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HMRC Homeowner Bankruptcy Avoidance

HMRC Homeowner Bankruptcy Avoidance

Avoiding bankruptcy when you have assets such as a home with equity or other assets that you don’t want to lose is essential.

Generally, its HMRC or Council Tax that makes the majority of individuals bankrupt in the UK and we’ve found that most people simply don’t understand the implications of being made bankrupt.

Therefore if you are or have been made bankrupt and you are a homeowner with equity in the property or have other assets that will enable you to clear all your debts in full then you may want to consider bankruptcy avoidance.

If you have received a statutory demand and have tried to get help, but for some reason have been unable to find the answers you are looking for, we suggest you call us as the problem is not going to go away. When you are made bankrupt and you are a homeowner, a £3000 debt will escalate into a much bigger debt.

Consider this example: 

Mr F is made bankrupt in march 2015. He is a homeowner with sufficient equity to clear all of his debts. He was made bankrupt by HMRC for £10,841.39 and the trustees fees are broken down as follows:

Statutory interest:-                                   £ 1639.00

Trustees costs:-                                         £19,128.30

Estimated Additional costs:-                  £ 5000.00 

Trustees Disbursements:-                       £   886.99

Estimated additional disbursements:-£    250.00

Legal Fees:-                                                £ 4781.85

Estimated additional legal fees             £ 1000.00

Agents fees:-                                              £  722.00

VAT                                                             £ 6353.87

Insolvency Service:-                               £ 1224.84

Petitioning Creditor costs:-                   £ 2297.00

Secretary of State Fees:-                        £11,957.53

Hence the total amount required to pay off all of the bankruptcy debts and achieve annulment is £66,083.55      

In this example, we can see how a debt of just £10,841.39 has escalated over the course of 22 months into a debt of £66,083.55  

If you are that homeowner facing bankruptcy but hesitating in drawing the money out of a property to pay the debt then now you can see why its worth doing whatever it takes to get a debt paid when you are a potential bankrupt homeowner seeking assistance.

 

How long will my IVA stay on my credit report

All debts remain on your credit file for six years, which can be frustrating for those who have recently completed a 5 – 6 year IVA, as the ‘Footprint’ stays there for several more years. There are so many people who opt for IVAs ahead of bankruptcy, despite the fact that they have no assets such as property or businesses – the purpose of an IVA is to protect assets which might otherwise be lost in bankruptcy. This results in them being stuck in a completely unnecessary IVA for at least five years, when they could be in and out of bankruptcy in 12 months or less.

While on the subject, people should note that properties in negative equity are not lost in bankruptcy, provided mortgage payments are maintained. It should also be pointed out that if a property is involved in an IVA, it will run for six years and not five. This is because there is a so-called four year re-mortgage clause in these agreements which obliges the individual to release funds from their properties after four years. Since this will never be possible because of an impaired credit rating, the IVA remains in place for a sixth year.

It still troubles us how many ordinary people have been placed in IVAs when bankruptcy was  the correct solution. People in rented and holding down everyday jobs have no place in an IVA but this is big business for the IVA companies and they will place virtually anybody in one of these wretched arrangements.

Bankruptcy UK has been helping people with insolvency since 1998 and has the experience to get you the right result every time. We will avoid jargon and confirm all discussions by email within 30 minutes. Call us for a chat about your circumstances on 01425 600129.

 

How Can I leave My IVA | Call Today To Discuss Options

How can I leave my IVA

I’ve been given the runaround by my IVA company once too often and I want out. When I started they told me the payments would be £140 per month, but now they want to increase the payments to £220 pm and it’s just too much. I’ve still got four years to go and I can’t see any end in sight.

If you have taken the decision to leave your IVA and enter into bankruptcy, there is a sequence of events that needs to take place and we can help you through the process. Having taken almost 4,000 people through the process, there is not much that we don’t know and we are confident of the outcome.

