Looking at an IVA

tyllwyd

I was looking around and ended up here http://www.debthelpuk.co.uk/info/iva_pros_and_cons.htm which says

'The Effect on Your Future Credit
IVAs do impair your credit worthiness. Certainly whilst the arrangement is in place, credit will be something that you will not be allowed to take without the permission of the arrangements supervisor. '

so I'd guess that buying a replacement car would be very difficult.

james32_uk

I suppose the thing is that I can afford to budget for around £350 per month on repayments. I have two choices:

1) DMP where not all my creditors are likely to accept this plan and I will no doubt end up with threatening letters, calls and possibly court action. It will take me 10 years to complete and a further 6 years before I have a 'clean' credit file. That's 16 years!!!

2) If I can get an AVI all creditors will legally be forced to accept the conditions it binds. It will take me 5 years to complete my payments and only 1 further year to before I have a 'clean' credit file. After all the interest and penalty payments I've made through the years I will certainly not lose any sleep over this.

I can't see how any rational person would choose option 1?!??!

ms_london

To be honest, when I had my "lightbulb" moment and when I realised how much I owed (and couldnt get any more credit), I didnt realise that there were so many options available in terms of becoming debt free. I had heard of Debt Free Direct and Baines & Ernst, and was in the process of setting up something with them, thinking they could help me get out of the mess I had gotten in to (not knowing that they charge you for their services!!). So perhaps if someone had outlined what was available to me, I might have gone down a different route. I know that I have defaults on file, so my credit rating is shot to pieces as it is - although I do have a Cap One credit card (29.9%!!) - it is just for my trip really!!

Not sure what my point is, but there are advantages & disadvantages of each route.

Of course, noone wants to be hounded by creditors, but it can also be done so that interest is stopped & creditors do accept your proposed repayments - it does happen you know!!

ms_london

james23_uk wrote:

3) My car is also on it's last legs. If it gives up the ghost, how likely would I be able to get a new one on secured loan/hire purchase?

Surely if you cant afford higher repayments you wouldnt be able to afford another secured loan/hire purchase on a new car?

This is exactly why IVA's and the like arent a good idea, because you learn **** all about budgeting and the true value of money.

It still amazes me that people who have been declared bankcrupt can get credit further down the line. They do get credit. And then they end up back on here saying how they are in debt again. (But lets save that for another time shall we!)

Cant you save for your new car?

james32_uk

A car would be completely out of the question on an IVA ( I was only talking of about a grands worth by the way). I would have to save for it. Trouble is, like many people I rely on it for my job.

ms_london

james23_uk wrote:

A car would be completely out of the question on an IVA ( I was only talking of about a grands worth by the way). I would have to save for it. Trouble is, like many people I rely on it for my job.

Know what you mean, which is why I moved to London (originally from the sticks and my car caused me more hassle than it was worth!).

Check out the website I in my other post (Kronos) as he makes some good points about IVA, and other options - perhaps that will answer your original questions.

sparkle84

james23_uk wrote:

I suppose the thing is that I can afford to budget for around £350 per month on repayments. I have two choices:

1) DMP where not all my creditors are likely to accept this plan and I will no doubt end up with threatening letters, calls and possibly court action. It will take me 10 years to complete and a further 6 years before I have a 'clean' credit file. That's 16 years!!!

2) If I can get an AVI all creditors will legally be forced to accept the conditions it binds. It will take me 5 years to complete my payments and only 1 further year to before I have a 'clean' credit file. After all the interest and penalty payments I've made through the years I will certainly not lose any sleep over this.

I can't see how any rational person would choose option 1?!??!

This is not true (re the DMP) a default is given once on a debt for example a default is issued on 20 March 2006 if you go for a DMP that default falls off on 20 March 2012 (six years) most debt collectors/creditors won't go for a CCJ if you are upfront with them and go through someone like Payplan or CCCS. A DMP is much more flexible than an IVA are you aware that if the IVA fails the IP will have to make you bankrupt, how much is your debt? By the way don't believe what DFD or Baines and Ernst tell you there is no way 90% of you debt will be wiped out this will never happen, also the IP fees will be added to you debt (approx £5,000). Is there any reason you can't go bankrupt?

headchef

james23_uk wrote:

I can't see how any rational person would choose option 1?!??!

I'm VERY rational. Which is probably why my creditors don't hassle me now even though I'm on a lowly DMP :rolleyes:
Whichever route you go down, your attitude counts for a lot with creditors. If you do your research (on here is a brilliant place to start), and know what debt collectors can and can't do then stay calm and professional with them on the phone, you're more likely to stop the hassle.
Not saying it will always work as some stories on here will testify but when you owe money, it doesen't seem to matter whether you're on a DMP, IVA or bankrupt, there are those in the debt collection trade who will chance the odd phone call to get a bit more (I kid you not!).
And as Sparkle said, the default isn't issued once you clear your debts, it's issued when you break your credit agreement (by missing a few payments, or coming clean and having to negotiate lower payments). So although my debt free date may be some way off at the moment, my file will be clean by early 2011.
I think it's really worth you looking back at some threads to pick up on some stories from those on IVAs. The more knowledge you have, the more able you are to make an informed choice. Basically we're a nice bunch and we don't want you to go head long into something that may not suit you.

IN_LIKE_EVERYONE_ELSE!

James, from what I have read you have no assets, you have some surplus cash at the end of the month, and, as you say are very rational, I suggest bankruptcy. Lets have a look at your SOA.

ILEE

donnalove

ms_london wrote:

Surely if you cant afford higher repayments you wouldnt be able to afford another secured loan/hire purchase on a new car?

This is exactly why IVA's and the like arent a good idea, because you learn **** all about budgeting and the true value of money.

It still amazes me that people who have been declared bankcrupt can get credit further down the line. They do get credit. And then they end up back on here saying how they are in debt again. (But lets save that for another time shall we!)

Cant you save for your new car?

how do you NOT learn to budget or learn the value of money when you are in an iva.We had to, they take every bit of spare income you have.So if anything goes wrong that money has to come out of what you have got and that means cutting back elsewhere.
It isnt an easy route and it is more restricted than a dmp, but believe me you deffinately(spelling) do learn the true value of money.

james, taking on an iva is very restricted more so than a dmp and should only be used if you know you can stick to the plan for 5 or 6 years.You could put a small amount on i&e in your car budget to save for another car, you should discuss this with your ip(if you decide to go this route).