currently on a DMP, considering an IVA Advice needed please

icecube2009

Looking for some advice please.
We sterted our DMP in June 2009, with the CCCS. We currently pay £300 a month which means we pay our creditors about 1/4 of them amount we use to pay each month & constanlty have them on our backs, especially LLoyds TSB.

Ous debts are around the £50k mark (mine & hubbys combined) and if everyone were to stop interest it would take 16 years to be debt free :eek:, BUT they havent all stopped interest & at the moment we owe more than when we started. It is horrible, there isnt a day goes by when it isnt on my mind, on top of that having no spare cash is a nightmare, I have two teenage children & I can only afford to buy them one item of clothing each a month, DS has grown out of everything & is at the moment living in the same 2 tops & trousers as I cant afford any more.
I cant afford to let them go out to the cinema with friends without it having a real knock on effect, it is really getting me down.
SO my queston is, would we be better off on an IVA? Hubby has 2 friends who are on iva's in recon its the best thing they have ever done. One got his £50k debt reduced to £12500, paid it for a year and now has been made redundant and has a lump sum to be able to offer them a F&F of £8k.
So DH wants to go the IVA route but I am not so sure?
Any advice appreciated??
Thanks

Nargleblast

The benefit of an IVA is that it is all done and dusted in 5 maybe 6 years at the most. Some people like the person you mentioned are able to finish it quicker, depending on circumstances. Also your creditors are not allowed to hassle you so it's goodbye to the nasty letters and phone calls. It is however a formalised version of a debt management plan rubber stamped by the County Court, and you have to be disciplined in sticking to your agreed budget. Also, in year 4 if you are a homeowner then you will be required to get your house valued and see if you can remortgage to release some equity - and most of that equity will be paid to the IVA company at the end of year 5 to finish things off. If there is no equity, or you can't get a remortgage, then they usually ask you if either you can get a relative or friend to give you some cash to pay in or alternatively your IVA will go on for another year. We switched from DMP to IVA last year and are glad we did so. However, make sure you get all the facts and figures first, don't let DH push you into agreeing to it just because his friends say so! Talk to CCCS - they have a sister company, CCCSVA, that do IVAs, and can talk it over with you. There are also other IVA firms, some very good I believe, but do not get sucked in by any firm that demands money up front - they just act as agents who introduce you to IVA firms and charge you loads for the privilege!

Max_1066

Icecube - it can be so frustrating however the main thing is that you're actively looking for a solution. Hopefully you'll get there fairly soon.

From what you've said an IVA certainly looks like a possible solution. There are various IVA companies and I would suggest talking to at least 2 or 3 as you'll get slightly different views. Go through your I&E beforehand so you know exactly what the surplus is (CCCS are actually quite good at helping with this).

Good Luck.

p.s. I understand the fees charged by CCCS-IVA (if you go ahead) are lower than other IP's (its worth checking though).

icecube2009

Thanks for your help/advice. I honestly need to do something as the way things are going i could still be in debt when I am 60, I am 43 now and although the CCCS says 16 years thats only if interest is stopped! so could be a lot longer than that!
I can't do it, cant be in debt for all that time, at least 5 or 6 years is the foreseable future, but 16+ years!!! I lost my dad just before christmas, aged 66, so to me now life is precious, I need to get out of debt & be able to start living again!

Max_1066

Probably like me the DMP was a solution at the beginning however reality then starts to slowly sink in.

I saw your post on another thread regarding %. If you are paying £300 per month at the moment and owe £50k then the IVA % would be:-

£50000 / £18000 (£300 x 60) = 36%

Its certainly enough to start discussions with an IVA company.

My honest advice is don't delay as it'll only cost you money one way or another. If the interest payments haven't stopped then as you say the debt is continuing to increase

icecube2009

I also have a couple of other things I was not totally certain about, just need to get it straight in my head!
How does an IVA work? my understanding of it was that the IVA company make the offer (similar to a F&F) to the creditors, and if accepted, pay them off, then we pay the IVA company but a friend has told me this isnt the case?

Also I understand that 50% of any overtime has to be paid toward toe IVA, does this mean the balance gets paid off faster or does it mean we end up paying more back into the IVA than originally agreed on?

sorry and a third question? how do you prove your income for an IVA? is it most recent payslip, more than one payslip??? I just got my p60 and it averages out that I earn £730 a month, but since Christmas my wages have gone down quite a lot & my average at the moment is £660, I have informed the CCCS & my budget & DMP payments have been changed accordingly, but does very a lot from one month to the next, for example, 2 weeks this month we had staff members off on holioday (due to easter hols) so I have probably earnt £750 this month, then next month it will go right down again, possibly below the £660.

