My IVA story, the early part

Legacy_user

Hi Everyone,

I just thought I would write up my story so far re: my IVA.

After some umming and arrhhing (a lot) I decided that an IVA was probably the best way to go.

I had recently moved into a new job where my cost of travel had skyrocketed by over 200% and it was, initially at least, paying less, although the prospects where better.

The first month was bad, working out what money needs to be paid where etc etc as it is in the first month, however in further months I realised that I was not really going to be able to continue paying my debts as I was so I decided to go IVA.

I could have done a DMP but the timescales where a bit excessive to say the least. The main appeal of the IVA for myself was partly that it had a definate end date. After several years of battling debts it's good to have a final date. That and the fact that all my dealings are in real money now. I know there is no easy credit, so I have to manage on what I have, and so far, so good.

So what happens (This is the bit that may be of use)

1. After you have decided this is the road (and they will go through all options with you), they will send you a form to fill in, detailing all your creditors, how much you owe etc. Here it pays to be absolutely honest and put down every creditor, because it plays a big part in how much is paid back.

Your IVA company will also have your home valued. You may well have to release equity from your home in the fourth year, and usually about 75% of the equity will be released to your creditors. If you jointly own the property, 75% of your share of the equity will be sought.

Also another thing to note is that your partners wages ARE taken into consideration.

They will also require you fill in an income and expenditure report. Now here they understand that you have bills and the like. They will turn a blind eye to a bit of "optimisation"

You need to also fill in a part of the form as to why you are in your present situation. Again, I was quite honest and told them the reasons etc

You will also need to sign 2 forms, one giving them the right to handle your financial affairs and secondly, a land registry restriction form, so you can't suddenly do a runner or some sly move regarding giving the house away to your wife or similar.

At this point you can also send your creditors a note explaining that payplan are dealing with you and you intend to enter an IVA. To try and save some money by offering small token payments. I did.

**** HOWEVER **** If you have secured debts, or Northern Rock unsecured debts, keep paying them. Northern Rock have a nasty clause in their agreement that you signed that tells you they reserve the right to convert your loan to a secured debt if you default or don't pay the full whack everymonth (Thereby excluding it from the IVA)

Then you will have to sign yet another document called an R13, which is basically a doc that says you understand what you are doing, and you will also have a phonecall that covers the same ground.

It is at this stage that the offer is put forward to the creditors (usually happens within 3 weeks). In my case it was accepted, even including Northern Rock. There were modifications but I am not going to go into what, as I don't really want to be identified.

Now some hints and tips I picked up from my experience:

You WILL get nasty phone calls. Just tell them you are going in for an IVA. Also demand that all communication is done in writing, and follow up with a letter saying the same. If they continue to do this, they are breaking the law. Also these companies, although they may send nasty letters etc can't do much, so you can pretty much ignore them or refer them to payplan.

There is no rush in completing it. It may allow you to save up some cash.

Don't offer to make any additional payments. Pay them £1 each. If you do it online, just make £1 token payments. It is your legal right.

Make sure you can afford what they are proposing.

Make sure you put down for every single expense you can think of. You don't want to leave yourself short at their expense.

The lump sump from the remortgage is not gaurenteed, so if your credit profile in year 4 is terrible and are stuck on Standard Variable Rate wirhout the ability to reasonably remortgage, all they can do is extend the IVA for 12 months, which is a lot less than the equity you may have to release.

Be careful which IVA company you choose. It can make a large difference. Recommendations can be found here on MSE.

Just thought I would give you all this in the hope it helps someone.

Also, the question of was it worth it? So far, deffo. No more money worries, and some free cash each month. Also it will all be over relatively soon.

mother_hen_2

Thankyou for such an informative post.. I am still waiting for our IVA proposal to be drawn up after many weeks of waiting, still being harrassed by companies, (at home I can deal with -just- its awful when it happens at work).
Will I ever get to sleep at night/will the knot in my stomach ever go - I am also scared that I will not be able to manage on the little amount we are 'supose' to live of should the IVA get accepted, so its helpful reading your post - a little bit of hope for the rest of us.. (we are looking at repaying 25p back in the £1 do you mind if I ask what figure was accepted by your creditors?)

mother_hen_2

Forgot to ask how do you manage to get some cash left over each month? On the forms asking for amounts we pay out (i.e. such as hairdressers) we have left blank - wonder if we should of filled each box in?

