute to work and then not used as a motorbike was then purchased as it was quicker and more economically viable. The car should should reach between £3000-£4000 although I believe that it is more now towards the bottom end of the sale as they have tried selling it privately previously and haven't got anywhere so it may well have to be sold to a trader!

Would they be able to sell the car prior to the move in order to fund the moving costs and any extra kept aside to form part of the estate or would that be deemed as disposing of the assets knowingly prior to entering into an agreement - or are they better off missing the mortage payment for a couple of months in order to get a rental property - although would that in turn have an adverse effect on their ability to rent through an agency? Which would be the best scenerio, if hypothethically, this was to take place in the future bearing in mind that they have no money as such to fund the rented property and/or bankruptcy costs at present!

You help is as alwasy appreciated - just nice to know what I am talking about if required!

Either way, the maths makes little difference each way. If they genuinely cannot pay the mortgage any longer, I suggest that the house be put on the market for sale immediately, and alternative living accomodation sought, which could be funded from the sale of a car at market value.

They should then inform the secured lenders that they are moving and invite them to take possession of the property. Are they then going to declare themselves bankrupt?

Thank you for advice. if the hypothethical becomes reality then it good to know what road to take as opposed to them stumbling in the dark.

In regard to bankruptcy - Sad to say I don't think that they have much choice!!! but at least it will provide them with a completely new start which may well be what they need.

Melanie's advice makes perfect sense, as always.

The only real issue is the exit route - IVA or Bky. I would suggest that will pretty much depend on whether the latter will impact in any way on the job of the main earner.

Ian