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gettingoutofdebt
forum expert
2418 Posts |
 Posted - 30 December 2009 : 13:26:40
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quote:
Where I think the Insolvency Service missed an opportunity is the IVA guide lines should have been revised simultaneously. Expenditure allowances in IVA, and the percentage disposable incomes retained by the insolvent should have been brought in line with the new Bankruptcy guide lines.
I completely agree with the above, John, and until that happens people will see BR as a less restrictive (I don't want to say easier) option that will have less of an impact on them and their partners/dependants.
The only exception to that would be if they would lose their job by declaring BR or they had a property in positive equity.
The link to the stats debtinfo provided is interesting although I wonder how many of those people knew the BR restrictions or IPA percentages? Every now and again people who are in an IVA pop-up on these, and other, boards and are disgusted with how much less restrictive (again, I don't want to say easier) BR is compared to what they are going through with their IVA.
I was considering an IVA and spoke to Tina from Melanie Giles' office and was stunned to hear that BR would only last 1 yr and I would only pay between 50% and 70% of my DI. I assumed I would be BR for life and the restrictions applying that until the day I die. As someone with no assets other than a car worth £1k the decision between paying 100% of my DI for 5 yrs or 50%-70% of my DI for 3 yrs wasn't difficult. Especially are I would only be BR for 1 yr and having read that quite a few IVAs fail and then people end up declaring BR anyway.
There are also some IVA completion/failure rates that have been published that people may also find interesting - http://www.insolvency.gov.uk/otherinformation/statistics/IVAs/IVA%20Completion%20Failure%20Tables_MMS.xls
The 'terminated' rates are around 30%, which is pretty high and 10% of IVAs from 2008 have already failed. |
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debtinfo
forum expert
2826 Posts |
Posted - 30 December 2009 : 13:36:09
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What would everyone suggest, i would always be in favour of leaving the IPA at 50-70% as it gives bankrupts an incentive to work and allows them to save for the unexpected. But what about for instance giving everyone an IPA with say a target of paying back 30% of what they owe. Then the IPA would just last indefintly until that amount was paid, the bankrupts gets to live a reasonable existance, they still become discharged after 1 year but anytime they have extra money it goes towards creditors. Obviously there would be some logistical problems but it is an idea that would seem fairer.
IE an IVA you get a set period to pay back (the 5 years), bankruptcy you get longer but the debt does not just easily disapear
any other ideas welcome |
Edited by - debtinfo on 30 December 2009 13:36:32 |
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Daniel Griffiths
Junior Member
United Kingdom
268 Posts |
Posted - 30 December 2009 : 13:40:37
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Hello John
Your senario of father one and father two is beautifully put, the forgotten family of anyone insolvent are the ones who normally suffer the most however in an IVA I believe they can suffer the most, five years is a long time to be penniless. |
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John
New Member
United Kingdom
73 Posts |
Posted - 30 December 2009 : 13:50:01
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Re the property aspect.
A large proportion of homeowners in financial difficulty are, by having firstly released all the equity they can and secondly by the current market, in negative equity so the property isn't so much of an issue for them.
Additionally a goodly number of "father 2's" are, or have been, self employed and probably removed some equity to support their business which means the non bankrupt spouse can, with quality advice, often apply the principles of exoneration to argue that their BI is more than 50%, and in a many cases a 100%, of the remaining equity where there is any.
For the remainder of property owners with equity then of course IVA may well be considered the best option, either a full term or Full & Final. Although the year 4 rule regarding current market value of the property at that time is so much of an unknown, which for me, again, is a real concern.
Bankruptcy is the only absolute, with the correct advice you know what will happen and the repercussions from the very start. Not so in IVA and certainly not in DMP.
Re the % IVA choices having increased in the last 3 years:
I think the trend will lean towards bankruptcy in future unless banks become more flexible where IVA's are concerned. A return to the original minimum 25% repayment of debt for acceptance of the IVA proposal would help that.
Personally, I would also like to see accurate figures, so far there has been a long standing refusal to disclose this information, which show just how many of those 35% to 40% that chose IVA had their IVA fail eventually and had to declare bankruptcy as a result.
As I said, I believe there is a place for IVA, as there is a place for DMP and therefore, in principle, I have nothing against any of them.
