IVA and being a guarantor

Disbelief

Hi all,

would like to say that this forum and the people who offer advice is top-notch and has been very helpful in helping my wife and I understand the awful situation her mam seems to have got herself in financially. :T

A brief summary, the mother in law has racked up quite alot of debt, how much i'm unsure as we find out more and more each week. Owes us a small fortune, other family members and even neighbours ontop of all else. Anyway she is now in the process of starting an IVA with payplan, as recommended by Northern Rock after defaulting on her mortgage.

With much reluctance I agreed to stand as a guarantor for her on a rip off loan with FLM, my question is she claims payplan won't allow her to pay this loan off as normal and must include it within her IVA. Would this be the case?

So what now? She said she will give me the money each month to continue paying it off from my bank account.

Just unsure about the process, imagine payplan will contact FLM, so do I pay the difference each month from what they will contribute?

Or I imagine FLM will refuse co-operating with payplan/IVA and come after me anyway-so should I start the ball rolling and change direct debit to come out of my account?

Thank you for your time, and any opinions or experiences would be greatly appreciated.

KC

trudij

Hi - well done you for helping her out - sounds like shes got herself in that well known spiral... Im sure someone much cleverer than me will be along soon - but this is what i can help with that I think is right.... (Im waiting for my completion certificate,so its a fair while since I did the first bit!!!)

Legally, she has to declare ALL debts in her name when she fills in the paperwork - and as long as the majority of the debtors agree the IVA, FLM will HAVE to accept their share of the money.

However - if you are named on the loan as well, I dont know what will happen there - you need Charco or one of the other clever people who work in the IVA world there - logic says that the loan co will come to you for the balance, but I hoenstly dont know.

Sorry I cant be more help - didnt want to read and run. Hope you find your answers, and you manage to help your mother in law get sorted. x
So yes -

Disbelief

Thanks for your reply Trudij.

I agree with your logic about FLM coming chasing me for the loan payments, just wishful thinking that they wouldn't. From what I've read they ring and text 5 times a day, can't be chewed with the hassle so have bitten the bullet. _pale_

After all I signed to be a guarantor, so in order to not incur any late payment charges etc I have already instructed them to take payments from my bank account instead.

I did read somewhere on the web that instead of FLM being named as a creditor it would be my name as I have taken over the debt. Not sure if this is true?

Bump anyone?

Hopefully she will be able to give me the £150 each month to cover (until april 2013) on her road to recovery, so to speak.

Regards

KC

trudij

I'll bump as well - in the hope that the aforementioned "cleverer than me" people come along!!

I honestly dont know what happens with guarantor debts - but make sure that everything that happens is told to her IP, and they will be the best people to advise I should think.

good luck

Payplan_company_representative

Hi Disbelief,

You are correct in what you have said, as you are the guarantor you would be chased for the debt and they would expect you to pay on top of your mother in law to pay back the total amount borrowed.

I hoped this has helped clear it up for you.

Lizzy.

Disbelief

Hi,

thank you Payplan Rep for your response.

I have asked Mother in Law to inform payplan of the situation, just a few questions if I may.

This loan was correctly included with her other debts in the IVA, just wondered what happens now. Do I get listed as a creditor? Or does Payplan make payments to FLM then they would chase me for difference?

Just not sure how it works?

Also, having gone through setting up IVA it was agreed she will pay £530 per month over the 6 years as that is what she can afford. Wondered would this monthly amount now change with the FLM loan situation? I only ask as I don't want to chase her for £150 per month which she could not afford and make her position worse; yet at the same time I don't want to have to pay it as I struggle each month as it is.

Overall we just want to try and help get herself sorted out, but at the same time don't want to over stretch ourselves anymore than we already have.

Hope all the above makes sense, and appreciate anymore input you have that could help me better understand this whole situation.

Thanks for your time.

KC

Payplan_company_representative

Hi,

The debt will be included in the IVA and they will received a payment from your mother in law towards the amount borrowed. They will then chase you for the remaining money.

With an IVA she will only be paying a percentage of the debt back, therefore they will expect you to pay the difference.

Hopefully that makes sense but let me know if you do have any other questions.

Lizzy

Disbelief

Hi,

thank you Lizzy. Makes sense.

I have set up direct debit anyway for payments to come out of my bank account as I don't wish the balance of loan to incur any late payment charges etc.

Will work out monthly payments with FLM and Mother in Law once IVA is up and running.

Regards, and thanks again

KC