Jam_Buttie

If you spend £80 a month on petrol, tell them you spend 90. etc etc.

Also do you wear glasses? this can be put thru as £12 a month.

I wear mine for driving, but I DO wear them.

When I took out my IVA I took a big risk as 3 of the 4 creditors were TSB, so if they said no, then I'd be up a creek with no paddle...!

trudij

you can also have up to £40 pm for pet care - to cover prescription diets etc...

mother_hen_2

Trudij thanks for that - do you need to provide receipts. for items that you have claimed for?

trudij

nope - when I set mine up, the girl on the phone had a list of the items, how much the allowance is (like the £40 pet food) and you just say what you use.She told me to go near the ceiling for most of the things,(to cover if something happened like needing replacement contacts or something.) I had two dogs, one of which was on prescription food,and that is exactly why its set that high.The whole thing with an iva is that you dont lose anything.Im even allowed £25 a month for contact lenses !!! I was told if you dont take the maximum on all the bits,you are more likely to be let have the total without being checked, but I have never been asked to prove my outgoings (other than the statements etc that they wanted at the beginning). Every year when I get reviewed, I send off my reciepts from my mechanics and the big bills, and they are taken into account as well.
Im in year 4 now, got 20 months left of it - its wonderful to know it will soon be over !!!

mother_hen_2

Thankyou for that reply.. glad its working out for you

bunnygirl007

Thanks 13000 and everyone els on this thread, its a great help as I am thinking about an IVA but have only just started looking into it and so far haven't found much info on what happens i.e. the steps of the process. This is great but i have a few more questions too.

Things that are holding me back (apart from fear of the unknown) are worrying they will not leave me anything to live on hardly and I also still have about £1400 car loan left to pay (finishes in Aug / Sept) so what would happen there with the car ? I can't lose the car as we live in a tiny hamlet with nearest shops 6 miles away plus need it for work - I'm past the stage where they can take it back.

Will my bank refuse to have me as a customer - I've been with them for over 20 years? I'm worried i may not be able to get an account anywhere else - I have a cash card account with Halifax which used to be a current account but they down graded it without telling me, when i asked they said it was becasue I didn't use it enough (I just used it for odds and sods). I don't really want to have my salary paid to them as i think their customer service is pants so would rather stay where I am with my main account.

I'm only just managing to make my monthly payments on everything but since interest rates went up I'm finding the payments hardly make any difference and the interest seems to be creeping up. Soon I will be in a situation where I can't make payments. At what stage should you apply for IVA I think i read somewhere you have to have already defaulted - I don't want to do this.

At the moment I'm needing my credit cards to live on - bad position i know!

How much cash do they tend to leave you with after everything else has been taken into consideration? Is their a set amount they consider you should manage on?

Lots of questions I know. Can anyone help or point me to another good thread so I can get a feel for how this works?

Many thanks

leanne2402

Hi, I'm currently in a IVA myself, started in june this year. Can say, at the mo it was the best thing i have done, all bit it a little stressful.

Bank account wise, you need to move to one that has no conection with any one you hold debt with. I was the same, i had been with my current account bank for over 10 years, but i did find it very easy to open a new one. You can get a current account BUT it can not have any sort of overdraft on it (so is better to get a cash card account that doesn't allow this to happen). I can recommend lloyds as theres comes with a visa debt card.

Monthly payment wise i have found the monthly budget you have is very fair, just make sure you claim for everything! I have a very high petrol allowence as i drive 120 miles a day for work, but have found with careful driving etc i have a little left. Don't get me wrong, its a shock to the system to have to live on a tight budget, but you get to grips with it, and even, shock horror, i'm getting some money put back to finish my house off.

I was in the same situation as you, where i caould just pay the min off each month. but then had to live off my credit cards to live. In the end i defaulted as just could cope any more. Get hold of the debt guys advised on here and see what they say.

Just remember that a IVA isnt for everyone, and really shouldn't be taken lightly. Its 5 years (or my case 6) of hard work.

Hope that helps.

Maxtout

When you say..........

"**** HOWEVER **** If you have secured debts, or Northern Rock unsecured debts, keep paying them. Northern Rock have a nasty clause in their agreement that you signed that tells you they reserve the right to convert your loan to a secured debt if you default or don't pay the full whack everymonth (Thereby excluding it from the IVA)"

I guess this would apply to Northern Rocks 'Togther' mortgage?