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An IVA offering "monthly payments" only
Background
Kevin is recently married without any
children. He has lived in his property, a semi-detached house
jointly owned by his wife, Jane for 8 months. The house is
valued at £58,000 but he has a mortgage on this property of
£58,750. He works as an insurance clerk in PAYE employment
earning £1,000 per month after tax.
His debts already total £28,000 and
he has been finding it increasingly difficult to pay the instalments
each month and feels he is robbing Peter to pay Paul.
Apart from his property which is owned
in joint-names with his wife, he has no other assets. Jane
has offered to support Kevin in order for him to offer payments
of £400 per month into an IVA.
Question
Will he be able to put forward an IVA
and would his creditors accept it?
Answer
In order for his creditors to accept
an IVA, the proposal would have to demonstrate that the creditors
would receive more benefit and a higher dividend than should
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.
Kevin would also need to demonstrate
that £400 is the maximum that he could afford to pay each
month whilst at the same time that this is a realistic figure
that Kevin would be able to pay each month.
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