Questions

Browse our archive of questions answered here. If you cannot find the answer to your questions submit your question below:

• I have been on an IVA for a year now and after my review I have been asked to increase my payments.
• I owe ?25000 to HSBC for a loan, overdraft and credit card, but have been told I cannot have an IVA. Is this correct?
• Can I go Bankrupt if I own a property?
• What do I need to do before going Bankrupt?
• I want to apply for an IVA and have been told I need to pay ?300pm but I cannot afford it.
• Does debt management work?
• I have received a default notice from Barclays for a loan I took out in 2006. What does this mean?
• how much would it cost me for a debt releif order?

I have been on an IVA for a year now and after my review I have been asked to increase my payments.

In short Yes. Your Insolvency Practitioner will be required to perform an annual review of your circumstances and submit a receipts and payments account to your creditors. Your payment may adjust according to your present circumstances. This payment can decrease as well as increase as it should be based on your ability to pay.

I owe ?25000 to HSBC for a loan, overdraft and credit card, but have been told I cannot have an IVA. Is this correct?

James, this would fall outside of the Standard IVA protocol, however you may still apply if you can meet the minimum return required by HSBC and prove that it is in the best interests of the creditors. I.e that the your propose a higher return in the IVA than the creditors would receive in Bankruptcy. Your assets will be considered and a full income and expenditure review required. Also have you asked HSBC for help? Often they provide a managed loan so you can pay one payment towards the 3 debts.

Can I go Bankrupt if I own a property?

Yes. Your property is considered an asset and may have to be sold if this is the only way to release money for the creditors. If the property has ‘little’ or no equity it is possible to keep the property, however the Official Receiver has 3 years to realise his interest in the property. There are other options if you have equity in the property, such as a third party buying the beneficial interest in the property or entering into a arrangement with your creditors such as Debt Management or IVA which may exempt the creditors interest in the property.

What do I need to do before going Bankrupt?

The most important step to take before bankruptcy is to speak to a licenced debt counsellor or licenced Insolvency Practitioner about your circumstances. Bankruptcy is a serious step and you may want to explore all your options before taking such a route. This is all determined by the amount of debt you owe, the type of creditors you owe money to, any assets you may have and your ability to pay them back.

Once you have the right advice you will then have a clearer picture of the best route for you to take.

I want to apply for an IVA and have been told I need to pay ?300pm but I cannot afford it.

IVA contributions are based on the value of your equity or realisable equity and your disposable income. If you feel that you cannot afford ?300pm then revisit your income and expenditure. Your income is very likely to remain unchanged, but have a closer look at your living expenses. Are there any areas where you can cut down? What can you reasonably afford to pay? Your Insolvency practitioner will have to make a judgement call on the likely outcome of the meeting based on your contributions. This will depend upon the amount of debt you owe and your own commitment to the IVA. If you sincerely feel you cannot afford the monthly repayments you may want to consider an informal arrangement. This doesnt work well when there are large debts so Bankruptcy could be a more realistic option. Remember when considering your options always speak to a Licenced debt counsellor.

Does debt management work?

A Debt Management Plan with your creditors should include:

1. A discussion about the nature of the debt problem and best advice of how to deal with priority debts, bailiffs and any other pressing matters
2. Completing a household budget
3. Completing an accurate list of creditors
4. Completing a financial statement
5. Deciding upon a strategy to deal with the creditors based on the information provided with all the appropriate options and implications
6. Contacting all of your creditors and obtain up to date balances
7. Calculating pro rata payments to be made to your creditors
8. Requesting interest and charges to be frozen on the debt
9. Ongoing reviews with client and creditor

If you feel that this process is something you cannot do yourself then you can use a debt management company to do this for you. Normally they will charge a fee but it takes the hassle away from dealing with creditors and they may have expertise in the area of dealing with the creditors.

You may find that having been on a debt management plan, the debt will be repaid over a longer period of time. Consider an IVA which can give you debt freedom in 5 years. Or Bankruptcy if this is appropriate.

I have received a default notice from Barclays for a loan I took out in 2006. What does this mean?

A default notice is a notice by your lender informing you that you have breached the terms and conditions of your debt. If you have missed a payment or the account has fallen into arrears, lenders will usually issue a default notice against you.

It is important not to ignore the default notice. Lenders must issue prove they have issued a default notice if they wish to take legal action against you. If you are unable to clear all the arrears contact the lender to make arrangements to catch up the arrears.

Lenders also have the right to inform credit reference agencies of any arrears on your agreement and the date and amount of the default. Once a default notice has been issued it will stay on your credit file for 6 years and will affect your ability to obtain further credit.

how much would it cost me for a debt releif order?

Dear Zoe

Thank you for your question. A debt relief order will cost ?90. This will be paid to an approved intermediary who will assist you with the application.

It is important that you check that you are eligible.

For a checklist please visit http://justicegoddard.co.uk/debt-relief-order/

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