another IVA / BR quandry

[matt5983]

is there any excact figures set in stone?

 

No there are not, there is only one sentence set down in law as to how the IPA/IPO should be worked out and it is as follows

 

The court shall not make an income payments order the effect of which would be to reduce the income of the bankrupt [F3when taken together with any payments to which subsection (8) applies] below what appears to the court to be necessary for meeting the reasonable domestic needs of the bankrupt and his family.

 

 

That is it, no recomended way of working out, no saying how much for food or rent oranything else just that one sentence which the OR is to interpret themselves.

 

 

When the judge asks if the person has taken advice it is solely so that they understand how bankruptcy works not for that advisor to work out every last detail of the case. The Advisor is not to tell the bankrupt how much they should put down for each expenditure item, there are no allowances that people can or cant have as such, every case is dealt with on its merit as each is different and so the figures that go down should come from the bankrupt, what they need and they should be able to communicate why they need that amount to the examiner. What the advisor can do is point out areas where the bankrupt may not have thought to have put anything down, for example they may have petrol and insurance down but the advisor may point out that the car may need repairs etc in the future.

 

Examiners strictly do not give advice as they are not on the bankrupts side as such, but they do make decisions about the case. All exainers as a minimum have a years training and complete a certificate in Insolvency practitionership.

 

All those decisions fall under the responsibility of the Official receiver who is an officer of the court so "they are sort of the law" although as always in the law they are subject to appeal further up the chain directly to the judge at the local court

 

The Official Receivers are required and appoited by the court in each case in their juristiction, whereas the advisor is not

 

Great post Debtinfo, explained really well.

[Philipo Shields]

OK lets give my view i am involved in a lot of these cases and there are a few extra things to consider, First if you house is in low. no. or negative equity you may purchase the beneficial interest at the point of OR interview or just after. The rules are 'If it is in the creditors interest, and the offer (from a 3rd party) is in excess of £1,000. We have it from Tech Services that there is no impediment of the OR accepting. Problem is that they don't have to but usually do, there is no uniformity on OR's implementation of the rules ,same with the courts who all act differently. Next prob is if the OR thinks that you can rent for a lot less than you are paying mortgage, they may not allow full mortgage payment and will ask for outrageous payment agreement. So as other posters have said get open market valuation , research rent in your area. Please also consider that the allowances are taken from National statistical office based on 2010 we all n=know prices have gone up since. You can help yourself by saving petrol reciepts but many allowances like meals at work dry cleaning etc are now gone. NEVER agree an IPA you must fight it the new regime is quite brutal which is why many people pay for the processing and support.

[toddle2u]

First if you house is in low. no. or negative equity you may purchase the beneficial interest at the point of OR interview or just after.

 

I thought under new directives the OR was waitng 2 years 3 months before dealing with the BI in the hope that property prices may have increased by then

[matt5983]

 

Examiners strictly do not give advice as they are not on the bankrupts side as such,

 

This is what im beginning to find out, your meant to have a fresh start in life and this is what the judge tells you to do however it seems like there trying to screw you over if they get a chance so are contradicting what the judge has said !!!

[Philipo Shields]

This is taken from Insolvency Service Directions:

Revision to the way in which the family home is to be dealt with.

Issued December 2010

Following consideration by the Directing Board, the way in which the family home in bankruptcy is to be dealt with has been amended. These changes should be put into effect for all cases from 1st January 2011, except where a property conveyancing transaction has been commenced in cases involving negative equity where the £1 consideration and the official receiver’s conveyancing costs have been paid by the intended purchaser. Such cases should proceed to a conclusion without regard to this amended procedure.

The official receiver, as trustee of the bankruptcy estate, should no longer seek to dispose of a bankrupt’s interest in a jointly or solely owned family home, as defined by section 283A of the Insolvency Act 1986, under the Property Conveyancing Scheme, prior to two years and three months from the making of the bankruptcy order, unless, an offer is received for a value which is clearly in the interest of creditors to accept. In practice this is likely to be for an amount which exceeds £1,000. In consequence, there will be no further sales of beneficial interests at nominal values.

