A.
Recent unofficial figures suggest that over a third of all IVAs fail but many people in an IVA are not certain of the procedures following missed payments and what happens to their debts once the IVA is deemed to have failed. Possible IVA failure will be approached slightly differently depending on the Administrator of the IVA. Officially, following 3 missed payments the IVA has normally failed, however, if circumstances look like improving in the near future and repayments can be met at some point, an extended period of non-payment may be acceptable. There is also the possibility of renegotiation but if there is no likelihood of repayment, the IVA will fail and the Administrator will inform creditors included in the IVA of the failure and ask if they would like to persue the debtor's bankruptcy. Some IVA companies will also set aside a sum of money for this purpose and in many IVA agreements this will be included.

Following the failure of an IVA, the debtor will be informed by letter or certificate of termination shortly after the last failed payment but it has been known for IVA companies never to officially inform the debtor and certainly, from experience, it would not be unusual to have to request such a document several times over in order to produce proof of failure of an IVA if bankruptcy is the most suitable path to follow. It is not uncommon for creditors to begin chasing the original debt owed following a failure of an IVA and any monies paid to the IVA company by a debtor to be retained by them for services rendered. It essentially puts the debtor back to square one with the same debt amount, perhaps even plus interest depending on the original creditor, as they owed prior to the IVA.

If you are unable to pay your IVA, have very little or no equity in your property and no assets, it may well be that bankruptcy would be the best solution and which could mean you may not necessarily lose your home if mortgage payments are affordable. I would advise that you seek professional advice as soon as possible to find out where you currently stand in terms of the IVA and a way forward as painlessly as possible in what must be an already emotionally difficult time.

Jeremy Hockley

A. We have many clients in your position who pay or have been paying nominal sums to their creditors or their agencies but as you will be aware this is a very slow process to repay debts that could take tens of years. I would not necessarily recommend bankruptcy in your case without further details such as whether you own your own property and have equity, have assets or a pension or are expecting to inherit. If the answer is no to all of these then it is an option definitely worth considering, however reticent you may feel about going down this path. Unfortunately you would not qualify for a debt relief order as you owe in excess of £15,000.

If you do own your own property and have equity or have other assets then it is possible an IVA would be suitable, or if you are able to raise a lump sum it could be possible to negotiate a settlement or single payment IVA but I really would need a comprehensive view of your financial situation before ascertaining the right debt solution path to follow.

A. Sadly this is a story I hear several times a day. What you must not do is extend your overdraft or take out further loans and you must put your priority bills such as mortgage/rent, council tax, water, gas and electricity first.

There is no doubt that credit card companies and loan companies shout loudest and make the most fuss which is why they tend to be paid first but ultimately this is putting your home at risk. It is essential that you stop spending on your credit cards and contact the providers and your lenders as soon as you are unable to meet your repayments to let them know your situation. As I have mentioned in a previous post, write a realistic, not breadline, budget and send your credit providers details of your Income and realistic expenditure with any disposable income split between your creditors on a pro rata basis. If there is very little money to offer them, try £1 per month as ultimately they will want to keep the lines of communication open in order to see if your situation improves at some point and they may well accept this for a period of 3 months with a review at the end of this time. This type of solution is purely to give you some breathing space though and should not be viewed as a long term remedy.

Should you find yourself in the negative and unable to offer anything to your creditors then it is essential you seek professional advice as there are other solutions available such as bankruptcy, debt relief orders and IVA's that could sort your debts out quickly and in one go. It will really depend on your circumstances including whether you own your home, if there is any equity, how much you earn and the number of dependents you have. Should you wish to contact us, we are a face to face company, very understanding and with the primary aim of getting you out of debt as quickly and as painlessly as possible, and supporting you fully through the process.

A. In our experience it is not uncommon for one partner to find that their other partner has been slowly building debts without their knowledge and to refuse to talk about it when they are eventually found out. There may be an underlying problem that has caused the issue in the first place such as unhappy at work or problems within the relationship and it is essential that the debt issues be discussed rationally and without blame as the partner who has accrued these debts will be feeling guilty and will need a lot of support to come to terms with the underlying issue that caused this problem and how the debt problem will need clearing up; whilst the partner who was unaware of the debts will be feeling frustrated and angry, even shellshocked, so calm communication is the key to moving forward. The solution to the debts will depend on the financial circumstances of each individual case. For example, is the property under home ownership or is it rented? Is there any equity? What is the income to expenditure ratio without these debt repayments?

In the first instance I would suggest that all the cards are cut up and a realistic, but not tight, budget is set and adhered to. If there is some money left over, each creditor should be contacted and an offer of repayment made on a pro rata basis, that is a percentage offer according to the amount of the debt. A request should also be made to stop any further interest accruing though each lender will have their own rules covering this. Whilst this does not solve the problem it should allow some breathing space whilst a conclusive solution is sought.

If some creditors refuse to accept any reduced repayments, it is essential to seek professional advice and debtDr's consultants deal with similar cases most days, offering an initial free consultation and are happy to point you in the right direction even if you decide to pursue a solution on your own.

A. Hi, if this is your only debt, you are living in rented accommodation and do not have a car worth more than £300, then you must look at entering a Debt Relief Order to wipe your debt off. Your local Citizens Advice Bureau (CAB) are able to deal with these and should advise you accordingly. However, they may try and persuade you to enter a debt management plan but in my experience this will take years to pay off and is unnecessary when you qualify for the Debt Relief Order. The CAB may also be able to liaise with your bank if you feel you still have a case to answer with your insurance. You must bear in mind that any debt solution will affect your credit rating and may hinder your ability to successfully apply for credit.

A. This is a very difficult situation for you, unfortunately for me to be able to help, and I am certain I can, I need more information. For example, I need to know what you are earning, is there equity in the property and I would need to get your wife to open up so I can deal with the property. You clearly need some peace of mind, please ring the OnlyDads helpline 01803 868683 which is confidential and they will put you in touch with us asap.

A. In some cases this maybe a viable solution although we would generally caution against turning unsecured borrowing into a secured debt which will put your home at risk if you do not keep up repayments. It is advisable you get professional advice on the all the alternatives open to you.