My IVA experience so far.

friendlyface1

Hi,

Lots of people come on here asking for advise on whether or not an IVA is the right way to go. Much as I did on various Forums in the past.

So I thought I would share my experience so far for those who are currently in a similar situation to where I was. Hopefully it might help one or two who are considering their next move.

Our (my partner and I ) route to an IVA started way back in March 2007. We were renting a flat together at that time and were sat back watching house prices go through the roof. We had planned a family in the coming years so wanted to buy a house with a garden, etc, etc

We came to the conclusion that if we didn't get on the ladder soon, we may not be able to afford to.

We both already had some debt. I was coming off the back of a rather expensive divorce, my partner had a loan and a credit card. So we decided the right thing to do would be to go to Northern Rock and apply for a "Together 125% Mortgage" and consolidate our debts. This would also allow us to raise the 5% deposit required.

So we paid off our debts, got the mortgage and bought a nice 3 bedroom semi. We naively thought that prices would continue to rise, and this went someway to justifying our 125% mortgage (hindsight eh?! )

This was the first move on our way to the IVA.

As everybody now knows, there probably couldn't have been a worse time to buy a house. Within months of moving in, house prices were falling.

In the first 3 years in the house we lost £25,000 off the value.

During this time, my partner went through 2 maternity leaves. Due to the downturn in the economy, overtime dried up at work (which we had planned to rely on during the maternity leaves to see us through).

Then even worse, I had to go "short-time" at work, loosing a significant amount of money by having to drop a day per week.

My partner went back to work for 3 days per week, but also quickly had to drop a day when HER employer hit hard times.

We were thankful we'd kept our jobs at all but times were tough.

I managed to get myself a second job cleaning, but it was only 3 hours a week. My partner started to work from home making and selling her own wedding stationary, but it wasn't guaranteed income.

We started to fall behind on our mortgage. At first Northern Rock were great, they were flexible and sympathetic, they allowed us to short pay occasionally, they even allowed to take a payment break at Christmas to give our kiddies a decent Christmas.

At the start of 2011, the cost of living had risen dramatically. Our car insurance had trebled in 2 years. Our utility bills had more than doubled since moving into the house. We would miss a payment on something every month to get by, but as a result, our future payments increased slightly to catch up. We couldn't keep going. Our outgoings were 94% of our income. We had no choice but to drop to an Interest Only payment on the mortgage, effectively renting.

In a stupid, desperate, misinformed and poorly researched move, we took out a loan. Due to our falling credit rating the interest rate was high (14%) and it was over 10 years. We thought at the time it was our only option. We used the loan to pay off the mortgage arrears.

So here we were, in a house worth about £90k, with a mortgage balance of £121k, and a further £26k unsecured on top of that as part of the Together Mortgage, and a £4k loan which over it's term would cost us almost double that.

We started to make more stupid moves. For instance, we would move energy supplier to qualify for cashback on sites such as Quidco, purely to increase our income for a month and make our disposable income at least a 3-figure some, just for a month. But in the process ignoring the Debit balance with the previous supplier knowing we could not pay it back.

We managed to move banks and get a basic Bank Account with Santander, but we had 3 overdrafts with First Direct totalling £1500.

By Spring 2011 we were in a total mess.

We had debt collectors on our backs. Letters every day. Dreading the postman coming. Ignoring a knock at the door in case it was a bailiff. I would literally receive between 30-50 phone calls on my mobile phone every day. I started to get calls at work. We would ignore calls at home but on occasion we would be sat there with friends or family as the answering machine came on and a message was left "For Mr XXX, calling from So-And-So Debt collectors, it's about your overdue debt, you need to ring us immediately".

It was embarrassing and extremely stressful.

A combination of poor timing, poor research, desperation, stupid decisions and the rise in cost of living had destroyed our lives as we knew it. I was put on Anti-depressants by my doctor, our relationship was "on the brink", my performance at work was effected, my partner had become virtually a recluse, bearly leaving the house other than to go to work.

Then in April 2011 everything changed. I read about CCCS and immediately ran through their online evaluation and rang them up.

They were amazing! They immediately set our minds at ease and told us everything would be ok and there was a way out. We discussed Debt Management Plans, IVAs and even Bankrupcy. They gave us all the information we needed and hoped for. They told us how to deal with the threats we were getting and who to take more seriously than others. They educated us on how to structure our income and what our priority payments were. They are on YOUR side!

