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An IVA Offering a lump sum being a gift from
a relative
Background
Jane is 37 years of age and lives with
her husband in a property which is owned in his sole name.
She works part-time as a shop assistant and earns a net amount
of £350 per month.
She has incurred debt in her sole name,
without her husband's knowledge and her debts now total £29,785.
Due to her small income, she now feels
that her income will not enable her to repay her debts.
She has no assets, but a relative has
indicated that they will "gift" the sum of £5000 into an IVA.
Question
Will she be able to put forward an IVA
and would her creditors accept it?
Answer
In order for her creditors to accept
an IVA, the proposal would have to demonstrate that they would
receive a greater benefit than should a Bankruptcy occur.
As the period of a Bankruptcy is 3 years,
creditors would usually be looking for an IVA to run for a
period of 4-6 years, if monthly payments were being made.
However, in this instance, as Jane could
not afford to make a monthly contribution into an IVA or Bankruptcy,
then by accepting £5,000 creditors would receive a dividend
of 16.78p in the £ as opposed to 0p in the £ in a Bankruptcy.
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