Converting IVA to unsecured loan

I haven't posted on this forum before but I was wondering what people's views are on converting an IVA into a loan.
I have recently completed the third year of my IVA out of a six year term. The terms and conditions of my IVA are pretty straightforward and I know exactly what my commitment is each month and the exact end date of the arrangement.
Last month, the IVA provider gave me the option of converting the IVA into a loan and as a sweetener, the amount outstanding on the IVA would be reduced by £500.
The pros, as far as I can tell, are as follows:
- My name would be removed from the insolvency register with immediate effect
- If I had a windfall, I could repay the amount outstanding on the loan without any penalty

The cons are as follows:
- the repayment term would be increased by 12 months to a 48 month arrangement
- the amount that I would repay each month would increase by 20%
- the APR on the loan would be 39.9%
- the total amount of the loan if it was carried through for 48 months would be £2100 more than
I currently owe under the terms of the IVA

I would appreciate any advice or shared similar circumstances from other users. For me, the temptation to accept is that I would probably be able to access funds pretty quickly after the loan had been agreed and pay it off in full.

I was also trying to seek clarification as to how my creditors would agree to this arrangement.

Apologies if my question seems naive, but I'm no financial expert!

Thanks for any feedback.

Michael

Comments

  • sourcrates
    sourcrates Posts: 28,711
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    I did not even know this was possible.

    Check any information page on IVA`s, no were have i seen an option for turning it into a loan.

    Has this come from your IP ?
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • connor08
    connor08 Posts: 92
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    mikeyt61 wrote: »
    I haven't posted on this forum before but I was wondering what people's views are on converting an IVA into a loan.
    I have recently completed the third year of my IVA out of a six year term. The terms and conditions of my IVA are pretty straightforward and I know exactly what my commitment is each month and the exact end date of the arrangement.
    Last month, the IVA provider gave me the option of converting the IVA into a loan and as a sweetener, the amount outstanding on the IVA would be reduced by £500.
    The pros, as far as I can tell, are as follows:
    - My name would be removed from the insolvency register with immediate effect
    - If I had a windfall, I could repay the amount outstanding on the loan without any penalty

    The cons are as follows:
    - the repayment term would be increased by 12 months to a 48 month arrangement
    - the amount that I would repay each month would increase by 20%
    - the APR on the loan would be 39.9%
    - the total amount of the loan if it was carried through for 48 months would be £2100 more than
    I currently owe under the terms of the IVA

    I would appreciate any advice or shared similar circumstances from other users. For me, the temptation to accept is that I would probably be able to access funds pretty quickly after the loan had been agreed and pay it off in full.

    I was also trying to seek clarification as to how my creditors would agree to this arrangement.

    Apologies if my question seems naive, but I'm no financial expert!

    Thanks for any feedback.

    Michael
    hi micheal I haven't heard that you could convert an iva into a loan ive always been afraid of iva because my idea of an iva was while you had this iva in place you couldn't take any more debt out against your name until the iva had finished however Ive never had an iva so I wouldn't know but look it up and ask citizens advice first they have a money line or you can phone the oney advice line or even national debt line just becarefull I hope an expert on here will answer your question if you put in google advice and the country you live England or wales etc it will bring up the citizens advice web site and you can enter you question in there and I think there is a live chat option on there I hope I have helped
  • Thanks for replying.

    Yes I was contacted by IP and advised that because I had an exemplary record repaying the IVA for 3 years, I had been 'selected' for invitation to convert IVA in to a loan. Like you, I didn't know that this existed as an option.
  • sourcrates
    sourcrates Posts: 28,711
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    mikeyt61 wrote: »
    Thanks for replying.

    Yes I was contacted by IP and advised that because I had an exemplary record repaying the IVA for 3 years, I had been 'selected' for invitation to convert IVA in to a loan. Like you, I didn't know that this existed as an option.

    I would say be very careful.

    Give National Debtline a ring, run it past them.

    I just dont see how an insolvency arrangement can be turned into a loan ???
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • fatbelly
    fatbelly Posts: 20,380
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    Yes this is the latest twist from the IVA pushers.

    Debt Camel has it covered here

    https://debtcamel.co.uk/perinta-loans-end-iva-early/
    https://debtcamel.co.uk/aperture-iva-exit-loan-sprout/
  • sourcrates
    sourcrates Posts: 28,711
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    fatbelly wrote: »
    Yes this is the latest twist from the IVA pushers.

    Debt Camel has it covered here

    https://debtcamel.co.uk/perinta-loans-end-iva-early/
    https://debtcamel.co.uk/aperture-iva-exit-loan-sprout/

    Thanks Fatbelly, it seems debt camel are not that impressed by this new venture then.
    Can't say I see much benefit in it either to be honest.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • fatbelly
    fatbelly Posts: 20,380
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    I think it can be useful in certain circumstances. But the benefits are going to be oversold because there is (more) money in it for the sellers.

    The comments underneath the article question the legality of this.
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