One of the biggest advantages of leaving an IVA in favour of bankruptcy is that your income and expenditure is reassessed under the more lenient bankruptcy criteria and there is rarely a monthly payment. The other big advantage, of course, is that bankruptcy only lasts for 12 months and your credit rating rapidly repairs itself once discharged. You can now get a mortgage just 36 months after discharge.

The thing that concerns people most about leaving and entering bankruptcy is the cost ‘how will I be able to afford it?’ It’s simple,  the payments that you were making will be used to fund the cost over a number of months. You need to remember that it will take at least 5-6 months before you receive a letter of termination from the IVA company (required for bankruptcy) and it will be possible to cover all of the costs in this time.

The first thing you need to do is to stop making the IVA payments immediately. If you don’t have the confidence to do this, we will write to the company and advise that you will be exiting the IVA. There are no repercussions for stopping payments; you have the right to leave just as you had the right to enter into it in the first place. It will not result in any Bailiff or Debt Collector activity.

Once you have missed three payments you will receive a letter of default and if this is ignored, the IVA company will approach the creditors with a view to terminating the agreement 6-8 weeks later. Ironically, despite going through the process of leaving the IVA, it will continue to protect you from your creditors until such time as the IVA is terminated.

However, this will not be the case once the IVA is terminated and unless an alternate course of action is taken – such as bankruptcy – you will be contacted again by creditors and debt collectors. Bankruptcy is applied for online these days; you no longer have to attend court and feel embarrassed, so take the plunge and give us a call.

Bankruptcy UK has been helping people with insolvency since 1998 and has the experience to get you the right result every time. We will avoid jargon and confirm all discussions by email within 30 minutes. Call us for a chat about your circumstances on 01425 600129.

Why does my IVA company ignore me?

When I entered into an IVA about 9 months ago my IVA company was ever so helpful, but now I have problems it’s almost impossible to get hold of them. I have left  messages and sent emails, but nobody comes back to me. Surely this can’t be right.

We come across a lot of this and it always seems to be when there’s a problem. IVA companies are notoriously slow in getting back to people, probably because they know it’s just a matter of time before the client realises they should never have entered the IVA in the first place. IVAs are designed to protect assets such as property portfolios and businesses, not for everyday people. If you are in rented and holding down a regular job like the rest of us, bankruptcy is the answer. Amazingly, people on DLA and other benefits are also placed in IVAs when there is absolutely no chance of there being a monthly payment in bankruptcy.

There are reasons for this and it comes down to money. IVA companies pocket the first two year’s contributions for themselves with only a trickle of money going to the creditors. Speaking of which, the original creditors would have long since sold the debt on to debt collectors and it is these companies that eventually receive a fraction of your monthly payment. We often hear people say ‘we entered an IVA because we wanted to repay the debt’ but this is a fallacy. IVAs are a grand illusion much the same as David Copperfield making an elephant disappear on stage.

Feel free to call us on 01425 600129 with any other questions or for bankruptcy help. Questions may also be posted on our Home Page. Please note, court appearances are no longer required for bankruptcy as everything is processed online.

Self Employed IVA

Self Employed IVA

IVAs were created in 1986 specifically for small business owners with cash flow difficulties. The first year that IVA’s were introduced there were only 11 in total that were sold. Now there are around 250,000 people in England and Wales who have signed up to the IVA Arrangement.

A Self Employed Person who is considering an IVA as a debt solution must face true and sometimes challenging facts about the business they operate. You have to be honest about the position you are in and whether or not there is realistically an opportunity to trade your way out of debt with your business.

In order for Self Employes IVA’s to work the business owner will have to produce a business plan in order that creditors can see for themselves that the business has a good prospect of completing the arrangement.

Although it may be the last thing that you want to do, it is often a very good way of identifying the weaknesses in your business.  is to provide you with the information you need to make an informed decision.

