sell your property offer lump sum & its rejected

[depressed]

we are proposing a lump sum iva from the sale of our property when it eventually sells offering around 36 p in the £ but what do we do if they reject ? and what would happen to the money we are offering ? could we make offers to varoius creditors who might have agreed to the iva ? or would we go on a dmp ? justa bit muddled ,we obviously want the debts to be paid or its a waste of time selling our home .
any advice would be great .
bankrupcy is not an option for my husband as he is self employed and wants to protect his business .However i could go bankrupt as all i have is equity in our home but i think this would be worse for our creditors as i have heard its more expensive to go bankrupt so they would receive less am i right ? thanks guys .

[Cybus]

I wonder what your plans are for the future ... as regards somwehere to live? Would you be looking to downsize or rent? Have you already consulted an IP and is their advice, after considering ALL the alternatives, to go for an IVA?

It is not necessarily more expensive to go bankrupt. However if you do go bankrupt, the amounts of money realised for creditors can be greatly diminished. By way of example, I have cribbed from one of my previous posts ...

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, 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 I believe it is fair to say that creditors lost out in quite a big way in that example.

If the IVA proposed is based upon the sale of the property and the proposal is rejected, then the simple answer is don't sell the property for the time being.

The problem with selling the property and trying to do informal deals with creditors is that those deals are not legally binding. It only takes one creditor to upset the cart and you could find yourself in a worse position. No matter what you do, it is going to be better to do it in such a way that legally binds ALL your creditors.

Always treat your creditors equally.

[MelanieGiles]

Great post by Cybus with good practical advice. Just want to mention that on top of the Insolvency Services' fee, there will be the Official Receiver's costs, and Trustee's fees, so overall the costs could end up being in the region of £20,000, which would really eat a whole into the return to creditors.

I have just returned from the IVA Forum meeting in London, and I will prepare a detailed blog later on listing the main points of the new IVA protocol, but suffice to say that it seems most likely that more IVAs will be accepted into the future, as creditors will have to give very good reasons as to why they are rejecting. I am very encouraged by the news, and so long as you can demonstrate you are making the best possible offer, rejection should not be something to worry about unduly.

[depressed]

hi cybus & melainie thankyou for your valuble advice ,we are selling to rent from the council as we have 3 small children and this place is one bedroomed which we staying in for so long to try to pay back to creditors as much as we could ,we owe around £180,000 and even though my husband is self employed payplan offered us a mortgage of another 40,000 to move house with ??? !!! which we decided against as we havent had any credit at all now for 4 yrs and we knew we could'nt really aford it ,but we have paid into a dmp ,but as its such a large amount we owe and works not always there we have been struggling ,this is why amongst obvious reasons of the house been over crowded that we decided to offer our home as lump sum payment .
I understand what you are saying as far as treat creditors equally but the house will be sold regardless as we can't stay here and the council are rehoming us due to over crowding so we can't afford to pay rent and the mortgage !!
if the lump sum was'nt accepted would it be fair to offer my half of the equity towards my own bankrupcy ? as i only receive the usual child benefits etc ,and could my husband then use his half of the equity to either offer a larger amount as a lump sum iva on his own ,as he owes much less than me ,then his offer would be almost 50p in the £ his debt is £68,000 and he would then be offering around £35,000 .
i know i'm babbling on ,but really just want things sorted out so we can try to live normally this is hanging over us at the moment and i want to be as fair as i can all round.
the other option is if i go bankrupt and he has a dmp but we arent fans of this because as i mentioned before we don't have much disposable income and can't guarentee that we could afford set payments each month ,we would obviously rather hand over his equity in a lump sum iva at a higher rate if possible .
i wish i understood all this much more,thankyou again

[MelanieGiles]

I am sure that the proposed lump sum full and final settlement based IVA will work for you both, but if not then you should look at the bankruptcy options at that stage.