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If you are struggling with your IVA get advice and help here
By Rogerthat
#23376
Hell everyone.

My landlord is going to put my rent up by £50 a month in August. This also happened at the same time last year and by struggling I have managed to keep my IVA payments going. However I know I am not going to be able to do the same this year. I cannot move as all the rents around where I live are similar. I am therefore thinking of letting my IVA fail and going back to debt management. Do you think that is the only option? Do you have any other suggestions?
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By Steve Jackson
#23388
Hello Rogerthat and welcome to the forum.

The first thing you should do is speak to your IP and explain the problem. When your rent was put up last year how did your IP react? They should have considered reducing your IVA payments to compensate and then perhaps extending the length of your IVA.

If your IP is not able to reduce your payments for any reason then you should consider your options. Given you are renting you certainly have the choice of letting your IVA fail. However depending on how many payments you have already made, this might mean that you are pretty much back to square one with your debts. If you can make good monthly payments then a Debt Management Plan (DMP) might be for you. However if the amount you can afford means that you will be paying the DMP for many years then you might be better off considering bankruptcy or a debt relief order.
By Rogerthat
#23392
Thanks for replying Steve. When I told my IP about the rent rise last year they said that they could not reduce my monthly payments as it would mean that I would not be able to pay anough back to my creditors. As such I am not hopeful of a positive response from them this time round :(

My debt was around £32k and I have been paying £140 a month into my IVA for nearly 2 years. With the rent increase this means I will only be able to afford £90. If i stop the IVA and start a DMP it will take years to pay so perhaps bankruptcy is best but this sounds so scary.
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By Hayden
#23395
Hi there Rogerthat

Given that you are only paying a relatively low amount into your IVA I can understand your IP being reluctant to allow you to reduce your payments as this would leave an extremely small return for your creditors. Given that the size of your debt and that you will only be able to afford to pay back £90/mth then I do not think the debt management plan solution is suitable as you would probably never get free of your debt. As such I do think bankruptcy is the right thing for you.

I know bankruptcy sounds bad but for someone in your position you really have nothing to lose. You will be no worse off than now and in fact a whole lot better as you will not have to stress about trying to keep up your IVA payments. It sounds to me as though it might well be the case that you would not have to make any paymwents at all if you declare yourself bankrupt.
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By James Falla
#25413
Hello Rogerthat

Sorry to hear about your situation. Given what you have said I am not really surprised that your IP has told you that they are unable to reduce your IVA payments. This is one of the major issues with starting an IVA with very low payments (I would say that anything lower than £200 is very low). It simply does not leave you any wriggle room if living expenses which you have no control of increase.

Given that you simply cannot continue to pay your IVA you will have to let it fail. I would say that very little of your debt will have been paid so you will still owe pretty much the same amount as when you started the IVA. As you have highlighted, a DMP would be impractical as it will mean you are paying your debt for years. As such I would agree that bankruptcy would be the right thing for you. But you should really not panic. It is really not as bad as it sounds for someone in your position and would be ideal to resolve your debt problem once and for all.
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By Hayden
#25652
Hi there Rogerthat

Your car would only cause a problem if it is worth more than £1000. If so the official receiver might ask you to sell it and get a cheaper one or you could ask a third party to pay the difference to the OR on your behalf and keep the car. Either way you are still allowed to have a car if you are bankrupt.
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By Geraldine
#25935
Hello Rogerthat

Sorry to hear about your situation and that your IVA may well fail. Having read all the posts i have to say that Bankruptcy looks like the right option for you. It is really going to reduce the amount of stress you have as when you review all of your living expenses again it could very well be that you cannot pay anything at all to your creditors. If this is the case then when you are bankrupt you will not have to.

As Hayden has said you will be able to keep your car given you need it and it is worth less than £1000.
By Rogerthat
#26025
Thanks all for your advice. The bad news is my car is worth nearly £4000 according to Auto Trader. However the good news is my Dad has said that he will pay the difference if I go bankrupt. So my mind is made up now I am going to go for it. What do I do now. I have not made a payment into my IVA since July but my IP is not chasing me yet. Should I tell them that I am not making any more or simply ignor them?
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By Steve Jackson
#26061
Hello Rogerthat.

If you have decided to allow your IVA to fail and then go bankrupt, then you must inform your IP. You need to ask them to send you a letter confirming the failure of your IVA. You need this before the court will allow you to declare bankruptcy. Normally your IP has to wait until you are three months in arrears to send this confirmation letter. However if you have not paid since July it sounds as though that should not be an issue.