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New IVA
Comments
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UpToMyNeckInIt wrote: »Hmm, True to a point. What if you cannot release equity?
The OP's main asset is the house. Are you really advising that they sell it, lose £5-6K in fees etc? Bearing in mind this process also takes say 4-6 Months. Then what? Rent? and risk watching the remaining money gradually disappear? (I've seen it happen). Utter madness in my opinion. Property ownership is still a good long-term investment, and if there is any way the OP can keep their house, surely that's the best option?
My 2 properties outstripped by debt by £40k, the second of which nets at £3k p/a rental profit. - it was no barrier to getting an IVA.
Both CCCS & NDL wanted me to sell property no2, AND go on a 10 Year DMP. Had I followed their advice, I would have been out of pocket £25-£40K (dependent on what creditors agreed to freeze interest + lost rental income), vs the IVA - where, not only was I allowed to keep the second property (my pension), but the additional rental income was seen as an advantage (by a private firm). Going the IVA route, I'll be debt-free in 6 Years, with £16-£20K of debt + interest written off.
Understand why I am cynical of the 'charities'? Granted, they work for some, but not others.
Surely if the OP's affordability is calculated at £100 p/m, paying back £17,500 on a DMP will take 15 Years (minimum)!!! vs 6 Years in an IVA, at the end of which £10K is written off. I know which I'd choose if I were in their shoes!!! (And after exhausting ways to affordably consolidate my debt).
Granted, IVA's have their downsides, but unless I am missing something major here, surely an IVA is WITH THE PROPER RESEARCH (into equity release clause especially), worthy of consideration in this instance.
Purely my opinion though.
Hi
You say...Granted, IVAs have their downsides and according to these latest figures from the I/S website tens of thousands get terminated and just look at some of those percentage figures, is it me or are they actually going up.
http://www.insolvencydirect.bis.gov.uk/otherinformation/statistics/IVAs/ivas.htm
A question worth putting to any IVA provider or Insolvency Practitioner is what happens when you have a property with significant equity where an IVA fails? Can you be made bankrupt?
If an IVA fails you can end up back at square one less thousands in fees or worse, having said that IVAs can be the right solution and write off a substantial amount of debt.
These figures are horrendous though in my opinion and given the economic situation then I wonder what the underlying trend really is, just how many IVAs are in arrears, how many people are struggling, just how bad is this?
Maybe someone should ask the above questions on the other forum
Still it has to be said that IVAs can be the right solution, just make sure you fully understand the pros, cons and potential implications. The payments have to be affordable and sustainable with a sensible flexibility aspect in these unique economic times or it could just eventually all fall apart and that will help nobody.
Like I have said before, time for responsible, experienced advice and assistance, before its too late, people need help to get through these difficult times.
PS - this post is not about the fee chargers versus the charities, Im just saying it like it is and the figures are from the I/S site for all to see.
Always make sure you get full advice before you make any decisions, your choice at the end of the day
My take again as always0 -
UTMNII,
It isn't a case of whether you can release equity or not, it is a case of comparing assets against liabilities. A creditor is highly unlikely to accept a potential debt write off where the means exist to pay back the debt in full by realisation of assets. If you put yourself in their position, someone owes you £17k and is proposing paying you back, over 5 or 6 years, maybe 16p in the £1, so you take a loss whilst that person keeps an asset that may be worth more then that it is now as well, are you going to accept that whilst the more logical step, from your point of view, is that you get paid back in full? Unlikely, therefore the choice of IVA may actually not exist for the OP in the first place, and I accept totally your opinion on the debate as to what you would choose by the way.
I didn't suggest that the OP sells, and releasing equity by borrowing is also out of the question, therefore the logical step as it stands is to seek a DMP. Not a massive fan of DMP's generally, but where they are the best option then they are a useful tool in the fight against unaffordable debt. The OP can always increase should circumstances improve, and if he or she works 30 hours or more than a claim for Working Tax Credit looks in order, it wouldn't be much but it would help.
Your own case doesn't really compare to this one as there are different factors involved. If you were to realise your own assets then it is not inconceivable that they will not fetch what you wish, you would have tenant notice issues to deal with, not to mention a serious loss of income.
DC, as ever, makes some good points. What happens to a property with equity if an IVA fails is a good question. The most common answer is very little, an IP will not usually bankrupt a debtor these days, and creditors are reluctant in the main (although that is not to say it wouldn't happen) to do so. Usually, but not always, a debtor will enter a DMP. I do feel, though, that the perspective given is only half the story, because if you are comparing IVA's to DMP's, then you should be able to compare but there are no figures for DMP's. I can only give you my own opinion, which is that there are far more DMP's in arrears than IVA's, and far more people on inappropriate DMP's in the first place, which maybe goes back to the point about charities putting debtors on "default" DMP's automatically. I.E. DMP first, all other options very much secondary as that is the way they work. That is a different debate however, and not really one for this thread.
