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How can I leave my IVA?

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 an IVA and entering bankruptcy is the cost ‘how will I be able to afford it?’ It’s simple,  the payments that you were making to the IVA 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 an IVA 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 offers bankruptcy help for those who might be unfamiliar with the jargon and procedures involved in submitting an application online. We will take care of everything and submit your application to your best advantage.

Court appearances for bankruptcy are no longer required. Feel free to call us on 01425 600129 for an informal chat about your circumstances.

How long does an IVA stay on your credit file?

How long does an IVA stay on your credit file

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 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.

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.

My IVA company wants more money – can you help?

IMG_0018 1My IVA company wants more money – can you help?

Hi. I’ve been living in the UK for 3 years now. I left some unpaid debts in Poland, which i tried to resolve by entering into an IVA in the UK. Unfortunately, they want to increase my payments by 60% for the second year and I can’t afford it. Can you help me leave the IVA and go bankrupt?

Yes we can, but we need a bit more information about your circumstances so please call us on 01425 600129 when possible. You mentioned that they are looking for higher payments after the first year. You might be surprised at how often this happens and it is the very reason why so many people abandon their IVAs in favour of bankruptcy. What starts off as a payment of £90 quickly escalates to £170, leaving people in difficulty.

We will quickly determine whether you will be asked for a monthly payment in bankruptcy and start the process for leaving the IVA. It is often the case that there is no payment at all, or at the very worst, a greatly reduced one. We will also prepare a letter for you to send to the IVA company and prepare everything for the online bankruptcy application (you don’t have to attend court these days).

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.

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.

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.

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.

Should I clear debt with an IVA or Bankruptcy?

What choice should you make when considering an insolvency solution to clear outstanding and unmanageable debts? Making the right decision is critical. IVA companies will encourage you to take out an IVA as this makes them plenty of money, but beware the implications. Do I Clear Debts with an IVA or Bankruptcy?

IVAs can be an sound choice in some circumstances. If, for example, you wished to continue practicing as a Director or you have significant assets, then of course an IVA is suitable. However, a report released by the Insolvency Service indicated that of all the people who had entered into an IVA, less than 29% were given information about the benefits of bankruptcy and whether it might be a more appropriate solution.

IVA companies have now reduced the amount of debt required to qualify for an IVA from £15,000 to just £7,000 in a bid to attract more clientele. This is ridiculous when considering the long term damage this will have on your credit file. An IVA lasts for a minimum of 5 years. Your income is capped and if you earn any more money you are obliged to pay any surplus income to your creditors. This will leave most people on the breadline for years after they took out the arrangement.

Bankruptcy Restriction Order
Bankruptcy Restriction Order

There are always things people can do when looking for help and assistance. It is hard to get these answers when looking for free help and advice, as the reality is that free advice is often the most expensive information you can receive.

Look into the small print of these agreements carefully before you committing. If in doubt get a professional to look at it and have it explained to you.

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.

 

 

Why would I want to leave my IVA and enter into bankruptcy?

Perhaps the best way to answer this question is to simply state the facts and let you be the judge. 

            Some interesting points about IVAs: 

  • IVAs are intended to protect assets that might otherwise be lost in bankruptcy e.g. properties, high value vehicles, etc. If you are living in rented and only own everyday items like TVs and fridges, there is no reason to be in an IVA.
  • You will be tied into the IVA for a minimum of 60 months, but if you are on a ‘low start’ IVA i.e. paying less than you should, you will be tied in for a minimum of six years. For example, if your debts totaled £20k when you entered the IVA you should be paying around £185pm
  • The set up costs for an IVA can run into thousands of pounds and this is where your monthly payment goes for the first two years of the IVA – to the IVA company to pay the set up costs. Not a penny goes to the creditors.
  • Thereafter, a trickle of money goes to the debt collectors that bought the debt. It is a myth that you are repaying the banks you borrowed from as it has already been sold on and written off.
  • IVAs have exactly the same effect on your credit rating as bankruptcy. In the eyes of the High Street, people in IVAs are bankrupt.
  • Your credit rating is zero for a minimum of 6yrs in an IVA, whereas those discharged from bankruptcy can now get a mortgage after 36 months (credit cards in half that time). Which begs the question: why struggle in an IVA for years on end when you can be in and out of a bankruptcy in just 12 months? 

 

        Some interesting points about Bankruptcy:

  • You no longer have to attend court. Everything is done online and over the phone. You can literally go bankrupt from the comfort of your armchair.
  • Nobody comes to your house to check what assets you have
  • Bailiffs, Debt Collectors and harassing phone calls are a thing of the past
  • You are only bankrupt for a maximum period of 12 months
  • You can keep cars up to the value of £1000 (but this is often stretched)
  • You can keep your bank account provided there is no debt or overdraft in place
  • Mortgaged properties are not lost in bankruptcy if there is no equity
  • Your name no longer appears in local newspapers
  • Around 85% of those switching from IVA to Bankruptcy have no monthly payment at all while the remaining 15% have a greatly reduced monthly payment.

Perhaps the most significant point when considering whether to leave an IVA is that your financial circumstances are reassessed. It is often the case that people’s financial positions have worsened since entering the IVA and this is recognised by the court. The end result is that there is often no monthly payment – or a greatly reduced one – following bankruptcy.

If you are considering bankruptcy, we will help you throughout the process and submit your application online. Court appearances for bankruptcy are no longer required. Feel free to call us for a chat or for bankruptcy help on 01425 600129.

 

 

 

 

 

Bankruptcy UK

Bankruptcy UK