Spending ability and how this is affected by an IVA?

blades_man_2

Hi,

We have friends who have taken out an IVA within the last year. Not through redundancy, divorce or ill health but from over-spending year after year (if you name it, they had it).

I have recently noticed (through facebook posts) that they have since purchased bedroom furniture, gone on holiday and are looking to buy a caravan this year.

Because I am close to applying for an IVA myself, I am wondering how these agreements affect your spending during the resulting 5 year period. Surely if you can afford a caravan you should be paying more on your IVA! I thought the idea was to pay off as much debt as possible within the 5 years or am I way off the mark here!

On that note, where exactly do you stand with big purchase items once in an IVA? Do these have to be declared? I know that they can ask you to re-mortgage in order to release equity into your IVA.

Regards

spaceman5

something is not right here, as you quite rightly say, whilst in an iva the idea is to pay off as much of the debt as possible, if they have any surplus there will be an agreement in place, i.e they keep the first 10%, then have to hand over 50% of the rest or something similar to those lines, how they can afford all these things god only knows, unless they have been a little economical with the truth with regards their incomings and outgoings with the iva company, but they are usually pretty hot on that sort of stuff, i have just come out of an iva myself, ok we had a holiday once a year, but that was only a cheap 4 day holiday through the sun £9.50 holidays, certainly could not afford anywhere near a full price holiday and still cant, our holiday this year has still being booked through the sun.

As with your question regarding big purchases during the term of an iva, if it is deemed something that is absoloutely an essential(i,e car blown up, you need one for work, cooker/fridge goes bang), the iva company either may let you take a payment holiday to purchase said item and tag it onto end of iva term, or if you know somebody who would lend you the money, and write to the iva company explaining they have lent you the money and dont expect it back until after the iva, the iva companys are usually very accomodating with this, not that i had to use this during the term of my iva, but i would think a £7000 caravan would not be classed as an essential.

HTH

Penelope_Penguin

blades_man wrote: »

Hi,

We have friends who have taken out an IVA within the last year. Not through redundancy, divorce or ill health but from over-spending year after year (if you name it, they had it).

I have recently noticed (through facebook posts) that they have since purchased bedroom furniture, gone on holiday and are looking to buy a £7000 caravan this year.

I wouldn't be so quick to believe everything people write on FB

It may be that they're embarassed about their situation, and don't want to lose face amongst "friends" so shall we say, embellish their situation.

I'm a debt adviser, and know of several clients of our office who boast around the town of large houses, great wealth, and fancy cars, when we know full well that thye're insolvent and facing bankruptcy.

Tixy

It might also be the case that only one of the couple has entered into an IVA and the majority of the debt was with that person. In which case it could be possible that the other still has some spare funds, or the ability to keep getting credit?

blades_man_2

Thanks for the replies on this one, all very interesting. To follow on from Tixy's comment, if you were married wouldn't you have to enter into the IVA as a couple? Otherwise all couples could ensure that all the debts are in just one name, take out an IVA, leaving the other one to take on more debt?

What would happen then if an IVA was in the husbands name and the wife was given a large some of money from a family member? Would this not have to be declared and be eaten up by the IVA?

The cynic in me can see some people doing quite well out of an IVA situation.

Regards
Blade

FoggyBrain_2

Hi --- if the debts are in one partners name then the IVA can be in that partners name alone. If any debts are joint they can be included in a sole IVA, but the creditors will be free to pursue the "solvent" member for the full debt... so often, if there is a significant amount of joint debt, two interlocking IVA's will be proposed.

Any income of the "solvent" partner is their's to do with what they will, as are the 50% shares of overtime, bonuses etc of the partner in IVA. It can happen that large sums can be accumulated 00 rarely I admit ... but in my case, after starting our interlocking IVA's we had a temporary extra income which gave us a tidy contingecy fund (OK we only actually got to keep a third after paying the taxman) and our creditors are happier than they would otherwise have been !!!

FraudBuster

Funded by the Black Economy?

FoggyBrain_2

Could be anything FB -- legit or not -- we don't have enough info to even speculate.

blades_man_2

Thanks for the answer but I'm a bit surprised by this. If this is true a husband could enter into an IVA but the wife still goes on a spending spree and buys him nice things!? Doesn't seem right to me.