Bottom line on this though, is that, given the limited info on here, I cannot for the life of me see this IVA proposal getting accepted, and I would be very reluctant to put such a proposal forward on nannymc's behalf.0 -
UTMNII,
It isn't a case of whether you can release equity or not, it is a case of comparing assets against liabilities. A creditor is highly unlikely to accept a potential debt write off where the means exist to pay back the debt in full by realisation of assets. If you put yourself in their position, someone owes you £17k and is proposing paying you back, over 5 or 6 years, maybe 16p in the £1, so you take a loss whilst that person keeps an asset that may be worth more then that it is now as well, are you going to accept that whilst the more logical step, from your point of view, is that you get paid back in full? Unlikely, therefore the choice of IVA may actually not exist for the OP in the first place, and I accept totally your opinion on the debate as to what you would choose by the way.
I didn't suggest that the OP sells, and releasing equity by borrowing is also out of the question, therefore the logical step as it stands is to seek a DMP. Not a massive fan of DMP's generally, but where they are the best option then they are a useful tool in the fight against unaffordable debt. The OP can always increase should circumstances improve, and if he or she works 30 hours or more than a claim for Working Tax Credit looks in order, it wouldn't be much but it would help.
Your own case doesn't really compare to this one as there are different factors involved. If you were to realise your own assets then it is not inconceivable that they will not fetch what you wish, you would have tenant notice issues to deal with, not to mention a serious loss of income.
DC, as ever, makes some good points. What happens to a property with equity if an IVA fails is a good question. The most common answer is very little, an IP will not usually bankrupt a debtor these days, and creditors are reluctant in the main (although that is not to say it wouldn't happen) to do so. Usually, but not always, a debtor will enter a DMP. I do feel, though, that the perspective given is only half the story, because if you are comparing IVA's to DMP's, then you should be able to compare but there are no figures for DMP's. I can only give you my own opinion, which is that there are far more DMP's in arrears than IVA's, and far more people on inappropriate DMP's in the first place, which maybe goes back to the point about charities putting debtors on "default" DMP's automatically. I.E. DMP first, all other options very much secondary as that is the way they work. That is a different debate however, and not really one for this thread.
Bottom line on this though, is that, given the limited info on here, I cannot for the life of me see this IVA proposal getting accepted, and I would be very reluctant to put such a proposal forward on nannymc's behalf.
Hi
Again, some very good points in here from GD, I can't quite bring myself to press the thank you button yet though he says a little tongue in cheek.
Without wishing to get dragged into a debate on the fee chargers versus the charities on this thread, the fact is that disposable incomes are coming under severe pressure and it is impacting on all debt solutions.
If bankruptcy or an IVA are not suitable then a DMP can be the only sensible solution be it long or short term. The creditors and collection agencies should be held bang to account if they dont tow the OFT line with Debt Management Plans.
Debt advice is not just about bankruptcy, debt management plans, IVAs and DROs either, but Im afraid this seems to be the trend, fees, commission, fair share contributions are what it all seems to be about nowdays.
The problem is with the above is that when agencies & companies are geared to these forms of income then independent, impartial advice can go out the window and when things go wrong for the people in debt or they dont fit the criteria to start with they are referred elswhere or pointed towards self help materials perhaps with a bit of spin attached for the stats.
My opinion is that the mask it starting to slip a little with the expenditure allowance figures twinned with the freefall in disposable incomes and people are starting to see through this especially the ones suffering in debt. Its getting a bit obvious now and the evasive answers are starting to appear, it is just a matter of time, simple economics really and the scrutiny commitee and questions wont be going away
There could be trouble ahead, maybe a miscalculation or two even, oh dear, could be.
The serious problem that is developing is that a growing number of people are not seeing an end to their debts even when they have entered payment arrangements with some actually getting further into debt with priorities or borrowing more.
Its not going to be easy over the coming months or perhaps years for some agencies and companies that depend on incomes from debt solutions, oh and did I forget to mention those struggling in debt, sorry I almost forgot about them, however they will be the ones that determine what happens in the end and it wont be long the way things are going.
Drawing board time perhaps, the fall is simply much too severe this time.
