IVA question?

bryan8237

hi all, comtemplating an IVA or a DMP, I have approx 40k in unsecured debt in my name.

i live with my partner, i am self employed.
i can just about manage to meet the minimum payments at the moment but have problems when icome tax payments etc come around.

if i go for an IVA will my partners income be taken into account

Charco_2

It would be taken into account as a calculation to what is a fair contribution to your household expenses....

FOR EXAMPLE
If you earn £1200 a month and your partner earns £800 then you earn 60% of the household income... so you would pay 60% of the household bills.

There is no requirement for your partner or ANYONE to have to contribute to your debts or your IVA. You can try to say that you and your partner dont share finances and that you split the bills 50/50 regardless of incomes, but this sounds more like you're both lodgers.

bryan8237

hi charco, i have managed to pay of £6000 worth of the worst debt that was on 25%pa. now owe about 34000. about 5k is on 25% pa.

we have a property in joint names, i assume we have about 60k equity based on the amount of outstanding mortgage and what a neighbour has just sold there similar house for.

if i go for an iva, would the creditors force me to remortgage at the start of the iva or could it be negotiated that i just keep making payments and clear the debt in that way. i currently pay about £700 per month to 5 creditors. the reason i ask is because i originally considered re mortgaging or getting a loan but have been turned down.

also we did some work to the house last year but this isnt completed so will devalue our house.

what would it cost to setup and then administer an iva and will i be better of in the long run, once those fees (iva setup etc) are added to my debt.

Charco_2

Do not pay extra fees for your IVA... You pay 60 monthly contributions and the IP negotiates their fees with your creditors to be taken out of the amount of money recovered! Some companies will try to charge you an extra two months payments but some don't so use one of those companies!

As for the house: multiply the value the house in your area sold for by 0.85

This is because no lender will lend you more than 85% of the value of your home for your remortgage.

Then subtract your current outstanding mortgage. This is the total amount of equity in your home. Divide that by two - because half belongs to your wife.

That us the amount of equity you would have to address somehow for your IVA...

bryan8237

hi, could you recommend a practitioner?

Charco_2

There's been some praise for McCambridge Duffy on here recently or go to "iva . com" where people who have entered IVAs go to review the service they have received.

All I would really advise is
1. Don't pay up front fees for advice or set-up charges for an iva
2. Make sure you're comfortable with the IVA company and IP... You'll be tied to them for five years.

bryan8237

hi charco, whats your opinion of DMP, whats the possibility of credit card companies freezing interest or reducing interest rates so i can clear the debts. I called McCambridge Duffy yesterday and asked a few questons re the IVA. They were very helpfull and not at all pushy. All the other companies I have called have asked for name etc etc before offering any advice McCambridge Duffy didnt do that.

Charco_2

A DMP certainly has it's place within the range of Debt Solutions that are available.

Personally I feel that it is a short-term solution to help people get back on their feet or give them some respite from the constant calls and threatening letters their creditors are sending... I certainly wouldn't want to be counting on it for the long-term though, but many people seem happy to settle down to that sort of plan for two or so years as it gets the creditors off their back for a while.

So some breathing space is what a DMP does offer but the main reason I wouldn't count on it though is for what it doesn't offer. It is an informal arrangement and therefore there is nothing binding on your creditors - the goalposts can be constantly moving.

In your situation, £40k of debt, even if you were able to pay as much as £500 a month, that's 80 months (almost 7 years) to pay the debts (if you go to a company that does not charge fees for a DMP).

Is it more likely you could only £350 a month? That's 114 monthly contributions... Nine and a half years.

And those timescales do not even allow for periods during your debt plan when interest and charges may be accruing.

bryan8237

hi charco, thanks for the response, i have already read threads where creditors havent agreed with the iva but have sued for bankruptcy.

hence my worry in going for an iva