IVA - 6 month rule re not increasing debt. Anyone know about it please?

blownalot

I have just spoken to Payplan about starting an IVA and the adviser told me that there is a little known rule that you can't have taken any credit in the last 6 months before going in to an IVA. This is a problem.
As I cant afford to repay my overdraft the interest charges are adding up and I am now told that this will prevent me from getting in to the IVA as I am effectively taking more credit each time I get hit with a late payment charges or interest. i.e. The balances keep increasing on all my cards and loans.
If this is the case then how is anyone supposed to get into an IVA without doing 6 months on a Debt Management Plan first?

Thanks
Blownalot

Wonder_Girl

This means you can't have taken out any NEW credit, i.e a new loan or credit card etc.

Interest and charges etc are just a cost on an existing credit agreement if you get my drift.

WG x

blownalot

Thats what I thought but the guy from Payplan said that even if I simply went further overdrawn or the amount owing on my credit card increased then I wouldn't be able to go for an IVA.

notmyrealusername

I think he meant that you need to stop using credit facilities ie spending on credit cards, or using the overdrawn bank account.

I am in the early stages of setting up an IVA through payplan, and that is what my advisor told me. I had recently increased the credit limit on one of my credit cards and was worried that this would stop me applying for an IVA as it could be seen as 'new' credit but I was told that it would be OK as the credit agreement itself was more than six months old. I am currently making token payments to all my creditors so by the time interest and charges are added on my account balances are going up every month but this is not classed as spending on the account.

If you havn't already you need to open up a bank account which is not connected to your creditors and get your salary paid in there ASAP.

frankie1_2

I have just started an IVA myself with Payplan.
I was told I could not have had any 'additional' credit, ie. new cards or loans before starting my IVA, so you should be ok.
You must get a new current acount as advised by 'notmyrealusername'. Be prepared to go overdrawn during the transfer of direct debits etc to your new account. You may wish to agree a lower repayment figire with Payplan for the first couple of months until you get your new current account straight, as I have found myself horribly short of cash in the first couple of months. Payplan were really understanding and gave me back 50% 0f my repayment in the first month

james32_uk

Yeah, this is totally not the case. Everyone who's applying for an IVA will be having charges and interest put on their existing credit. Not a problem.

Addicted2Chocolate

agree with James23_uk the guy is wrong, if the bank keep bouncing say their own loan repayment after refusing to cancel it, and puting further charges and interest then you cant help it.
think the payplan guy must have misunderstood.

blownalot

Thanks. He was suggesting doing a DMP for the next 6 months and in the meantime working towards the IVA. I would rather get into the IVA as soon as I can because as I understand it not everyone has to accept the DMP and the phone calls and threats of court action could continue in the meantime anyway.

On the subject of phone calls - last week one of the collectors from Morgan Stanley told me that at the creditors meeting it could be that the creditors agree that the IVA should run for more than 5 years. I said that I didnt think this was true but she was adamant. I forgot to ask the guy from Payplan today but was she right?

I have to say that MSDW have so far been the worst to deal with. They insist on being able to call me on my home number as apparently its in their terms and conditions that I have to give it. I refused to give them my new work number but unfortunately I had already told them where I work. I said I didnt want to be called at work as it's an open plan office and everyone can hear what is said. She said that it didnt matter if I didnt give her the number as she would look it up in the phone book anyway.
MSDW also try to trick you into paying them money by saying they will hold off any action if you pay £x. THey caught themselves out on this because the default notice had already arrived on my doorstep the day before and she ws quite happily sitting on the phone telling me that she could stop it being issued if I paid her £59 there and then. I told her I didnt have the £59 and she suggested that I could borrow it from someone. Are they allowed to suggest that I get in to more debt? Given that she knows I already owe £160k in insecured borrowing I think she was being a bit hopeful !!

blownalot

Thanks. He was suggesting doing a DMP for the next 6 months and in the meantime working towards the IVA. I would rather get into the IVA as soon as I can because as I understand it not everyone has to accept the DMP and the phone calls and threats of court action could continue in the meantime anyway.

On the subject of phone calls - last week one of the collectors from Morgan Stanley told me that at the creditors meeting it could be that the creditors agree that the IVA should run for more than 5 years. I said that I didnt think this was true but she was adamant. I forgot to ask the guy from Payplan today but was she right?

I have to say that MSDW have so far been the worst to deal with. They insist on being able to call me on my home number as apparently its in their terms and conditions that I have to give it. I refused to give them my new work number but unfortunately I had already told them where I work. I said I didnt want to be called at work as it's an open plan office and everyone can hear what is said. She said that it didnt matter if I didnt give her the number as she would look it up in the phone book anyway.
MSDW also try to trick you into paying them money by saying they will hold off any action if you pay £x. They caught themselves out on this because the default notice had already arrived on my doorstep the day before and she ws quite happily sitting on the phone telling me that she could stop it being issued if I paid her £59 there and then. I told her I didnt have the £59 and she suggested that I could borrow it from someone. Are they allowed to suggest that I get in to more debt? Given that she knows I already owe £160k in unsecured borrowing I think she was being a bit hopeful !!

fatboy88

On the subject of phone calls - last week one of the collectors from Morgan Stanley told me that at the creditors meeting it could be that the creditors agree that the IVA should run for more than 5 years. I said that I didnt think this was true but she was adamant. I forgot to ask the guy from Payplan today but was she right?


yeah i went to ask at the CAB and they didnt seem to know about this either but they advertise it on teletext about it not lasting more than 5 years

Addicted2Chocolate

i think there is no maximum ternm for an IVA but 3-5 years is the most common length