This is email sent from tech services

Except as indicated above, in the period of the first two years and three months of a case, the property conveyancing scheme should not be used to dispose of bankrupts’ beneficial interests in family homes.

The interest on a charging order is simple interest at the rate specified at the date of the charging order (set as per section 17 of the Judgments Act 1838 - currently 8%). Interest is added from the date of the charging order. In dealing with the second point you raise I am struggling a little as I have not been privy to what has been discussed with R W prior to his email. Where a property is in negative equity and the bankrupt’s interest in the property therefore has no value but an offer of £1000 is received for the bankrupt’s interest, I cannot see why the OR would not be able to exercise his discretion in deciding whether or not to accept the offer. The OR’s solicitors costs in dealing with the sale would also need to be met by the purchaser. I understand that these costs at present are approximately £500. Often cases with negative equity will be re-vested back to a bankrupt a the two year three month point at no cost to the bankrupt, so that this may not invite as much interest as suggested. Additionally the paper to the directing board, in relation to the family home changes, states that in practice only a small percentage of cases resulted in a disposal of the interest at an early stage and most arose when the property was in negative or very low equity. In those circumstances the disposal offered no benefit to creditors but gives advantage to the bankrupt. Again this would indicate that the level of interest is not what Mr W believes it to be.

 

They wil accept an offer from a third party ,you really need to do this asap in case price DO rise

[gord1963]

OK lets give my view i am involved in a lot of these cases and there are a few extra things to consider, First if you house is in low. no. or negative equity you may purchase the beneficial interest at the point of OR interview or just after. The rules are 'If it is in the creditors interest, and the offer (from a 3rd party) is in excess of £1,000. We have it from Tech Services that there is no impediment of the OR accepting. Problem is that they don't have to but usually do, there is no uniformity on OR's implementation of the rules ,same with the courts who all act differently. Next prob is if the OR thinks that you can rent for a lot less than you are paying mortgage, they may not allow full mortgage payment and will ask for outrageous payment agreement. So as other posters have said get open market valuation , research rent in your area. Please also consider that the allowances are taken from National statistical office based on 2010 we all n=know prices have gone up since. You can help yourself by saving petrol reciepts but many allowances like meals at work dry cleaning etc are now gone. NEVER agree an IPA you must fight it the new regime is quite brutal which is why many people pay for the processing and support.

 

Hi there - re your point that if it is deemed that renting could be cheaper they will not allow full mortgage payments - wont that simply mean that you are unable to pay the mortgage and end up gettiing repossesed ? The house is then sold at a much bigger loss and everyone looses out . Surely if the bankrupt can still pay the mortgage there is little to be gained in a distress sale releasing no equity just to satisfy the point that a few hundred quid might be released to pay for a cheaper rental ? - I agree with the point about fighting for every penny on a IPA - that has been the pronlem with a lot of IVA's - the debtor is just simply happy to get the creditors off their back and accepts a budget than in reality just wont work - not for 6 or 7 years anyway in today climate of food/fuel/utiliity inflation and falling incomes .

[Philipo Shields]

Gord your sentiment and sense of justice common sense is correct.~However if you get a situation where somebody has a massive mortgage payment no equity the OR will want this extra paymentand is allowed to ask for it. There is no humanity only a calculator and the rule book.We usually put the point that as you say, secured creditors are put in jeopardy and the debt increases and that it is near impossible to be bankrupt and pass a rental agency who will demand 6 month rent up front. If one partner is solvent they have their own issues with the OR. But since changes in end of 2010 they are trying everything to get money in. They are trying to cap car values at 1000 and 1500 instead of historical 2k and trying to deny beneficial interests of people who have contributed money tothe purchase. You really will save money by getting prper representation. If you deal with the revenue get an accountant, the court a solicitor, bankruptcy is no longer the easy option.

[gord1963]

f*** me - if you excuse my paraphrasing - most people like me who are looking at BR as the end game solution - is is because we have nada in the bank - every penny is being spent on month to month - no idea where thiings like the £750 to go BR are supposed to come from and if you then have to get a brief - well if I had that sort of disposable incoime I wouldnt be considering thiis route

 

I have also been considering hunkering down - ignoring the calls once the crediors eventualy realsie that the IVA has failed and seeing how long we can go on - but I reckon it would be not long before the charging orders reared its head., And I do want this to come to a conclusion sometime - 48 years old now and getting tired of it all.

