IVA provider wants monthly payment before IVA agreed?

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cheapround
cheapround Posts: 31 Forumite
in IVA & DRO
Hello
Just after a small bit of advice as worried about this. We have contacted National Debtline who advised that an IVA was the right answer to our problems.
We have been proceeding through a provider since October and finally the proposal has been prepared and I have received this for signing, together with a standing order mandate directed to the exact person dealing with this.
Firstly is this normal procedure to pay the Solicitor acting on your behalf directly??
Also the standing order is due to start in December by which time the meeting with the creditors will not yet have taken place, also the company have advised as a large portion of our credit is with Northern Rock, that Northern Rock may not even agree to an IVA.
I am concerned that we have to start paying even though nothing has been agreed with the creditors as yet.
Does anyone have anything advice??
Thank you in advance:confused:
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Comments

  • Useless_with_wonga
    Useless_with_wonga Posts: 233 Forumite
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    Hi,
    Same happened to us. Initially we were with an IP and they asked for the same(Direct Debit) whilst preparing our proposal. They said it would show our creditors we were serious and could afford the monthly amount we were proposing. Anyway read the small print which stated that should the IVA fail at the creditors meeting our money would be returned MINUS admin fees etc etc.
    At this point i was not comfortable and told them so. I declined to pay anything beforehand stating i'd pay when the proposal was agreed and not before.
    As it happened ours failed at the creditors meeting and i am so pleased i did not pay anything upfront.
    My advice would be NOT to pay anything unless it's toward your IVA and AFTER it has been agreed/set in place which can't happen until AFTER the creditors meeting.
    Basically this firm you are using same as ours are asking for up front fees and some cushion should your proposal fail at the creditors meeting they will keep all or part of the money you have paid in claiming it as admin/fees etc etc either way it's in their pockets not your's.
    I assume you sought out your own IP you could always go via CCCS or Payplan who will NOT ask for anything upfront.
  • cheapround
    cheapround Posts: 31 Forumite
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    Thanks for your reply Useless with Wonga.
    Have spoken to them and they said if the IVA gets agreed at the creditors meeting I can pay then.
    Also have just found out that they should have advised me that an IVA would unlikely be agreed as large percentage of credit is with Northern Rock, they agreed this should have been picked up by them at the first stage! I am not at all impressed, however we have got this far so might as well see it out until early Jan 09. Then if still in the same position, will do a DMP and Northern Rock will turn our loan into secured and we may have to start again with an IVA!
    :beer:
  • Useless_with_wonga
    Useless_with_wonga Posts: 233 Forumite
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    That's good news then about not paying beforehand. Still don't sign the DD yet keep hold of it until you have a result at least that way you are in control of when you start paying and no one can sneak your money away before you have time to realise.
    Our IVA proposal failed due to MBNA voting "NO" they held 29% (ish i forget the exact figure now) of the debt and therefore 29% of the vote.
    Anyway i know what you are going through it's horrid sitting and waiting wishing the days away until the creditors meeting.
    With hindsight i am sort of pleased our IVA failed and we started up a DMP. Although it'll take longer at least i have more control over my money, overtime etc etc and no one has an expectation that i remortgage my house
    Still in the early stages of our DMP only 10 years to go:rolleyes: still i think i can reduce the term with some hard work and a bit of luck along the way.
  • skintandscared_2
    skintandscared_2 Posts: 2,781 Forumite
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    You have just basically outlined some of the main reasons why people avoid IVA's. You need 75% of the debt (not creditors) to agree to the plan, and you can have paid thousands to the solicitor before the plan is accepted or rejected. Is there any reason why you can't do a DMP instead?
    DMP Mutual Support Thread member 244
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  • cheapround
    cheapround Posts: 31 Forumite
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    skintandscared wrote: »
    You have just basically outlined some of the main reasons why people avoid IVA's. You need 75% of the debt (not creditors) to agree to the plan, and you can have paid thousands to the solicitor before the plan is accepted or rejected. Is there any reason why you can't do a DMP instead?

    Really because of the amount we owe and it would take years and years to repay it. Also we would not be able to do anything with our mortgage for a long long time (we will be on Northern Rock variable in march)
  • skintandscared_2
    skintandscared_2 Posts: 2,781 Forumite
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    The thing is, the plus side of the IVA is that, if it is accepted, you pay for a certain amount of time then whatever is left is written off. BUT you have the expense of paying someone to manage it for you and they have their fee. What's in it for them if you don't pay them unless your IVA is accepted? Are they expected to do all that negotiation for nothing? The upside with the DMP is that all your payment goes straight to the creditors, so they get more each month. But, as you point out, the DMP carries on until your debt is paid in full.

