Hi there

[Antonio1960]

I just need some advice from somoene that now about law. The problem
is this .My wife is been paying for the last 3 years for an IVA so has 2 years
remainning.But for Health reazons she ad to give up her job.
At the moment she is only house wife and she rang the IVA Practioners
let them now what's going on.They turn oround and said they could wait
3 months because she ad enought money in HER Account.WeeL I found
that strange because every time she was late with apayment they were
on the phone straightway.As I Said to her You need to find somme proper
advice and make yourselfe Bankrupt because you don't have a job and wil
not have one in the near future.

[themas]

1. To be made bankrupt her IVA has to have failed formally. The IP managing it has to issue a formal letter to this effect.

2. If she is a house owner (jointly with you, or in her sole name) she may well find bankruptcy not a good solution. This depends on the value of the house & the mortgage/secured loan total charged on it.

3. If she goes bankrupt & gets another job within the next 12 months (bankruptcy lasts that long) she may have to start making payments to her creditors for a period of 3 years from any surplus income she has.

4. Is she owns a car it might be taken, unless it is low value & can be bought out by you or someone else.

5. There are a lot of other issues to consider. I suggest she tries to get advice from local CAB (ask to see a debt adviser) or by phone from CCCS. Do not go to any fee charging outfit.

[tonywiltshire]

Antonio suggest to your wife that she thinks long and hard before she gives up the IVA, consider her reasons for adopting an IVA over bankruptcy in the first place. She has done the correct thing in keeping the insolvency practitioner informed and they have accepted the position, themas has given some of the difficulties with bankruptcy, particularly if your wife owns any property, if you are tenants some agreements preclude tenants if they become bankrupt. The IVA is often thought of as a halfway house to bankruptcy and payments have been made for number of years, talk to your insolvency practitioner and see if they can re-negotiate with your creditors, to reflect the current situation.

[cathfromsaron]

ditto above, and she should phone again and speak to someone in authority!

the IVA can continue, even if she is paying less in!

[themas]

My post set out some of the disadvantages of bankruptcy, but (depending on her circumstances) it may well turn out to be her best option. You say she now has no job, so I assume her only income is any benefits she is entitled to. There is therefore no way she can afford to make any payments into the IVA so long as this situation continues. (I assume you are not willing or able to make the payments on her behalf.)

If the above is correct, then I think it is inevitable that the IVA will fail unless the creditors take a very generous view & allow her to delay starting payments again until she gets another job.

Incidentally, if she (solely or jointly with you) owns a house the IVA terms will almost certainly include one that it is to be re-mortgaged in year 4 to release equity for the creditors; failing that the IVA can be extended for 1 or 2 years.

If there is no house or car problem, it might well be worth her biting the bankruptcy bullet sooner rather than later - but do get advice anyway, as I suggested.

In my experience it is rare for there to be any problem with tenancy agreements if a tenant becomes bankrupt - & it is certainly not the case for council or housing association tenants.

[tonywiltshire]

In my opinion themas may be wrong in two important areas and if either apply to your situation I strongly suggest you discuss the matter with your insolvency practitioner before making a decision.

1/ If there is property I would have expected your IP to have taken this into account during their negotiations with the creditors, I would not have expected any property holding to be re-mortgaged in year 4 or any other year, most IVA are for a maximum of 5 years. Creditors are usually pleased to receive something rather than the nothing they would receive with bankruptcy. There is far less chance of a property having to be sold with an IVA than there is with bankruptcy.

2/ Many private tenancies contain a provision allowing the landlord to end the tenancy in the event of the tenant’s bankruptcy.

Check the position with your IP and see if they can re-negotiate the situation under new terms.

[themas]

tony

Sorry to disagree, but it is very common indeed for a provision to remortgage in year 4 (coupled with a possible extension to 6 or 7 years if this proves to be impractical) to be included in IVAs. The purpose is to release some part of the equity in the property for the benefit of the creditors, in addition to the payments made monthly from income. Of course, if there is no equity in the property when year 4 comes round this is not going to apply.

In effect, this provision is an alternative to the creditors insisting that the property is sold as a means of them getting their hands on the equity.

[tonywiltshire]

Thank you very much themas for your views and comments they are greatly appreciated.