I would never propose bankruptcy to anyone unless it's the right solution for them AND it's their preference having weighed up the options. And as before, I would never suggest it's easy.
John White
Independent Debt Consultant
Specialising in Bankruptcy |
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gettingoutofdebt
forum expert
2418 Posts |
Posted - 30 December 2009 : 13:53:15
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quote:
Originally posted by debtinfo
What would everyone suggest
TBH, I don't think it is necessary to change anything. People are saying that IVAs and BRs should somehow either favour the IVA or at least make the BR more equal, but why?
IVAs, DMPs and BRs are all options open to people who are insolvent (provided you have enough DI for an IVA or DMP) so people should chose the best option for their circumstances.
If the government wants to make people pay off more of their debts then 'evening up' the IVA and BR is ok but I don't know if that is the case. |
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John
New Member
United Kingdom
73 Posts |
Posted - 30 December 2009 : 14:04:49
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Hi
I must say i very much liked the concept poseted earlier in this thread that people should be restricted to one single credit card.
Can you imagine the impact?
Interest rates would plummet as banks fight for their market share of business. At the moment each one of them can throw a card at you as and when they choose, as has been the case in the past and why so many are in difficulty.
To Daniel G:
You're so right, I approach every case where there is family with the view that it is the non bankrupt spouse and the kids that I'm there to help primarily.
Re the 30% repayment for all:
Another good suggestion in principle but would need some tweaking so as not to remove insentive from those with little or no DI at the outset.
John White
Independent Debt Consultant
Specialising in Bankruptcy |
Edited by - John on 30 December 2009 14:06:09 |
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Jane.l
Average Member
511 Posts |
Posted - 30 December 2009 : 14:26:05
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I am with John on this one, I am afraid.
We looked into an IVA at first,(had a proposal drawn up) we only had one unsecured loan, a secured loan, Together mortgage, 2 cars on HP and just one credit card. We did not spend the debt extravagently at all I don't think but some may think otherwise.
The majority of our debt was in the house, huge neg equity, but the more I read about IVAs, the more it did not seem right for us, we have 3 kids, we have scrimped for nearly 20 years and the thought of another 6 years in an IVA was just soul-destroying. (there were other factors too, the house could not sell, the IVA company were not giving us good advice, etc, my job was only temporary and they did not think this was a problem!  how were we supposed to pay the final 4 years of the IVA then?!!! and we had another £2000 debt from the estate agents and we wanted to include this in the IVA but we were told by the IVA company "can you not borrow it off someone and pay it off so it doesn't now have to go in the IVA?" err, NO, thus I searched out these forums and did my own research) Why should the kids be penalised just because of our debt? It was 2 bad property decisions that had got us to the bankruptcy point, not reckless spending.
Anyway, the point I am making is that bankruptcy was NOT the easy option, we lost our house, our cars, my health has suffered. We both got early discharge (sorry, that may not go down too well and we got no IPA, so yes, we swapped nearly £100,000 of debt for 2 lots of bankruptcy fees, job done and I am so glad we chose bankruptcy over the IVA, we are getting on now with our new debt-free life, we have a council house, I have a new job, savings!  I know I won't ever get into debt again and there is no way I will comtemplate getting a mortgage ever again.
I am grateful for the chance to start afresh and think the BR rules should stay as they are.
If people have a career or property they want to protect, then fine, they will chose the IVA route but its a tough route and one I would not like to go down. My morals on paying back the creditors were not strong enough to wishstand that journey |
Edited by - Jane.l on 30 December 2009 14:27:57 |
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Skippy
forum expert
United Kingdom
3290 Posts |
Posted - 30 December 2009 : 14:58:34
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Another thing that needs to be taken into account is that some people feel morally obliged to repay as much of the money they have borrowed as possible, hence choosing a DMP or IVA.
Tomorrow is a mystery, yesterday is history, today is the present, a gift to make the most of.
View my blog at http://skippy13.blogs.bankruptcyhelp.org.uk/
30 IPA payments made, 6 to go - the end is in sight! |
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John
New Member
United Kingdom
73 Posts |
Posted - 30 December 2009 : 15:57:40
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Of course each of us should go with our own moral beliefs and ideals. This is our right as individuals just as surely as it is our civil right to choose bankruptcy, IVA, DMP.
