Considering an IVA - Please can someone answer these simple questions!

Mercyknight_2

judojub wrote: »

If you manage to pay back the full amount of your debt plus fees within the 5 years then your IVA will conclude and of course there will be no need for an equity release.
This clause is common in most IVAs these days.
As Nargleblast has said, you will be asked to gain a valuation for your property in the final year. If there is no equity to realise then your IVA should conclude at 5 years. If there is equity but a remortgage not possible (most likely) then the norm would be to extend the IVA for a further 12 months.
Again though, as an IVA is individual these are all things that you would need to discuss with whichever company you decide to go for.

Do you mean the total amount of debt (that I've accrued with all creditors) + fees, or total "agreed" repayment amount + fees?

judojub

Hi Mercyknight.
Yes, to clarify, you will always owe the full amount of your debt (through creditors) throughout the term of your IVA. If you can pay that back plus fees then the IVA will conclude. Other than that you will continue with the IVA for the 5/6 years and what is left will essentially be 'written off' and you will be debt free.

Mercyknight_2

Ok, but my house was purchased through MHO Mychoice Homebuy so I know for a fact they would not allow a remortgaging on my property. Can't this be written into the IVA contract so I know that I'll only pay 5 years full stop with option to remortgage.

FoggyBrain_2

You can discuss the mortgage options with your IP before he drafts the proposal. If there is equity and you are unable to remortgage (for whatever reason) you will most likely get the extra 12 months added to the term.

Mercyknight_2

I am currently on a CCCS DMP. I spoke to them yesterday and they said that it's best I stay on DMP rather than go for the IVA as it will only be 6 years to complete in September. But I added my debt up last night and my debts have stayed the same in a year because of interest and charges whilst being on a DMP, they advised me to write letters of complaints to get interest and charges cancelled.

I'm confused now...

FoggyBrain_2

You are "paying" CCCS to do the contacting of creditors and negotiating interest freezes on your behalf .... if you are going to do it yourself the creditors will get more, as CCCS are still getting their cut (for, in this case, effectively doing nothing!). Of course they want you to continue with the DMP -- they are getting paid for no effort on their part at all !

It is impossible to predict an end date for a DMP unless there are very few creditors and they all agree to freeze interest and charges --- and don't sell on the debt or renege the agreement (which they often do).

Mercyknight_2

Yeah but CCCS don't charge a fee for DMP and the money I pay to them gets distributed to each of my 5 creditors equally (I have checked)

My 5 creditors:

HSBC - Agreed to freeze on Overdraft
Halifax - Agreed to freeze interest on Credit Card
Lloyds TSB - Agreed to reduced payments on loan
Lloyds TSB - Not agreed to freeze interest on credit card
Lloyds TSB - Not agreed to freeze interest and charges on Overdraft

I am sending a letter today to get all interest and charges frozen. If it doesn't work I think it'll push my hand to go with the IVA.

With the IVA will it be set out at the beginning the maximum amount I will pay over the 5 years? For example say I won £3000, would they simply take that money, and I'd still carry on paying the full term of the IVA regardless of the extra cash?

FoggyBrain_2

With an IVA you are bound to pay disposable ( ie surplus) income into the "pot". If you won £3000 that would be classed as a windfall and, under the current protocol ( which CAN be varied in the draft, but is the usual starting point) you would keep the first £500 of any windfall and pay the rest in to increase the dividend to the creditors. Increased earnings, overtime and bonus payments (earned income) are dealt with by disregarding an amount equivalent to 10% of your usual monthly income, which you keep, then splitting the balance 50/50. Some, generally older, IVAs set out a MINIMUM dividend (newer ones set out an estimated dividend), but the maximum is always 100% on the total debt plus fees. Only when the IVA has concluded does tha balance not paid get written off.

Mercyknight_2

Another quick question.

As a teacher I get a salary increase every September.

Would it be beneficial to set up my IVA just before my salary increase therefore I would have a year before having to increase my IVA through my annual review because of my salary increase?

dancingfairy

I think you're right in that you're probably at that crossroads where the differences between a dmp and an IVA become very slim. Your options appear to be
1) carry on with the dmp but push Lloyds vey hard to stop interest and charges - grrr for them. You reckon this will last for another 6 years? obviously if you get a payrise or paycut your dmp can be varied accordingly or
2) do an IVA - you will finish in a set time 5 or 6 years and then you will be debt free. Your credit file is probably trashed by now but you should check out the impact an IVA would have on your future career - some careers are limited by IVA's as they are an official form of insolvency like bankruptcy - I'm not sure if teachers would have any problems with an IVA being on their file to be honest. I believe it's also like bankruptcy in that you would have to declare it if ever asked whether you had been insolvent but I'm not 100% sure. Check with the relevant teaching union before deciding your next move- anonymously if necessary.
Best of Luck
df