IVA - Good or bad?

blades_man_2

Hi,

I've accrued significant debts over years of married life which is countered by a good wage however, although I can service these debts on a monthly basis there is very little left for me after doing so.

I have been considering an IVA but to be honest don't like the idea of doing so. I would feel that I have exploited a huge loop-hole and being a traditionalist surely if I have amassed the debt I have an obligation to pay it off in full (what right have I to expect my debt to be written off).

Does anyone have any positive or indeed negative experiences over the IVA process. I would imagine that the process is well regulated and only people in real dire straits are awarded one or, are IVA's given out readily with lots of people having thousands of pounds of debt simply cancelled out.

The question is: Do I keep my financial dignity and do without things for a few years or try to jump on the IVA bandwagon? (which seems to be gathering pace.) I believe that Martin sees these as a last resort.

Any thoughts

Regards

FoggyBrain_2

Hi Blades. An IVA should only be entered into when you become insolvent, that is more money going out servicing your debts and paying essential outgoings than coming in, depending on further credit just to buy food and power ( not wide screen TVs). If you are managing, but money is tight a short term answer, to give you a bit of breathing space, would be a DMP, where (if they agree) the creditors freeze the interest for a while to give you a chance to catch up.

People who enter IVA's, in the main, do so in order to meet their obligations as far as possible ( rather than avoiding them) and pay back as much as they can reasonably afford. If they wanted to get away with paying as little as possible (and this is still not an "easy out" ) they could go bankrupt and the creditors would get far less.

If you go the IVA route, you will find that it isn't the easy ride the less scrupulous companies advertise it as. The real object isn't to write off as much debt as possible, but rather to pay as much debt as possible. But, of course, that's not catchy advertising, is it?

Seek out the companies that don't advertise and take advice from them.

Best of luck with whatever route you take.

snicz

I agree with Foggy.

It's normal to feel that an IVA is a cop out and you are merely 'ejecting' your debts for an easy life - trust me, it isn't.

The IVA would be tailored to your income and you will pay as much off your debt as YOU can afford. Just because Joe Bloggs has £50K of debt and pays back £210 a month for 5 years, doesn't mean Dave Bloggs wont pay back £700 a month for 6 years on his £40K. It's all down to you.

Anyone that has had to go down the IVA route will understand that it is tough, requires strict budgeting and sticking to. I wouldn't call it a cop out and certainly agree it is the last resort.

Bad aside, as a last resort it does bring relief from collectors, letters, threats and worry of never clearing debt in a million years.

Hope this helps

blades_man_2

Many thanks for the replies. I have since read Martins IVA guide and will be trying my hardest to AVOID signing up for one of these. Always believed that there's no such thing as a free lunch and therefore must be a downside to having debt wiped off!

FoggyBrain_2

I have just read Martin's guide and, with all due respect to Martin, it is a bit OTT and makes more of the bad than the good ( but, after all the man IS a journalist!). One big error is labouring the fees ... which are inflated anyway. These fees are agreed with the creditors -- if they are happy with them, who are we to worry ... at the end of the day, they are in reality coming out of the creditors pockets, and is a matter for them to concern themselves with.

One thing he has got spot on is that an IVA shouldn't be entered into lightly.

cheesedoffwithdebt

Whilst an IVA should not be entered into lightly, I've found its the best thing I could have done.

The reason you should take it seriously is simply because it is an enforceable agreement, as opposed to debts which are unsecured- but I agree with the above-it should not be done with the objective of getting debt "written off"- there is a huge price to pay, as the IVA shows on your credit file, and thus becomes a noteable part of your credit status.

All the original poster says is that debts have been accrued over the years- I would suggest your first port of call is to make a decision to stop increasing your debts, post an SOA and see how you can start a plan to pay off your debts, it sounds like you can afford the payments, but you are looking for a way of paying everything off am I correct?

debtinfo

as has been said the very first thing you need to look at is if you are insolvent, that means if you cut up all your cards today and did not use any more credit at all, could you afford to pay all normal outgoings including debt repayment, If you answer yes to that, eeven if things are tight then you are not insolvent

blades_man_2

Completely happy with the replies and advice.

Here's another thought, with the banks set to lose millions now in pending PPI payouts and the banks being one of the biggest losers when an IVA is awarded (quite often a major bank is the deciding creditor) I wonder if the future of IVA's are looking bleak. I can imagine that the banks don't exactly jump for joy when these are awarded although it must be the preferred option over bankruptcy.