 

will have to look very closely at everythiung

[Philipo Shields]

Gord this is the plan ; note book calculator on the table work out if you have more than 1000 equity , if you have and its only a few grand you got 2/3 years grace to come up with that money for creditors.Just pray you do it before prices rise. You will be discharged after 12 months max so go to credit repair program and if prices do go up you may be able to raise a little cash. Although i wouldn't put a penny on that . If you got no equity (is there 2 of you both insolvent if you can keep your partner out they own untouchable 50%) and you income is really tight then consider BR . I really advise you get help and not CAB or CCCS as they will not follow through for you. Any mug can do paperwork ,some can do it properly(not many) the court is easy peasy the OR is not. If you hide from creditors they will get attachment of earnings and/or charges. So get the calc going remember no friperies geniune expenses no private health gymns etc car up to 2k if you earn joint less than 18k then fee is 525 or if on working tax credit. go to the govt's insolvency site look under publication it's no7 down 'what happens to my home'.

[debtinfo]

The impotant thing to remember is that although the Tech Section provides guidance and you can make an offer, The OR is under no compulsion to accept that offer, they can use their discretion whether to accept it or not, Cant harm to ask though.

 

MATT - Whilst i said that they are not on your side, they are not on the creditors either they are independant and sit in the middle. Which usually means that both sides are unhappy.

 

The best thing in these situations is for the bankrupt themselves to discuss the situation with their examiner themselves

[gord1963]

hi - we are sitting in negative equity at the moment - bought in July 2007 at top of the market - in fact I think we personally created the run on NR - even if you give a conserative 15% drop since 2007 we are probably sitting on 30K in the red - more if the house was to lie empty for 6 months. The house opposite gor repo a year back and it was empty for close on a year and then went to auction for a huge loss on what it went for even less than it went for in 2005.

 

Yes I am pretty good with the calc - as we have been forking out £900 s month for the last two years to the IVA - we are pretty used to working our budget. That is the problem - as you have to be really sure about everything - unexpected costs - the car broke down one month and the garage wanted £800 to fix - , our shower sprung a leak etc etc you know what life is like .

 

I will certainly look into getting / taking advice . It just all comes down to cash as per - Our IVA has now breached so we will have to make decisions soon - noit sure how much breathing space we will need or are allowed

[Philipo Shields]

DI is quite correct in that they don't have to take an offer , however the wording is saying and I'm ad libbing here "if there is no reasonable prospect of benefit coming to creditors in that time then the OR may re vest the property to the BR at no cost" I sincerely don't think you'll put on 30k in 27 month. I hope I'm wrong I have a string of BTLS! however i will not bet on that ,the opposite in fact. It means you will be give your house back for gratis so that part is easy. The income and rent mortgage difference is what you need to consider. I would have thought it's quite a straight forward on those figures, a bit of horse trading with the OR and you should be fine . You creditors will descend almost immediatley that the IVA fails. So be ready, there are a few IVA debt line companies that will take a fee monthly, cost about the same as the IVA payment but you still need court fees so you prob not got the time for that. Remember and IPA =agreement IPO = order agree the first or get the 2nd agreements with OR are very flexible remember they are not allowed to take more than your living needs. The house is zero risk if your figures are correct.

[gord1963]

DI is quite correct in that they don't have to take an offer , however the wording is saying and I'm ad libbing here "if there is no reasonable prospect of benefit coming to creditors in that time then the OR may re vest the property to the BR at no cost" I sincerely don't think you'll put on 30k in 27 month. I hope I'm wrong I have a string of BTLS! however i will not bet on that ,the opposite in fact. It means you will be give your house back for gratis so that part is easy. The income and rent mortgage difference is what you need to consider. I would have thought it's quite a straight forward on those figures, a bit of horse trading with the OR and you should be fine . You creditors will descend almost immediatley that the IVA fails. So be ready, there are a few IVA debt line companies that will take a fee monthly, cost about the same as the IVA payment but you still need court fees so you prob not got the time for that. Remember and IPA =agreement IPO = order agree the first or get the 2nd agreements with OR are very flexible remember they are not allowed to take more than your living needs. The house is zero risk if your figures are correct.

