# Bankruptcy or IVA in UK?



## marfsmal (31 Dec 2012)

Hi all.
I am just wondering what the chances are of getting bankruptcy granted for a person who has very little incomings and whose debt is credit card and personal loan type debt and whose debt is under 10k. 

Is there some place you can read previous judgments or rulings that others were granted? I have heard that in some cases the judge has ruled that the person would be more suited to the debt relief order rather than bankruptcy? 

Would appreciate any help at all.


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## Brendan Burgess (31 Dec 2012)

Hi Marf

How about waiting for the implementation of the new Personal Insolvency Act in Ireland and using a Debt Relief Notice? 

It's for debts under €20k 
But the time period is 3 years. 

However, I would imagine that once it's issued, the pressure from creditors will just stop.

Brendan


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## Time (31 Dec 2012)

Can the banks veto the notice?


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## marfsmal (1 Jan 2013)

I would normally do that but the government have been taking too long to put this bill into action so I'm not waiting. I actually would be surprised if it was up and going for people by September even.

Does anyone know anything about the DRO in the UK? It would seem to be a wise option at this point for me but I'd love to hear from other people about how they've gotten on with it.


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## marfsmal (1 Jan 2013)

The DRO will stay on your record for 6 years. Is there any chance I would qualify for bankruptcy with that amount of debt? At least bankruptcy is off your record after a year in the UK


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## Time (1 Jan 2013)

£750 is the min debt needed for bankruptcy in the UK.


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## Brendan Burgess (2 Jan 2013)

Are you sure that "bankruptcy is off your record" after one year? 

The bankruptcy period ends after one year, but I presume the fact that you were bankrupt remains on your record. 

But it's a question I have often asked - why would anyone opt for a 6 year Personal Insolvency Arrangement in Ireland vs a 3 year bankruptcy? The answer I am given is that they get to keep their family home.  In most cases, they would be better off just getting rid of the home and mortgage and getting a fresh start in three years. 

So maybe bankruptcy is better than a DRN in the UK as well.


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## marfsmal (2 Jan 2013)

Thanks Time, that's good to know. I'm researching the three main options in the UK- the DRO, the IVA and bankruptcy. 
I have no idea what applies if you have a mortgage but I thank god did not make that mistake myself.

There are a lot of people out there like me and living on nothing just to make repayments on different accounts. I can imagine that it must be far less of an issue if you have one debt, but it's a problem if you have two or more different credit cards/loans and if you can't get a consolidation loan.

The banks leave one with no choice.

I'll be sure to post up and update with how things go with this at any rate as there is a huge dearth of information out there at the moment and if I can help anyone else in the same boat as myself I'll be delighted.

I tried to get a consolidation loan but neither bank would give me one, despite my credit rating so far showing how I've paid back money continually, despite being late or behind. Any intelligent person would know I am a good payer, but good payers can turn into can't payers if there isn't some reasonable help available. Both banks turned me down without even doing a credit check on me anyway saying that they are just not taking on other banks' debt at all and that it would be no use applying. I was also told that we had a spectacular christmas and that the economy would be better this year and when I mentioned things like talk about the fiscal cliff, I was told that Irish people are not listening to that stuff.


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## Dr.Debt (2 Jan 2013)

This is a complex area.

Details of your bankruptcy will remain on your credit file for six years after your bankruptcy declaration however any debts that are included in your bankruptcy will be marked down to "nothing owing" after the bankruptcy has been discharged (one year)


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## marfsmal (2 Jan 2013)

So what would the fundamental difference be between the DRO and bankruptcy? I'm thinking that the DRO is probably the most suitable after all with my debts being less than 10k.


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## Dr.Debt (2 Jan 2013)

You can apply for a DRO if :-

1) You are domiciled in the UK or have been living there for at least 3 years
2) Your unsecured liabilities do not exceed 15000 pounds
3) Your total gross assets do not exceed 300 pounds
4) Your disposable income after deduction of basic living expenses must not exceed 50 pounds per month


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## marfsmal (2 Jan 2013)

Yep, and there is the other condition of not owning a vehicle worth more than 1000, Mine is borderline. Looking into that now.


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## Time (2 Jan 2013)

Transfer ownership to a relative for the duration? Honestly I can't see it being an issue.


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## marfsmal (2 Jan 2013)

It seems they ask on the form if you have sold or transferred any assets in last 2 years and I think they check databases... could be dodgy to try that Time.


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## Time (2 Jan 2013)

Fair enuff. I was thinking they may not be too strict about the value of the car.


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## Dr.Debt (2 Jan 2013)

Do you qualify under the domicile rule or have you been living in the UK for the past three years ?


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## marfsmal (2 Jan 2013)

Well as you know I am no expert on this but I've seen a post on another forum where someone got turned down because they didn't declare car ownership. Hopefully I'll be okay declaring as is.


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## marfsmal (2 Jan 2013)

Dr.Debt said:


> Do you qualify under the domicile rule or have you been living in the UK for the past three years ?



Yup, sure do.


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## Dr.Debt (2 Jan 2013)

Thats great.

I think the DRO is a much better option for you than bankruptcy although I would question your need to go for a DRO even ??

Anyhow, 10K / 15K is much too insignificant a sum to go bankrupt for.

Bankruptcy has much more negative and long lasting implications than a DRO.

Do you really need to go for a DRO at all. Could you not come to some solution with your creditors to avoid it ?


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## marfsmal (2 Jan 2013)

I'm happy to go down the DRO route at this point. I've looked into all other options. I arranged appointments with the two banks I deal with, went in in person to meet them to go through everything and as I mentioned above neither could consolidate for me.

Forbearance is of course an option but that goes down as a default on my credit rating (according to the person I spoke to in the personal credit department at one of the banks I deal with) and that mark stays there for either 5 or 6 years. DRO is same length of time. Yes, there are other considerations, but a DRO is more of a fresh start than the other.

I've no qualms about this. Have paid lots in interest on the credit cards over the years- the banks aren't really at a loss here.


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## Time (2 Jan 2013)

I wish you the best of luck with it.


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## marfsmal (2 Jan 2013)

Thanks Time. I'll let you all know here how it goes.

In the meantime if anyone has any tips or advice I'd be really grateful. Or feel free to PM me.


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## marfsmal (7 Jan 2013)

The ball is rolling now 

I also got some information on what they will be doing in the Republic eventually- it will be a similar set up to the options they have available in the UK which they have obviously used as their model but of course they went and did their own thing on it just to screw it up on people and it's not as good for debtors as what the UK have - _just_ as you might expect from the Irish system.

I have a further comment. It is a disgrace how the Irish government are treating the smaller debtors and the lack of information out there is a downright scandal. If it wasn't for a few people like Jill Kerby, Eddie Hobbs, and the odd person here and there there would be absolutely nobody talking about personal debt strangling those on lower incomes or social welfare. Shame on them, SHAME ON THEM.


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