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If you are struggling with your IVA get advice and help here
By LieselD
#14926
Hi here

A few months ago we were in an IVA and were contacted by a PPI claim company. They advised us that they could only help us claim if we stopped our IVA. We were struggling with the payments so we did. Now we are worried that we are going to be made bankrupt. Can you help?
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By James Falla
#14936
Hi there LieselD and welcome to the forum. Can you give us a little more information about your situation. You mention that you were struggling with your payments when you were in your IVA. How much were you paying and had your circumstances changed meaning things had become more difficult? Also are you homeowners? This generally makes a difference to what happens next after an IVA fails.
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By Steve Jackson
#14986
Hello LieselD.

Generally speaking I would say that it is very bad advice to stop paying your IVA for any other reason that it is failing and you have no other choice. If you were struggling did you dpeak to your IP about the possibility of reducing your payments? As James has said, if you can give us a little more information we will advise you further.
By LieselD
#14989
Thanks for getting back to me.

Our situation was that we owed about £30,000 and we started an IVA with Cleardebt paying around £300 a month. We are renting from the local council. I then got laid off. I got another job but for less money. We spoke to Cleardebt about it but we were not able to convince them to reduce our payments so we were struggling and started to get behind. That is when we were contacted by the PPI company. We stopped paying our IVA but now we are not sure we have done the right thing. When I spoke to cleardebt they said that we might be made bankrupt. Now we are starting to panic....
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By Hayden
#15010
Hi LieselD

If you were not in a position to continue making your IVA payments and Cleardebt were not prepared to help, then you did have the option to stop paying your IVA and to let it fail. Generally speaking it is not recommended that you do this unless you speak to an independent debt management expert first as it could have serious consequenses. However luckily as you are not homeowners the effects will be minimal.

It is extremely unlikely that Cleardebt will declare you bankrupt (despite what they may have said) as it will cost them money with very little gain. As such they are far more likely to just fail your IVA and then leave you to it.

The issue you now have is that you still owe 100% of your outstanding debt and your creditors will start to chase you again for this. As such you need to think about the possibility of starting another IVA on a more reasonable payment basis (this might be possible) or perhaps even declaring yourselves bankrupt. In the mean time you could make a PPI claim but it is likely that this will not be sorted for a number of months by which time you will have had to take action on your debts and so you will not be likely to benefit from any PPI compensation you are awarded anyway. My advise would be to speak to a debt advisor and talk through your options.
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By Geraldine
#15081
Hello LieselD

Because you are renting, there will be little or nothing to gain by Cleardebt making you bankrupt. As such the person you spoke to at Cleardebt is probably just trying to make you stick to your IVA. However as Hayden has said, you now have to decide what to do next.

If you were struggling to make your IVA payments you might be able to start a new IVA with a different IP paying less each month. But this would put you back to square one facing 5 more years of payments. The alternative is actually to go down the bankruptcy route yourselves where if you cannot afford to make payments at all, you do not need to do so.
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By James Falla
#15170
Hi LieselD

Given you are not a home owner and I suspect have little or no assets I do not think that Cleardebt will make you bankrupt. It is far more likely that they will simply fail your IVA and then leave you to decide what to do next. If as I suspect you are not made bankrupt then you could make a PPI claim and wait to see if you receive a payout. If you do this might help settle your debts. Alternatively you might not want to wait and so go straight ahead with either an new IVA or implement bankruptcy yourself. However if you do either of these things and then make a PPI claim, any money you recieve will not be under your control and will have to be paid to your creditors.