 

cheers phillipo

 

The area I live in rental is expensive - south east commutable into london within 20 mins . I have 3 kids and 4 bed houses are all going for around £1800 + even 3 bed houses are £1400 , My mortgage is £1500 so should be ok as rental is not cheaper ,Also I am stuck on 6.4% fixed rate that should come down next year- hopefully unless NR have a surprise in store for debtors like me. NR is also my biggest creditor - yes I had a lovely together deal .

 

Thanks for your input it all helps form a picture of where to go and how to go

[debtinfo]

Also i would say that if you think you need an expense put it down, even if other people think it is dubious that it will be allowed, you dont get if you dont ask, so i always say put everything down and be prepared to accept that the odd thing may be reduced or discarded

[matt5983]

debtinfo..

 

I've leanrt alot from you and as im in my bankruptcy you have opened my eyes to what i can ask as such, i was worried about my IPQ but like you said if i dont i ask you wont get

 

Thanks

[Wintry]

Hi all

 

Just a little item of interest relating to the Common Financial Statement income & expenditure figures in Debt Relief Orders (another formal insolvency solution)

 

A little confusion or inconsistancy here perhaps in relation to B/R income / expenditure & IPAs etc ?

 

The Common Financial Statement (CFS) was last updated April 2011 I am led to believe.

 

Food for thought & debate maybe!

 

Link to and paragraph below from the I/S V7.0 January 2011 Intermediary Guidence notes

 

http://www.i-m-a.org.uk/pdfs/intermediary-guidance.pdf

 

Page 8 – Income and Expenditure Account

This part of the application form requires information of the debtor‟s total monthly income and expenditure. 44

It is an eligibility requirement for a DRO that the debtor does not have a disposable monthly income, following deduction of normal household expenditure, of more than £50 per month. The Income and Expenditure Account on the application form therefore provides a calculation of how much money the debtor has to spare each month (if any), and stemming from this, whether they are therefore eligible for a DRO.

The Income and Expenditure Account is based on the summary page of the Common Financial Statement used by many debt advisors. It is anticipated that in most cases, although not in all, the intermediary will already have completed a version of the Common Financial Statement (or similar document) following initial consultation with the debtor regarding their financial affairs.

Income

Please indicate on the application form the debtor‟s total net monthly income following deduction of tax etc.

The debtor‟s income could derive from various sources, including wages, benefits and pensions. All benefits should be scheduled, including DLA, and in the instance of DLA, it is acceptable to record the same amount as expenditure. The debtor may also receive income from other areas, such as rental income, which should also be included on the form in the "other sources" field.

The system will automatically calculate the debtor‟s total monthly income (stated in the "Total Income" field) based on the figures included on the form.

Expenditure

Please include all of the debtor‟s monthly expenditure on the application form.

If any of the debtor‟s expenditure does not fit within the categories provided, please enter the amount of expenditure in the "Other" field, and briefly describe the nature of the expenditure in the free-text box at the end of the page.

The system will automatically calculate the debtor‟s monthly expenditure (stated in the "Total Expenditure" field) based on the figures included on the form.

Income less Expenditure

The system will automatically calculate the debtor‟s surplus income by deducting their total expenditure from their total income. This value is then stated in the "Income less Expenditure" field. The debtor‟s total surplus income must be £50 or less in order for the debtor to be eligible for a DRO.

Please feel free to use the free text box at the bottom of the page to provide further information, commentary or to elaborate on any unusual income or expenditure entries.

 

 

 

Edited July 12, 2011 by Wintry

[Philipo Shields]

any input is fantastic for al of us but the application of dro v BR is a bit different i.e as you cannot go in with more than £50 excess income you have to get it there before you apply by whatever means possible! I would believe that if the or will only leave you £10 in BR he will only do the same in a dro does anyone know if that is true?lets be fair easy to get rid of £40 and thats a lot when you're on benefits

[Wintry]

any input is fantastic for al of us but the application of dro v BR is a bit different i.e as you cannot go in with more than £50 excess income you have to get it there before you apply by whatever means possible! I would believe that if the or will only leave you £10 in BR he will only do the same in a dro does anyone know if that is true?lets be fair easy to get rid of £40 and thats a lot when you're on benefits

 

Hello Philipo

 

Might be worth having a careful read through the Intermediary Guidence Notes in full (if you have not already done so)

 

Then ask yourself the same questions.....maybe flip the £10 in BR one though.

