Food for Thought
June 4th, 2008 by BrettEnglandIt has been a while since my last blog and due to a heavy diary of late I have been away from the forum and site for a short term.Â
Firstly I thought I would talk about the Debt Debate, It was a well organised and controversial eventdiscussing IVA v Bankruptcy.Â
I felt the answer to this question was as I expected, this being that it is purely down to the individual circumstances of the debtor.Â
Both IVA and Bankruptcy are great solutions, but which one is best can only be decided by the debtor themselves. It was made clear, however that the debtors do not always get the option of having the choice and the clear picture is that debtors should investigate all options available.Â
The same point erupted again, however that there are still no figures published on the failure rates of IVA’s. Each year figures are published on the number of IVA’s and Bankruptcies, but there is no indication of how many IVA’s fail each year and result in Bankruptcy giving a true picture on the outcome of IVA’s as a solution.Â
In all cases I deal with and at the events and debates I attend there is always finger pointing.We are a blame culture and always hear talk of irresponsible borrowing on the part of the debtors and irresponsible lending on the part of the creditors.Â
Insolvency professionals, the Insolvency service, the media all talk about the creditors and the debtors, However I feel there is a party to insolvency proceedings who invariable gets overlooked, that party being the Spouse or Partner of the debtor.Â
If you look at IVA’s and Debt Management the joint income and joint expenditure is taking into consideration.  What happens where the debt is only in one name and that person has a low income, well this seems to be overlooked. I have seen IVA cases where the debtor only earns £400 per month, but having to pay £600 into an IVA leaving not only the partner or spouse to brunt all the monthly living costs, but contribute towards the IVA also.Â
In Bankruptcy the calculations for disposable income will take into consideration a fair breakdown of the income against joint expenditure, allowing the non bankrupt spouse to enter contributions rather than full income.Â
I still feel however the non Bankrupt spouse is shifted to one side, especially when dealing with the matrimonial or jointly owned home.The trustee will make their calculations for the Bankrupts beneficial interest in the property and offer this to the spouse, however in a number of cases we see it is to late and no provisions have been made for the spouse or partner to afford this.Â
This lack of information could result in the loss of the home.
I think people worry about the rights of the debtor or creditor who obviously are effected by the situation, but I think more thought should be given to those who find themselves caught up in these proceedings where clearly there is no fault or finger to be pointed. Â