Our objective is to identify on your first call with us exactly what is going on and attempt to identify what and when its gone wrong. Our priority is to make sure you understand what is involved in the process and what

bankruptcy-solicitorsteps are needed to make certain things happen that need to happen.  It may be that you are married or in a relationship where the family unit is at risk of losing the home or assets that would be uncomfortable to lose. The facts are that all sorts of people get into all sorts of financial complications and simply cant see the wood for the trees. It is not uncommon for people to feel totally depressed and not want to face the world because they simply cannot see what they can do to make a difference. They feel like giving up.

This is natural but if you are in that position or moving towards that position then we want to hear from you. Our experience in Business and financial survival is all about making mostly small adjustments that make a significant difference.

If we need to write or contact a particular creditor to release the pressure or get you more time then we will do this without delay.

If you have time then you can make more relaxed decisions and communicate effectively with the people around you that need it. You have to be able to adapt and work quickly to action what needs to be done.

Bankruptcy UK offers a full bankruptcy administration service, including dealing with creditors, completing the all important Income and Expenditure, professional completion of the relevant paperwork and bankruptcy help at all levels. Call us on 01425 600129 or 0800 5977 977 for a chat about your circumstances.

 

 

IVA Payments

bankruptcy-solicitorIVA Payments

 

I’m thinking of abandoning my IVA I am two and a half years into an IVA and wondering if bankruptcy might have been a better solution. My total debt is £35,000 from loans and credit cards. My only asset is a car worth about £800 and I live in rented accommodation. My IVA payments take into account total household income despite the debts having nothing to do with my partner, I had them long before meeting him. I have to pay 50% of household expenses, but my IVA payments company says he should pay more, as he earns more. How can this be right, seeing they aren’t even his debts? 

Although it’s true that total household income is taken into account when assessing affordability – even in bankruptcy – it should only be what he contributes to the household that should be considered and not his entire income. Therefore, if he earns £1200 per month but has personal expenses of £400 (loans, credit cards, etc), then only £800 should be considered. The IVA company is almost certainly aware of this, but will milk the situation for all it’s worth as this is their income – don’t believe for a minute that your payment is going to the creditors. However, what concerns us more than anything is why you are in an IVA in the first place, as you have no assets. You will definitely keep the car and the rental isn’t under threat. IVA companies are ruthless exploiters of people’s fear of bankruptcy and rarely, if ever, fully explain both options when approached. The first 20 payments of an IVA go directly into the IVA companies’ pockets and not a penny goes to the creditors. In fact, in most cases, the original creditors would have long since sold the debt on to third party debt collectors and these are the people who will eventually receive a trickle of money from the IVA company. Our speciality is taking people out of IVAs and into the protection of bankruptcy, so call us for a chat if you need assistance.

Bankruptcy or IVA?

Is an IVA better than a bankruptcy?

The only way to truly answer that question would be to look at the failure rates of IVAs after the first 18 months. They sound great at the outset but a significant number fail in the first two years. More importantly, the IVA companies that arrange these wretched debt solutions are motivated to sell IVAs ahead of anything else and will bias their presentation accordingly.

Individual Voluntary Arrangements and bankruptcy are both court sanctioned debt solutions, yet are essentially very different. The prime function of an IVA is to protect assets such as properties and businesses, which might otherwise be lost in bankruptcy. Bankruptcy, on the other hand, is ideal for those who do not have significant assets, are in rented and holding down everyday jobs like the rest of us. They both harm your credit rating, but it is a proven fact that discharged bankrupts can get mortgages within three years (other forms of credit within 18 months), whereas there is no chance of this happening for those in IVAs, within 5 – 7 years.

The big selling point for IVAs is that part of the debt will be written off ‘using Government legislation’, yet any apparent savings are soon eroded by the high fee structure. We speak to scores of dissatisfied IVA holders who all complain about the same things : once the IVA is set up it is almost impossible to speak to anybody from the company; there are frequent ‘reviews’ and requests for more money, and there is very little understanding if anything goes wrong with your finances (illness, redundancies, etc). Assuming, of course, you manage to speak to somebody in the first place. We could talk forever about the injustices of IVA companies that have set up arrangements for those who should have been recommended bankruptcy at the outset, but what it really all comes down to is whether you have any assets or not. And if you don’t, you certainly wouldn’t want to be tied into an IVA for five years.