But we should all of us also remember that those beliefs and ideals are ours individually and not to be invoked on others by force, opinion or condemnation.
John White
Independent Debt Consultant
Specialising in Bankruptcy |
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gettingoutofdebt
forum expert
2418 Posts |
Posted - 30 December 2009 : 16:05:29
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quote:
Originally posted by John
Of course each of us should go with our own moral beliefs and ideals. This is our right as individuals just as surely as it is our civil right to choose bankruptcy, IVA, DMP.
But we should all of us also remember that those beliefs and ideals are ours individually and not to be invoked on others by force, opinion or condemnation.
Well said John. I must admit after 8 weeks of being threatened, verbally abused, hassled and tormented numerous times each day by my creditors my moral obligations seemed to disappear. |
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Skippy
forum expert
United Kingdom
3290 Posts |
Posted - 30 December 2009 : 16:22:00
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I agree John, I'm just pointing out that's how some people might feel.
Tomorrow is a mystery, yesterday is history, today is the present, a gift to make the most of.
View my blog at http://skippy13.blogs.bankruptcyhelp.org.uk/
30 IPA payments made, 6 to go - the end is in sight! |
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John
New Member
United Kingdom
73 Posts |
Posted - 30 December 2009 : 17:50:40
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Absolutely, anyone who feels a moral obligation to repay what they can and take on perhaps what is the more difficult route should be supported and applauded.
As in my previous post, we all view these things in our own way and should rigorously explore every option before any decision is made. Whatever that decision is we have to be able to live with it and likewise move on with our lives once the choice has been made.
I know for me I changed as a person when I was under financial pressure and certainly not for the better. It didn't matter to me as I felt I deserved everything I got. But my wife and children didn't.So for me repayment, or the possibility, or practicality, of it didn't come into it. I could not remain the person that 3+ years of constant financial pressure had turned me into.
I would still be that same moody guy if in an IVA with another 18 months to go. Instead, and for the last 3+ years, I'm back to being the person I was before the problems started, a little older, a little wiser. But most important of all I have a wife, 4 kids and 4 grandchildren who, I have no doubt, have benefited from the choice I made.
John White
Independent Debt Consultant
Specialising in Bankruptcy |
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Daniel Griffiths
Junior Member
United Kingdom
268 Posts |
Posted - 30 December 2009 : 17:51:31
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| Very interesting thread this, John you are a credit to this forum, I enjoyed reading your posts, and Jane I think you deserve a pat on the back, you have been through the mill obviously and chose an option wisely with your three kids at the forefront of your decision which is how it should be. You hit the nail on the head when you said you had bad advice from your IVA company unfortunately many families dont realise that until its too late. Creditors may indeed receive more in an IVA PROVIDING it goes the full term the problem is we live in very uncertain times I cannot think of many professions where any individual can gurantee an income, never mind keep in good health for the next five years, however the Bankruptcy IVA debate will continue to live on |
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John
New Member
United Kingdom
73 Posts |
Posted - 30 December 2009 : 18:06:53
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Hi Daniel (and Jane)
many thanks for your words of praise they are very gratefully received. I have been away from the forum for some time and only returned a few days ago and intend to be here for the foreseeable future.
I am sure that all of us just want to help. Yes it's my profession, and yes if I were to gain a client here or there then I'm happy with that. But if I don't I'll still be here.
I truly feel that every single person willing to become an expert on here deserves that same pat on the back as does any member willing to offer advice and share their own experiences.
As it has said in my BIO since I joined in July 2008.
This site is, in my view, unique. It was then, it still is.
AND I would also like to add... that my previous experience on here was such that a thread of this nature would inevitably turn into a bun fight!!! Well it hasn't this time... a sharing of opinions as well as knowledge is the site's strength and long may it continue.
John White
Independent Debt Consultant
Specialising in Bankruptcy |
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Housing
Senior Member
United Kingdom
1399 Posts |
Posted - 30 December 2009 : 19:17:41
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Hi John,
We have not exchanged posts as yet - welcome back.
I started posting here in July after filing for BR in May (only a while to go now!)
It is a good site and the exchanges are useful a mix of advice, sharing of views and experiences - all very positive and I have not seen another site like it.
Keep posting and a Happy New Year to you and yours, Richard
"There are no problems - only solutions..." |
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