    So if you have large debts (like I do) then yes, it can take a long time to pay back. But I don't see any reason why I shouldn't pay it all back.

    I think the rules on IVA are just as strict as on a DMP so you wouldn't be able to do anything about your mortgage whether you were on an IVA or a DMP.
    DMP Mutual Support Thread member 244
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  • cheapround
    cheapround Posts: 31 Forumite
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    Useless_with_wonga wrote: »
    That's good news then about not paying beforehand. Still don't sign the DD yet keep hold of it until you have a result at least that way you are in control of when you start paying and no one can sneak your money away before you have time to realise.
    Our IVA proposal failed due to MBNA voting "NO" they held 29% (ish i forget the exact figure now) of the debt and therefore 29% of the vote.
    Anyway i know what you are going through it's horrid sitting and waiting wishing the days away until the creditors meeting.
    With hindsight i am sort of pleased our IVA failed and we started up a DMP. Although it'll take longer at least i have more control over my money, overtime etc etc and no one has an expectation that i remortgage my house
    Still in the early stages of our DMP only 10 years to go:rolleyes: still i think i can reduce the term with some hard work and a bit of luck along the way.

    Thanks, I appreciate your advice, will definately not send the DD. I can see ours would take at least ten years is there a maximum term you can set!!
  • cheapround
    cheapround Posts: 31 Forumite
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    skintandscared wrote: »
    The thing is, the plus side of the IVA is that, if it is accepted, you pay for a certain amount of time then whatever is left is written off. BUT you have the expense of paying someone to manage it for you and they have their fee. What's in it for them if you don't pay them unless your IVA is accepted? Are they expected to do all that negotiation for nothing? The upside with the DMP is that all your payment goes straight to the creditors, so they get more each month. But, as you point out, the DMP carries on until your debt is paid in full.

    So if you have large debts (like I do) then yes, it can take a long time to pay back. But I don't see any reason why I shouldn't pay it all back.

    I think the rules on IVA are just as strict as on a DMP so you wouldn't be able to do anything about your mortgage whether you were on an IVA or a DMP.

    Yes skintandscared, I do think that it should all be paid back, however we would like to try and change our product with Northern Rock maybe after the IVA had finished - whether or not that would be possible I don't know, but the thought of paying the standard variable rate for at least 10 years is a bit off putting.:eek:
  • skintandscared_2
    skintandscared_2 Posts: 2,781 Forumite
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    cheapround wrote: »
    Yes skintandscared, I do think that it should all be paid back, however we would like to try and change our product with Northern Rock maybe after the IVA had finished - whether or not that would be possible I don't know, but the thought of paying the standard variable rate for at least 10 years is a bit off putting.:eek:

    Understood. But from what I've read about IVA's, if you own property you are expected to refinance in the fourth year to raise the additional funds to clear your debts completely. Would that not affect your mortgage anyway? I know there ARE success stories with IVAs but the only ones that really seem to work are ones where people don't have properties and aren't pressured into coming up with extra finance at the end year of the plan. They seem like a quicker (and cheaper) solution at the beginning - even factoring in the fees which you pay to the solicitor to set up and manage the plan for you - but then turn out to be anything but!
    DMP Mutual Support Thread member 244
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  • Useless_with_wonga
    Useless_with_wonga Posts: 233 Forumite
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    cheapround wrote: »
    Thanks, I appreciate your advice, will definately not send the DD. I can see ours would take at least ten years is there a maximum term you can set!!

    No i don't think so it takes however long it takes you just pay what you can until it's gone. Obviously the more you pay per month the quicker it goes.
    Thing with an IVA is the process is legally binding and once agreed your creditors have to stop applying interest and charges which can't be guaranteed with a DMP.
    The downside for us was the remortgage business in year 4 and the fact that any overtime would be taken off us or at least 50% of it. By way of DMP that is not so and we feel more in control of how we address our debt with any "Extra" that we may have from Overtime etc.
    For us it was the way to go but only time will tell if we chose the right path.
    We have managed to get our debt down from just short of 50K to about 48K in the space of a few months and by intending to pay more into our DMP in the new year we can reduce the term from 10 Years to just over 7 Years and if we can add more later obviously it will come down even further still.
    I am aiming for 5 years same as an IVA but without the same restrictions remortgage business being involved however there are so many what if's it's impossible to say with any certaintity if it's attainable whereas with an IVA you have a definate end date.
    Also if you suffer any major problems whilst on debt managment, car breakdown etc etc on a DMP i think negotiation on lower payments is easier than when you are in an IVA.
    Think it through and i'm sure you'll choose the path most suited to your circumstances. Best of luck
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