Full and final, or IVA?

damonthebuilder

An associate of mine has debts of 30k. They've been talking to a debt management company, completed an I&E report, and have been advised that an IVA is the best course of action, and their repayments would be no more than £125 per month. So thats 125 x 60 months = 7500.00
They have been offered an interest free loan by a close family member that would cover the 7500.00.
So should they write to to the creditors and collectively offer a full and final of £7500, or take the £7500 loan, put it in an ISA or similar then pay out 60 monthly payments, or just sign up to the IVA (assuming that it all goes through)?

oliviarosejackson

If they can get the creditors to agree to the f&f settlement I would just pay it off and not entertain the Iva.

damonthebuilder

Thanks, I'll pass that advice on. I've done some reading on IVA's to try and help out my friend. Most of what I've read says that creditors will most likely expect 20 - 25p in the £1 so on £30k worth of debt I presume that's where the debt management company came up with the £125 per month figure from...(?)

FoggyBrain_2

No Damon, the repayment figure ( in this case £125) is the amount of disposable income available, and could increase during an IVA if the DI increases. I have seen dividends range from 9% all the way up to 100%

damonthebuilder

I see, so it's just coincidence that the £125 per month equates to 25 per cent.
So if their wages rise above a certain level, then their payments into the IVA will increase also (?)
I don't think the company they've been talking to has advised them very well...
I've suggested they try talking to someone like the cccs - at least their advice is free.
Thanks for all the input

FoggyBrain_2

Ask them to pop over to https://www.iva.com and have a word with a few companies there. The advice is free and without any obligation. Avoid any company that cold calls and / or charges any upfront fee.

Basically you get a set of allowances, based upon individual circumstances. Say your allowances total £600 and the salary is £1000 (for ease of maths). Then the DI is £400 and payable to the IVA. Generally ( and this can vary from proposal to proposal) if they get a pay rise next year of £100 per month, then they keep £50 and the IVA payment will rise to £450. This is a very simplistic example for illustration only.

vicki488

Having had an IVA myself I would be inclined to say avoid them at all costs. Mine ended last year after 5 years and it makes it really hard to get any credit after it is finished. I can't even get a mobile phone contract for £10 a month! Plus I find it very embarrassing having to admit I have had one.

FoggyBrain_2

vicki488 wrote: »

Having had an IVA myself I would be inclined to say avoid them at all costs. Mine ended last year after 5 years and it makes it really hard to get any credit after it is finished. I can't even get a mobile phone contract for £10 a month! Plus I find it very embarrassing having to admit I have had one.

Interesting line of reasoning Vicki. Now you are officially debt free. You will get the phone contract once your credit record repairs.

I wonder if you'd still get that contract if your record was now full of defaults. Drowning in a sea of debt, you might even have been made bankrupt.

doelani

vicki488 wrote: »

Having had an IVA myself I would be inclined to say avoid them at all costs. Mine ended last year after 5 years and it makes it really hard to get any credit after it is finished. I can't even get a mobile phone contract for £10 a month! Plus I find it very embarrassing having to admit I have had one.

Sorry to go off topic from original post but.....

Vicki have you checked your credit file is all correct after your IVA? hubby and I had joint IVA, started 2005 and ended 2008 with f&f. We had no problem getting new bank accounts with debit cards, credit cards ( paid in full each month used to rebuilt credit ) and we both have mobile phone contracts since finishing IVA.

As for being embarrassed about admitting IVA did not bother us when we went to new bank and applied for new current accounts, showed them iVA paperwork to show it was finished.

not all IVA go wrong and he fact you completed the 5 years is good and your defaults should then drop off this year as long as all marked correct date on credit file.