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IVA not the answer to debt

edited 30 November -1 at 1:00AM in IVA & DRO
3 replies 1.8K views
Shaz69Shaz69 Forumite
2 posts
edited 30 November -1 at 1:00AM in IVA & DRO
I was in debt of £15k (2 credit cards/1 loan and mobile phone bill), my partner left and I was left to pay the mortgage alone also. I was struggling and read an advert that said IVA could help by using new legislation I could control the debt, pay a monthly amount for 5 years and at the end of it be free of the debt.
I did this and paid £254 per month for 5 years -half way through the fourth year I had met my new partner and we approached my administrator to ask how much it would cost to close the debt, we expected it to be around £2,500 with administration costs and were absolutely astounded when we were told to clear the debt we would have to pay £12,649! This was apparently administration charges and also that I'd sold my home (which my administrator was made fully aware of - I'd had to put a £8,000 deposit on my new apartment as I couldn't get a mortgage that would allow me to put a smaller deposit on and had to use a broker that cost me £2,000 in fees) but had I approached my administrator and asked to pay off the debt at that point the charge to clear would've been nearer £4,000.
This man was nothing more than a shark profiting off a vunerable person. I have cleared the debt now but would advise anyone to get everything in writing not just be relieved that the burden is being released and you are going to be in a controlled situation with no one phoning demanding money and constantly worrying which bill to pay first.:mad:

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  • Deep_In_DebtDeep_In_Debt Forumite
    8.6K posts
    Part of the Furniture 1,000 Posts Photogenic Mortgage-free Glee!
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    Hi and welcome.

    Yep, couldn't agree more. IVA providers are generally "sharks" looking to make money out of the already financially vulnerable. IVA's are only suitable for a tiny percentage of people who have assets to protect. That said, my view is, if you have assets to protect and are expected to release equity in your property in year 4, how is that clearing your debt? It's just putting your home at risk for the next 25 years. Sorry if I'm being thick, but I wasn't prepared to pay off my unsecured debtors by way of a secured debt, thus putting my home at risk.

    IVA's are incredibly inflexible; a lot can happen in 5 years (as I discovered) and they don't seem to account for the rises in the cost of living.

    I'm on a dmp, ok, you do still get a bit of hassle but you learn to deal with it after a while. I was told it would take me 9 years to clear my debts on a dmp and 5 years in an IVA (plus a 25 year high interest rate mortgage!) but I've managed to reduce the dmp term to 6 years in a few months - far more flexible and I'll be mortgage free at the same time.

    I'm an IVA ranter! They are not the "quick fix" solutions that are advertised on the TV or in the papers.

    I'll go away now!
    Debt 30k in 2008.:eek::o Cleared all my debt in 2013 and loving being debt free :)
    Mortgage free since 2014 :)
  • Ummm!!!! Horses for courses and all that. I initially considered an IVA up to the point of having a creditors meeting arranged then changed my mind and backed out and opted to stay on a DMP.
    The IVA was initially attractive because i felt backed into a corner. I was worried Bankruptcy would affect my employment and felt that other than an IVA i had little choice.
    Anyway i plucked up some courage after a month or two of severe worry etc and spoke to my HR department, staff welfare etc and to my surprise Bankruptcy was not the issue it once was and although not good i found that it would not affect my employment. What a massive relief.
    Considering that i then thought oh well i'll carry on with an IVA at least it will be over in 6 years max and i will have a fresh start.
    I then realised that my DMP had been running smoothly for 2 months and that for whatever reason i have had no hassle or contact from any of my creditors to date. Only one creditor has yet to stop interest and charges and hopefully after my recent letter to them they will play ball too.
    I got to thinking that at least whilst on a DMP i am a bit more in control of my finances and do not have the restrictions that an IVA would entail namely i can choose what to do with any overtime etc. I intend to use it toward my debt but it's nice to know i can keep it all if i need to for unforeseen emergencies, you know stuff like broken cars and boilers etc.
    I was also scared off the IVA route due to the re mortgage business which i have to say to my mind just meant turning unsecured debt into secured debt and god knows i have remortgaged at least three times to consolidate debt this just seemed like the same familiar scenario to me albiet someone else was suggesting it as a way out. It's never worked before hence my current situation:o
    On top of all this my DMP will take 10 years to clear but i think that by gradually increasing my payments into it as and when that is possible i can reduce this down to the 6 or 7 year mark which is there or there abouts the same as an IVA.
    For me i like the fact that everything i pay goes to clearing my debt and not to paying in the region of 10K to an IP before my creditors see anything. I can track my progress on line and i can pick up the phone and get advice if i have any questions or concerns(Payplan)Should an IVA go wrong it leaves no where to go and has cost a fortune to have achieved diddly squat.
    I also don't want my details on the insolvency register for every Tom, !!!!!! and Harry to see this is obviously avoided on a DMP but not on an IVA.
    So for me i felt it was the wrong choice. All i would say is consider it very very carefully. I am sure it works for some but in my opinion it leaves you little to no room for manouvere with your finances should you need it. 5 years is a long time and as Deep in Debt says a lot can happen in 5 years.
  • Shaz69 wrote: »
    I was in debt of £15k (2 credit cards/1 loan and mobile phone bill), my partner left and I was left to pay the mortgage alone also. I was struggling and read an advert that said IVA could help by using new legislation I could control the debt, pay a monthly amount for 5 years and at the end of it be free of the debt.
    I did this and paid £254 per month for 5 years -half way through the fourth year I had met my new partner and we approached my administrator to ask how much it would cost to close the debt, we expected it to be around £2,500 with administration costs and were absolutely astounded when we were told to clear the debt we would have to pay £12,649! This was apparently administration charges and also that I'd sold my home (which my administrator was made fully aware of - I'd had to put a £8,000 deposit on my new apartment as I couldn't get a mortgage that would allow me to put a smaller deposit on and had to use a broker that cost me £2,000 in fees) but had I approached my administrator and asked to pay off the debt at that point the charge to clear would've been nearer £4,000.
    This man was nothing more than a shark profiting off a vunerable person. I have cleared the debt now but would advise anyone to get everything in writing not just be relieved that the burden is being released and you are going to be in a controlled situation with no one phoning demanding money and constantly worrying which bill to pay first.:mad:

    why didn't you just continue with your iva until it was finished? why ask to pay it off?
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