How an IVA with Payplan works

I thought it would be good for me to share my knowledge of how an IVA with Payplan works. Please note that things can be different in different circumstances. Also I DO NOT know how these things work if you have any large assets such as property. I suggest to everybody that you speak to either Payplan or CCCS to talk through what options would be best in your individual circumstances.

1) Ring up Payplan and talk through your issues. They send you a pack where you fill in your income, expenditure, assets and debts. You send it back and they work out your surplus income and ring to talk you through your options. They will suggest some course of actions that best fit your circumstances.

2) If an IVA is an option then they will send letters to all your creditors asking for a total balance outstanding. With your surplus income and your total credit balance they can work out how much of your debt you can pay back over 5 years. This proposal will be a % of your total remaining debts. eg, if someone owes £50k and has £400 surplus per month they will repay 400*60= £24k. A proportion of this goes towards their fees which would leave, say, £18k left for creditors. £18k is 36% of the £50k owed so 36% would be your proposal.

3) You would then have to sign some forms agreeing to an IVA and Payplan would put this proposal to your creditors.

4) A creditors meeting would be called for 20ish days later where creditors would send in their decision by letter. Their share of vote is pro-rated to their share of your debt, so a bank to whom you owe £10k would have 10 times the share of vote than of a credit card with £1k on. Of the creditors who bother voting (most of the smaller ones won't), you need 75% of the value of creditors to vote in favour for it to go through. It's common for companies to accept, but with conditions, that you either can accept or reject. This can be anything from a larger % demand to additional clauses about bonuses/overtime etc.

5) If accepted you pay a MINIMUM of the agreed amount to Payplan over 5 years who distribute this to your creditors on your behalf. It's normal for your financial circumstances to be reevaluated every 12 months and changes in your circumstances can result in increased payments being necessary. Any lump sum windfalls (such as bonuses, gifts etc) over £500 have to be declared and anything over £500 goes into your IVA.

6) Once the 5 years has been completed and the payments been made all your debt is wiped off and you get to start with a clean slate oweing nothing. Your IVA remains on your credit history for a further 12 months (6 years in total).

7) Learn from your lesson and never use unsecured debt again!

For me the whole process took about 10 weeks from the first phone call.

As I said, I'm not sure how property works. I think you're probably required to at least give up some of the equity in your property if you have any.

And to close, again I say you MUST ring CCCS or Payplan. There's no obligation until the very last minute with these guys and they make it very easy. Totally non-judgemental they are sympathetic to any situation and at no point have I had to physically meet anybody. All done through post and the phone.

The very best of luck to all who are reading this