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  • FIRST POST
    • Pam17
    • By Pam17 9th Jun 17, 5:03 PM
    • 2,922Posts
    • 1,358Thanks
    Pam17
    Urgent advice please re IVA
    • #1
    • 9th Jun 17, 5:03 PM
    Urgent advice please re IVA 9th Jun 17 at 5:03 PM
    In the post today was a letter from Creditfix for my daughter who lives with us. It is in relation to her "Proposed Voluntary Arrangement " which has a creditors meeting scheduled fo 19 th June.

    She has shown us the paperwork and to be honest I'm panicking. I know it's not our debt but we never knew she owed so much and would have helped if we had but she is insisting on sorting it herself. We just want to know if this looks like a good arrangement.

    So in summary she owes about £13800 and the IVA is as follows:

    60 months duration
    £190 per month
    Nominees fees £1100
    Total supervisory fee £1881.17
    Total disbursement £1529.40
    Dividend in Bankruptcy 27.69p
    Dividend in IVA 49.6p

    Can you tell us if this looks like a normal arrangement and what it actually means because £190 per month for 60 months does not cover the debt.

    Is it likely there can be any fee increase or any other costs which are not included in the contract and which I have not given above.

    Also how does an IVA differ from bankruptcy. I've googled but at the moment I can't understand the difference.

    And how does an IVA affect her credit rating.

    Finally if she accepted our help do these companies allow you to back out of the arrangement bearing in mind the creditors meeting is coming up soon.
Page 1
    • sourcrates
    • By sourcrates 9th Jun 17, 5:39 PM
    • 11,210 Posts
    • 10,876 Thanks
    sourcrates
    • #2
    • 9th Jun 17, 5:39 PM
    • #2
    • 9th Jun 17, 5:39 PM
    Hi,

    Yes its a perfectly normal arrangement, a certain amount of the debt will be written off on completion.

    Fee`s should not differ much from that stated.

    As with any debt solution, an IVA will badly affect her credit file for 6 years, there`s no getting away from that i`m afraid.

    An IVA is much less invasive than bankruptcy, you can pretty much carry on as normal with an IVA, whereas in bankruptcy you have an official receiver watching your every move.

    She will have a cooling off period, and she can cancel anytime before signing the paperwork.

    I have to question through, if an IVA is the right choice here, as her debt is only 13k, IVA`s are usually, but not exclusively, for much higher amounts of debt, would she not qualify for a debt relief order instead ?

    Google it, and see.
    I'm a Board Guide on the Debt-Free Wannabe, Credit File And Ratings, and
    Bankruptcy And Living With It, boards. I'm a volunteer to help the boards run smoothly, and I can move and merge posts there.
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.

    For free debt advice, contact either : Stepchange, National Debtline, or, CAB.
    For Legal advice see : http://legalbeagles.info/
    • Pam17
    • By Pam17 9th Jun 17, 5:59 PM
    • 2,922 Posts
    • 1,358 Thanks
    Pam17
    • #3
    • 9th Jun 17, 5:59 PM
    • #3
    • 9th Jun 17, 5:59 PM
    I think she doesn't qualify for the DRO because she has more than £50 per month surplus after making the minimum monthly payments.
    • sourcrates
    • By sourcrates 9th Jun 17, 6:07 PM
    • 11,210 Posts
    • 10,876 Thanks
    sourcrates
    • #4
    • 9th Jun 17, 6:07 PM
    • #4
    • 9th Jun 17, 6:07 PM
    I think she doesn't qualify for the DRO because she has more than £50 per month surplus after making the minimum monthly payments.
    Originally posted by Pam17
    You dont include debt repayments in your budget.

    Has she done a realistic budget ?

    If she can afford £190 a month for the IVA, then she wouldn't qualify for a DRO.

    She should be ok on the IVA, as long as its affordable.
    Last edited by sourcrates; 09-06-2017 at 6:14 PM.
    I'm a Board Guide on the Debt-Free Wannabe, Credit File And Ratings, and
    Bankruptcy And Living With It, boards. I'm a volunteer to help the boards run smoothly, and I can move and merge posts there.
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.

    For free debt advice, contact either : Stepchange, National Debtline, or, CAB.
    For Legal advice see : http://legalbeagles.info/
    • fatbelly
    • By fatbelly 12th Jun 17, 6:50 PM
    • 10,959 Posts
    • 8,161 Thanks
    fatbelly
    • #5
    • 12th Jun 17, 6:50 PM
    • #5
    • 12th Jun 17, 6:50 PM
    I don't think it is a good arrangement.

    She will pay £11400 over 5 years against £13800 debt. So she's declaring insolvency for a £2400 saving over 60 months.

    Whether it's the best strategy would depend on looking at the big picture, and I wonder if anyone has done that, or did she just approach an IVA company and say 'what should I do?' No surprise at the answer if she did that.

    An IVA can be viewed as bankruptcy for those seeking to protect an asset, such as a house or business. Is she doing that or would she be better with normal bankruptcy and an IPA for 36 x 190 = 6480.

    Or avoid insolvency altogether and do a debt management plan with full & final settlement to finish things off?

    And I would not be so quick to rule out a DRO. An IVA-pusher would try to maximise the surplus for their own and the creditors' benefits. A DRO intermediary might come to a very different view of the surplus.
    • Johnsmith2016
    • By Johnsmith2016 18th Jun 17, 7:15 AM
    • 431 Posts
    • 221 Thanks
    Johnsmith2016
    • #6
    • 18th Jun 17, 7:15 AM
    • #6
    • 18th Jun 17, 7:15 AM
    For 13k I'd say there is almost certainly a better option. Could you get a loan of 13k at 3% with M&S over 5yr about £230 a month that she repays you.

    Failing that do a budget for a DRO, as and IVA seems drastic measures for only 13k

    Next stop would be bankcrupty if she owns no assets over an IVA - in my opinion of course . Did she take advice and an IVA was considered the best option?
    • BrightLights14
    • By BrightLights14 19th Jun 17, 3:20 PM
    • 52 Posts
    • 34 Thanks
    BrightLights14
    • #7
    • 19th Jun 17, 3:20 PM
    • #7
    • 19th Jun 17, 3:20 PM
    I don't think (and this is just my opinion) she should go down this route. £13k is a relatively small amount of debt and if she has nothing to protect like a house (which I presume she doesn't), it just doesn't make sense. Investigate the DRO, and if not maybe look at a DMP through one of the free debt charities like Payplan or Stepchange. This will be a much more flexible arrangement than an IVA, which at her age could have a huge impact on her career prospects. IVA's aren't as restrictive as bankruptcy, but they're still pretty restrictive. For example, she'll have to hand over any surplus income she makes from when the agreement was made - which means she could end up paying back way more than she owes if she gets a promotion/payrise in the next 5 years. Good luck to her xxx
    and here you are living, despite it all
    - Rupi Kaur

    LBM August 2013 - debt: £27,181
    May 2017 - debt: £10,725
    DFD - November 2018
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