[Wintry]

Hi

 

A little item of interest

 

Common Financial Statement (CFS) - August 2011 review / update below -

 

http://www.cfs.moneyadvicetrust.org/editorial.asp?page_id=43

 

The cost of living is going up especially taking into account the forthcoming hike in energy prices !!

[Wintry]

Hi debtinfo

 

"also when you say the ones that i have seen, is that in an official capacity, ones on here at CAG or just others in general."

 

True to my word -

 

"As I have already said I will let you know the best I can"

 

The proposed IPA figures have been significantly reduced - but we are still challanging and negotiating if you like.

 

We will also go to court if necessary - not sure if any examiners will be in attendance though if it gets that far.

 

Interesting to see that you have made no comment on the posts regarding income / expenditure and the Common Financial Statement relating to Debt Relief Orders which as I have already stated is another formal Insolvency Solution.

 

As I have already said it is important to keep an independent impartial non - judgemental view on these things.

 

I would strongly urge people who are in the process of bankruptcy to have a careful read through this thread.

 

Proper independent impartial face to face advice is paramount in my opinion - it is your right !

Edited August 18, 2011 by Wintry

[Wintry]

Hi debtinfo

 

"also when you say the ones that i have seen, is that in an official capacity, ones on here at CAG or just others in general."

 

True to my word -

 

"As I have already said I will let you know the best I can"

 

The proposed IPA figures have been significantly reduced - but we are still challanging and negotiating if you like.

 

We will also go to court if necessary - not sure if any examiners will be in attendance though if it gets that far.

 

Interesting to see that you have made no comment on the posts regarding income / expenditure and the Common Financial Statement relating to Debt Relief Orders which as I have already stated is another formal Insolvency Solution.

 

As I have already said it is important to keep an independent impartial non - judgemental view on these things.

 

I would strongly urge people who are in the process of bankruptcy to have a careful read through this thread.

 

Proper independent impartial face to face advice is paramount in my opinion - it is your right !

 

Hi

 

Further up date debtinfo & others

 

The proposed IPA figures have been reduced for a second time.

[Wintry]

Hi

 

Have a read -

 

http://www.oft.gov.uk/shared_oft/consumer_leaflets/credit/OFT664Rev.pdf

 

Interesting para taken below.

 

k. not having appropriate regard to the principles of the Common

Financial Statement (or equivalent)

 

So, where does this leave the Insolvency Service so called HES 'guideline' allowances & figures with regard to proposed IPAs and IPO's?

 

I dont know if I am reading into this right, but are they saying that the Common Financial Statement (CFS) is acceptable / and perhaps enforcable for Debt Management Plans & for that matter Debt Relief Orders (DRO's) a formal insolvency solution but not for......

 

Can you see the possible arguable contradiction?

 

District Judge?

 

Reviews maybe!!!

 

Oh dear!

Edited October 30, 2011 by Wintry

[gord1963]

Just a quick update on the original thread - IVA failed now for 6 months and the creditors are all beginning to get back in touch which is nice, Interesting some are more agressive than others and some havent even sent a letter. But it is the usual stuff threats etc which I am now an old hand at. It is funny to see the stuff they invent like a letter from the Pre Sue unit LOL

 

Anyway I am now thinking about the future and what to do. I am nervous about going BR as I fo not want to loose my home . I am getting a valuation and am probably still in Negative Equity it is the 3 years + rule that worries me.

 

I have managed to get new employment and finacialy if you take away what we owe our week to week cash flow is in theory looking OK I am going to look into the possibility of trying to negotiate a repayment scheme with the creditirs - try and extend the length of the mortgage to bring down paymenst and see if we can have another crack at paying them off. Still not sure though - the house is key to whatever I do