Thanks

Charco_2

No the IVA company does not pay off your debts like a Lump Sum F&F... the IVA company negotiates on your behalf that you cannot reasonably afford your debts (and like you're saying, the interest and charges mean your debt is still mounting). The IVA company researches your position and drafts a proposal for your creditors saying "MrsIceCube2009 cant afford all this debt and the huge repayments, but she CAN afford to repay this amount... " If your creditors agree to this proposal, then it is up to you then to stick to this new repayment for five years after which the remainder of the debt is written off.

If at some stage during the five years you can afford to pay more than you have agreed to then you should pay more - an IVA is not about avoiding paying your debts, it's about turning your debts into something much more managable and affordbale.

The IVAs vary but it is generally accepted that if you earn overtime you get to keep the first 10% and must split the rest 50/50. So if you earn £700 a month and then earn an extra £100 overtime some month you get to keep the first £70 (10% of your normal wage) and split the rest 50/50 so you keep £15 and send your IVA the other £15.

Your IP will opbviously look at a number of sources to verify your incomings and outgoings. Yes he will probably expect to see a number of payslips and the p60 but the figures he bases it on will have to be realistic.

(one thing i would wonder about though is if you're earning only £700 how can you afford £300 a month towards your DMP?)

icecube2009

Charco wrote: »

No the IVA company does not pay off your debts like a Lump Sum F&F... the IVA company negotiates on your behalf that you cannot reasonably afford your debts (and like you're saying, the interest and charges mean your debt is still mounting). The IVA company researches your position and drafts a proposal for your creditors saying "MrsIceCube2009 cant afford all this debt and the huge repayments, but she CAN afford to repay this amount... " If your creditors agree to this proposal, then it is up to you then to stick to this new repayment for five years after which the remainder of the debt is written off.

If at some stage during the five years you can afford to pay more than you have agreed to then you should pay more - an IVA is not about avoiding paying your debts, it's about turning your debts into something much more managable and affordbale.

The IVAs vary but it is generally accepted that if you earn overtime you get to keep the first 10% and must split the rest 50/50. So if you earn £700 a month and then earn an extra £100 overtime some month you get to keep the first £70 (10% of your normal wage) and split the rest 50/50 so you keep £15 and send your IVA the other £15.

Your IP will opbviously look at a number of sources to verify your incomings and outgoings. Yes he will probably expect to see a number of payslips and the p60 but the figures he bases it on will have to be realistic.

(one thing i would wonder about though is if you're earning only £700 how can you afford £300 a month towards your DMP?)

Thanks, its a joint DMP, I earn £700 ish & DH earns £1300, our debt is £50k.
So I i were to earn more & pay more off, it wouldnt make the dmp finish any faster? just means I pay more of a percentage off my debt?

Charco_2

A DMP and an IVA are not the same thing.

If you earn more money and pay more money into it then obviously you'll be out of debt quicker in a DMP (if you're paying more money than you're being charged in interest and charges).

In an IVA you'll be expected to pay for five years (60 months*) regardless of how much more you are able to pay in in the meantime... in most cases you're not paying off all your debts, you're paying as much as you can afford and the rest is simply written off by the banks after that time scale (*this can be extended by 12 months if have equity but are unable to release it)

A joint IVA technically doesn't exist - it called interlocking and mutually reliant.

So although you, as a couple, have debts of £50k, you have to work out how much individually you owe to see if your are BOTH insolvent. Your monthly payment between you might be £300 per month but how much really is yours and how much is your partners?

lenniboy

As others have already mentioned, the big plus about an IVA is that you afford what you can reasonably afford to pay. And, the interest stops mounting up. Let's face it, much of the debt many of us have is due to crippling rates of interest.

You`ll find that given the choice between someone going bankrupt, and accepting that person on an IVA, the vast majority of creditors will go for the IVA. That way they know that they will at least get some of their debt paid back over time.

thinkpositive1

Dear Ice Cube - I have just posted a similar message seekign advice on the DMP v IVA options.

I was reading this thread with great interest as your predicament (and your age, level of debts and period of time forecast to clear your DMP are very similar to my own circumstances).

The more I read about IVAs and understand the pros and cons, the more I wished I had gone straight for the IVA option 2 years ago. As is stands I will be nearly 60 when I finish repaying my DMP and it's doing my head in. If I had seriously looked at the IVA option 2 years ago I would be debt free in 3 years not 16 years.

I wish you well.