My IVA already costs £280pm .. now they want more

My IVA already costs £280pm .. now they want more

I’ve been in an IVA for a year with debts of £27,000 and the IVA Costs are £280pm, which leaves me with absolutely nothing every month. Now my IVA company is saying they got the numbers wrong and want another £70pm. How can this be right?

Precisely, it’s not right. The number of people we speak to who should have been recommended bankruptcy at the outset, is staggering. If you are living in rented and holding down an everyday job like the rest of us, an IVA is of little use to you. That’s because the primary function of an IVA is to protect expensive assets such as properties with equity and businesses. If you don’t have these things you have nothing to lose and bankruptcy is the solution. IVA companies make a mint out of exploiting people’s fear of bankruptcy. Once in an IVA a regular pattern emerges: it is extremely difficult to speak to anybody, there are constant reviews, there are frequent requests for bank statements and more money, and there is no understanding if things go wrong (pay cuts, illness, etc).

Did you know that the first 20 payments of any IVA go directly to the IVA company and not a penny goes to the creditors? The original creditors would have long since sold the debt to third party debt collectors anyway and are out of the picture. So why would you choose to remain in an IVA when you’re not even repaying the people you borrowed from? Many people struggle to meet the high monthly payments of an IVA when bankruptcy should have been recommended in the first place. It is far quicker and much fairer – the courts have no interest in making money out of you.

What happens if you stop paying an IVA

You are entitled to leave an IVA just as you were entitled to enter into it in the first place. However, these things are quick and easy to sign up to but not quite so easy to exit. There is a process that will need to be applied in order for the IVA to be terminated and for you to receive a letter of termination from your IVA provider.

You would need to write a letter to the IVA company advising of your intentions, as the court will usually expect sight of an  IVA Letter of Termination. You will receive a ‘Breach of Terms’ letter after missing three payments and if you ignore this, a further letter terminating the agreement will be received 6-8 weeks later. If you exit an IVA and don’t go bankrupt, your creditors will start contacting you all over again, and your level of debt will return to what it was prior to entering the IVA.

A lot of people find it hard to get what they need from some IVA companies that simply have no interest in giving the failed IVAs the service they desperately need. All we can say is that you have to push hard sometimes for what you want and need. keep pushing, send confirmation of cancellation letters by recorded or registered mail. They have a habit of losing things and subsequently a lot of time goes by and you don’t hear anything.

Although IVAs are geared to collect payments from you, a failed IVA may result in you being placed in ‘no mans land’, unless the decision is taken to enter into bankruptcy. If you don’t, your creditors may start pursuing you again. We have taken well over 3,600 out of IVAs and into the protection of bankruptcy, so call us if you have any questions.

Bankruptcy UK offers a full bankruptcy administration service and will submit your bankruptcy application online. Court appearances are no longer required for bankruptcy. Call us for bankruptcy help on 01425 600129 or for an informal chat about your circumstances.

My wife and I both received breach of terms letters re our IVAs and would like to know what happens next

My wife and I both received breach of terms letters re our IVAs and would like to know what happens next

A Breach of Terms letter is usually received when an individual has missed three payments on an IVA and failure to act results in termination of the agreement 6 – 8 weeks later. A Letter of Termination is required by the court to effect bankruptcy, so it is important that this is chased up. Failure to enter into the protection of bankruptcy will result in the creditors contacting you all over again as they attempt to arrange new payment plans. If you leave an IVA prematurely, the debt is as it was before entering into it i.e. you still owe the full amount. Taking people out of IVAs and into bankruptcy is something of a speciality for us so call us if you need help.

Bankruptcy UK offers a full bankruptcy administration service and will submit your bankruptcy application online. Court appearances are no longer required for bankruptcy. Call us for bankruptcy help on 01425 600129 or for an informal chat about your circumstances.

 

 

Bankruptcy UK

Bankruptcy UK