40k In Dept IVA Help Needed

Tommydeeuk

Hello Everyone

I have been reading so many peoples posts and have gained so much help from them so thank you.
I am 40 k in dept with loans and credit cards, still trying to look at how I got into 40 k as I don’t have much around me that costs anywhere near it !!!!!!
So with the overtime at work drying up and the interest rates and payments on the credit cards going up I finally decided to take my head out the sand and do something about it. I have to admit it was causing me some stress.
Cut a long story short the first people that have got in touch with me is a company called Churchwood Financial, who said that my best solution would be an IVA. So I decided to get more than one opinion and after reading this site went onto the CCCS website, filled in the dept remedy information that they requested, this too came up with an IVA or a DMP. (I am edging towards an IVA though it might mess up your credit score but this may not be a bad thing in my case human nature and all that.)
Can anyone tell me if all these companies charge around the same is there any I should not touch with a barge pole? If I get refused an IVA can I still go for a DMP? Any information on Churchwood at this stage would be good, as they said that I will only pay one up front fee of £500 as its Government funded and as long as I qualify there should not be any other charges.
Don’t worry I am waiting to talk to an IP adviser from CCCS but that’s a week on Tuesday.

My situation is according to my dept remedy budget:

Income £1700
Outgoings (without Cards and Loans) £1270
My total Creditors List is £38596 total and £1059 per mth.

So my short fall is around £600 a mth.


Tim

Deep_In_Debt

Hi

Are you sure that it's an IVA that Churchwood recommended? Fees for IVA's are a lot higher than that - usually around 7k. They may have recommended a dmp. In which case, go with CCCS who won't charge for a dmp.

You can go for a dmp if an IVA is refused. Why not start on the dmp route first and see how it goes?

Radiantsoul

There is an IVA sub-board on the bankruptcy forum.

If you enter an IVA it will essentially be your creditors that pay for the arrangement. Most likely you will pay over all surplus income to your IVA supervisor, they will deduct their fee(Agreed with creditors) and pay over the residual to creditors. The £500 is just an upfront fee that you will have to pay.

IVAs tend to last for years(perhaps five years). You have £40k debts and can pay less than £500 per month, therefore a DMA would last 80 months, plus you would have to pay a management fee if you choose a private company.

You don't state what asset you have if any. The other option is bankruptcy which lasts a year and that is it. You will lose all your assets, surplus income and your credit record(but that must be terrible anyway).

It might well be that you have a house with some equity in and getting an IVA or DMA might allow you to keep this. But on the other hand if you don't release the equity creditors are unlikely to accept any arrangement. I think you should consider bankruptcy.

fatbelly

Both IVA and Bankruptcy are insolvency options. The IVA route will be about three times more expensive than bankruptcy (I've done some rough figures based on what you say) - IVA would normally be used by someone who was trying to protect an asset such as a house or a business.

Firms such as Churchwood do try to push you down the IVA option because of the fees as DID mentioned - 6 to 8 k is typical.

Radiantsoul

fatbelly wrote: »

Both IVA and Bankruptcy are insolvency options. The IVA route will be about three times more expensive than bankruptcy (I've done some rough figures based on what you say) - IVA would normally be used by someone who was trying to protect an asset such as a house or a business.

Firms such as Churchwood do try to push you down the IVA option because of the fees as DID mentioned - 6 to 8 k is typical.

To be fair to the companies IVAs are generally more complex to administer and set up and that is why the fees are higher. With bankruptcy all assets and sold, all surplus income is taken and then any surplus is distributed. IVAs require more organisation and renegotiation as individuals circumstances are likely to change over the timescale of the IVA.

A further advantage of IVAs is that the supervisor does not need to pay funds into the government bank account(which creams off 15%). But in generally the extra costs of administering an IVA more than offset this.

IVAs don't count as insolvency in the same way for people like solicitors and accountants and so are often preferred by people who might find bankrupcy career ending.

Deep_In_Debt

IVA's are less flexible than dmps too. If your circumstances change, and you can no longer afford your IVA, you would have paid a lot in fees and often creditors don't see a penny of it for a few months.

A dmp is more flexible - if your circumstances change, then you can reduce the amount you pay etc. There are always risks, creditors can take you to court, etc but if you are on a dmp the courts will generally see that you are trying to clear your debts.

Tommydeeuk

Thanks Deep in debt for the advice, will look at DMPs a bit more see if it is a viable choice.

RAS

Read Martin's IVA Guide http://www.moneysavingexpert.com/loans/pdf-iva-guide.pdf

The thing we keep encountering her is folk who start an IVA and then find they cannot keep up the payments, so it fails.

For example, pregnancy, ill-health or job loss can all mean that the debtor does not have enough to meet the creditors requirments to keep the IVA going. They may have already paid in a couple of years and lose all of that and usually go bankrupt.

If you are absolutely sure there is no chance that you are going to have an acident, get unwell or lose your job, they can be great.

RAS

Tommydeeuk wrote: »

Thanks Deep in debt for the advice, will look at DMPs a bit more see if it is a viable choice.

And also check out PPI and charges reclaims etc.

Radiantsoul

RAS wrote: »

Read Martin's IVA Guide http://www.moneysavingexpert.com/loans/pdf-iva-guide.pdf

The thing we keep encountering her is folk who start an IVA and then find they cannot keep up the payments, so it fails.

For example, pregnancy, ill-health or job loss can all mean that the debtor does not have enough to meet the creditors requirments to keep the IVA going. They may have already paid in a couple of years and lose all of that and usually go bankrupt.

If you are absolutely sure there is no chance that you are going to have an acident, get unwell or lose your job, they can be great.

I agree with this. IVA tend to fail they have to last long enough to satisify creditors, but this just means there is more time for things to go wrong. I would say that most people are probably better off with bankruptcy as it draws a proper line under things. Unless you have a house I can't see the point, and even then bankruptcy is not so bad if it jointly owned with limited equity.

Radiantsoul

Tommydeeuk wrote: »

Thanks Deep in debt for the advice, will look at DMPs a bit more see if it is a viable choice.

My opinion is that it is not appropriate for you. You have less than £500 per month that you could pay into a DMP. So it is going to take about 90 months to clear you debts, and that is assuming your creditors agree to freeze interest(which they are not oblidged to do) and don't get bored and go to court.

Your best bet is probably http://www.cccs.co.uk which is a charity can run a DMP or give advise for free.