After much deliberation, my partner refused point blank to consider Bankrupcy and I had to respect that so we got to the stage where we had decided to apply for an IVA. (CCCS have a success rate of over 90% for applications repaying over 10p in the £1)

And then we got asked the question that has changed our lives! "are you dead set on staying in your house?"

We weren't, we had long since fallen out of love with our house and what it represented to us but it hadn't really crossed our minds to move out, we didn't think it was an option.

So we had two options:

1) Go through an IVA and end up in 6 years time (6 years not 5 due to the low return for Creditors) non-mortgage debt free but in a house we didn't want with probable significant negative equity still.

2) OR! Move out, now! Rent a house, take voluntary repossession and let Northern Rock take the house. The negative equity then becomes unsecured and is added to the IVA. So in 6 years we're totally debt free.

This scared me. As much as I was effectively renting by paying Interest Only, it was still my house. And a landlord could move us on when ever they pleased. I had 2 kiddies to think about.

But we were on the brink of repossession anyway, how much worse could renting be?!

So I did some research, I asked Estate Agents about the landlords for possible homes, I wanted to know their situation. Were they likely to try sell the house, etc.

During this time, Northern Rocks sympathy had understandably run out and they insist we revert back to a full C&I repayment. The timing of that made our decision.

We decided it was the lesser of two evils and decided to go for it.

So in August last year we moved out. We moved to a rented house worth double (yes double!) where we were living, for £260 per month LESS than I would have to pay Northern Rock. The house is only 3 miles from where I work, not 14 miles like my old house. It's practically next door to an excellent school in which my first son starts in September. We have a rolling 12 month agreement with a landlord who purchase the house as an investment for her children and has told us she currently has no plans or desire to sell it as things stand in at least the next 5 years.

We started our IVA in September 2011 and by Christmas, all the phone calls had stopped, all the letters had stopped. It was the most wonderful Christmas! I am in the final stages of weaning off anti-depressants, my partner has just gotten a promotion at work due to her performance improving to such an extent, we're even going on holiday in November! Holiday for christ sake. We haven't been on holiday in 4 years. It may only be 5 days in a caravan in South Wales but to us, that's like 3 weeks in the Maldives! And in February of next year we're getting married :T:T:T A simple affair but we're not bothered

That one phone call to CCCS has literally changed ours lives!

Now if you've read this far (because I've rambled on much more than I intended, think I've found this quite therapeutic!) please don't be mislead into thinking an IVA is the easy way out!

IT'S NOT!

But it's A way out. We have a tiny light glowing at the end of a long tunnel. In 6 years (or almost 5 now) we will have no debt and can start the slow process of rebuilding our kids futures.

It certainly won't be plain sailing. There will be many pitfalls along the way, we know that and nobody should enter into should a drastic measure without knowing that.

For instance, my partners car insurance was up for renewal in May, I know I can save £40 per MONTH by moving insurers, but we can't pass a credit check to allow us to pay monthly. So we plod on.

I know any pay rise either of us get will have to be declared and is likely to be taken away to contribute towards the IVA. So our income now is our income for the next 6 years. We know that as cost of living continues to rise and our income stays the same, year on year will getting more of a stretch, but that's fine. This whole process taught us a valuable lesson, and taught us how to live within our means. Taught us the value of simple pleasures. Taught us how our kids are happy with a £5 new toy instead of a £50 new toy. Taught us what's important in life.

So far, touch wood, everything is fantastic! :T

I cannot believe how far we have come in just 12 months. This time last year I choose not to think about where I was as a person and what was going through my mind. And where my wife to be was in her life.

If you have read this and can relate to anything I have said, make that call because companies such as CCCS literally can change your life.

Good luck with which ever path you choose to take

Vikipollard

Well done! That's a really inspiring read and I'm so glad that things have worked out for you. :j

I have 3 payments left to make on my own 6 year IVA. I won't hijack your thread with the details as they're all on here somewhere, but I can totally relate to the relief you feel.

One point to note is you don't usually lose all additional salaries you get in pay rises, so although you are bob on with regard to the cost of living going up (and up...and up...), you should still see part of the money. (Depends on the arrangement, but a lot let you have the first 10% of any increase, then you split the rest 50/50 with the IVA provider). Your IP can advise on that though

However if you can manage to live on this level of money for the next 6 years, then think of the extra savings you'll have

The very best of luck for the rest of the term. :T