IVA help - redundancy looming - urgent

Hi there

I'm not sure if you will get this reply, but I was wondering how things turned out for you. I hope well!!

I'm in a very similar situation, but I'm one year in to my IVA. I, like you here have found it hard to get replies on my thread for situations like this. If you could post an update about how you got on I would be very grateful, or if you have any hints and tips about how to approach this with my IVA company that would be great too.

I'm off work with stress at the moment and sitting up trailing through the forums looking for advise at 4.30 in the morning as I can't sleep.

Thanks
Angel-spirit

Check the terms of your IVA, some firms do offer a waiver of contributions in such circumstances for up to 12 months, up to twice during the lifetime. The payments are met by an in-built PPI type policy (not actual PPI obviously). When you get back into work, you start your payments again.

If not, typically the IVA will let you keep the equivalent of 6 months wages from the redundancy to help buy time to find a new job, and only any surplus after that has to be paid in.

A redundancy payment vests in the trustee in BR as it is earned income, and if over a certain threshold (all cases treated individually by Insolvency Service) then it would lead to revocation of a DRO.

You cannot get the debt under £20k as suggested above, the creditors are bound by the IVA so even if you tried then they have to return the money, but to the I.P. not you. Ignore that suggestion completely, however well intentioned (The OP could not do a DRO anyway as it seems a property is involved.)

If work cannot be found after the 6 months, then payment holidays or breaks can be arranged and added on at the end if necessary. The key is to communicate with the I.P. at all times, they are there to help after all.

As for 90% of IVA's being mis-sold, as far as I am aware the failure rate of IVA's is 20 odd % and almost all of those are due to a change in circumstances rather than it being the wrong product. Depends on how you set your criteria for arriving at the 90% figure I guess. If it is solely about how much money it would cost to become debt free then I would venture to suggest that, in cases where IVA is a choice, then a DMP will always be far dearer, even with a free one. DRO is cheapest, BR should be (not always) second, IVA 3rd and DMP last. If you apply that, and narrow the criteria to being purely about money and ignoring all other factors, then where does that leave debt charities that rely on DMP income to survive? Logically, why refer to StepChange at all then? I am sure that is not what is wanted or meant however, so assumptions as above have to be qualified somewhat. The ton of fees comment is also a pretty random one. IVA fees are driven by creditors these days, and they are not known for their generosity in that area. For example, ignoring debt level as it is irrelevant, affordability is the key, an IVA at £150 will carry fees usually limited by creditors to £1,000 nominees fees and 15% of realisations. Total paid in £9,000, total fees £2,200 or £36.66 per month. Other costs may apply, but they are costs rather than fees. Not overly excessive for 5 years work if you are having £x, 000's written off or x% of the debt written off. In comparison to a DMP, again, even a free one, likely to be far cheaper and far quicker. Choice is very important, and whilst I accept that the above example is only one in what could be tens of thousands of scenarios, the logic remains the same.

Ignoring DRO's for a moment, the bottom line is that people have to be paid for the debt solutions they provide, and that money has to come from somewhere. In a BR, it is the initial £680 fee and any IPO/IPA and/or realisations from assets (in cases where assets have to be realised, the cost of doing so will far outweigh the cost of an IVA, which is why BR is not always cheaper than IVA). In IVA it is nominee and supervisor fees. A free DMP still carries cost, albeit met by creditors who agree to pay a contribution (not all do, that's bad) and the potential of further interest and charges being added (it is good practice to freeze, but is not an obligation to do so). Otherwise, how do StepChange pay staff? Those creditor costs are of course then passed back to every consumer in the form of higher costs, so someone always pays.

I am certainly not rabidly pro IVA, as a DRO approved intermediary that would be nonsense, but a blanket dismissal of a valuable product in the fight against debt is also fraught with danger. The real elephant in the room is poorly advised DMP's, which may explain the FCA's reticence in granting full authorisation to a lot of organisations. At least one very large charity is still waiting to pass their approval process, even after all this time. Bad advice is still bad, even if free, and assuming that a product that carries cost is somehow always bad is an absolute red herring as well. Where appropriate IVA's can be fabulous and the cost is irrelevant.