Lets hope the OP gets the right result for them
My take as usual0 -
Depth_Charge wrote: »Hi
You say...Granted, IVAs have their downsides and according to these latest figures from the I/S website tens of thousands get terminated and just look at some of those percentage figures, is it me or are they actually going up.
http://www.insolvencydirect.bis.gov.uk/otherinformation/statistics/IVAs/ivas.htm
A question worth putting to any IVA provider or Insolvency Practitioner is what happens when you have a property with significant equity where an IVA fails? Can you be made bankrupt?
If an IVA fails you can end up back at square one less thousands in fees or worse, having said that IVAs can be the right solution and write off a substantial amount of debt.
These figures are horrendous though in my opinion and given the economic situation then I wonder what the underlying trend really is, just how many IVAs are in arrears, how many people are struggling, just how bad is this?
Maybe someone should ask the above questions on the other forum
Still it has to be said that IVAs can be the right solution, just make sure you fully understand the pros, cons and potential implications. The payments have to be affordable and sustainable with a sensible flexibility aspect in these unique economic times or it could just eventually all fall apart and that will help nobody.
Like I have said before, time for responsible, experienced advice and assistance, before its too late, people need help to get through these difficult times.
PS - this post is not about the fee chargers versus the charities, Im just saying it like it is and the figures are from the I/S site for all to see.
Always make sure you get full advice before you make any decisions, your choice at the end of the day
My take again as always
Hi DC,
Yes - I've seen those stats as well. About 1/3 IVA's fail - that's far too high, (we've already discussed overselling issues, people taking poor advice), but despite that, the majority succeed.
I think the shaded bars in the final few years are unknown because those IVAs are still in progress). it will be interesting to see the figures when the first protocol compliant IVAs have been concluded.
Let's be fair: No debt management solution is a bed of roses, it's blinking difficult in some cases, be it IVA's , DMPs, DRO's or BR. They all have major detrimental ramifications if you fail to stick to the required terms.
You can possibly, be made bankrupt if your IVA fails. (But the same could be a possibility if you fail you DMP I suppose).
This was made very clear to me at the outset. I believe a lot depends on how much you have paid into the IVA up to the failure point. Have come across examples of people in Year 4, losing their job, but the IP agreeing to complete the IVA based on payments received to date (particularly if things like PPI have also gone into the pot).
Bottom line as always to anyone considering an IVA. Do as much research as possible vs BR, DMP or other debt solution.
How many times have we come across people in trouble with their IVA, who just went for it because they saw it as a lifeline when they were desperate? I sympathies of course (having been there myself), but the phrase 'buyer beware' is my prevailing thought.0 -
UpToMyNeckInIt wrote: »Hi DC,
Yes - I've seen those stats as well. About 1/3 IVA's fail - that's far too high, (we've already discussed overselling issues, people taking poor advice), but despite that, the majority succeed.
I think the shaded bars in the final few years are unknown because those IVAs are still in progress). it will be interesting to see the figures when the first protocol compliant IVAs have been concluded.
Let's be fair: No debt management solution is a bed of roses, it's blinking difficult in some cases, be it IVA's , DMPs, DRO's or BR. They all have major detrimental ramifications if you fail to stick to the required terms.
You can possibly, be made bankrupt if your IVA fails. (But the same could be a possibility if you fail you DMP I suppose).
This was made very clear to me at the outset. I believe a lot depends on how much you have paid into the IVA up to the failure point. Have come across examples of people in Year 4, losing their job, but the IP agreeing to complete the IVA based on payments received to date (particularly if things like PPI have also gone into the pot).
Bottom line as always to anyone considering an IVA. Do as much research as possible vs BR, DMP or other debt solution.
How many times have we come across people in trouble with their IVA, who just went for it because they saw it as a lifeline when they were desperate? I sympathies of course (having been there myself), but the phrase 'buyer beware' is my prevailing thought.
Hi
The IVA termination figures for 2006 & 2007 are 36.7% & 37% respectively which is higher than one third and there are a fair percentage still ongoing in these years which may suggest the failure rates will be higher, perhaps topping the 40% mark in time.
The more recent years figures are high too and given the current economic situation, then who knows what these percentages will eventually climb to.
I dont think the argument that more more IVAs succeed than fail makes much sense really as this is a formal insolvency solution with a high level of fees involved unless we are talking about a lottery or you pay your money you takes your chances type of situation.
Also these figures do not show how many people are currently in arrears with IVAs or are struggling with payments.
Looking round the forums then the above seems to be apparent, but of course the forums will highlight the problems as those who are managing and happy with their IVAs will not likely post which is fair comment.
When you look at bankruptcy and Debt Relief Orders then there is no comparison and of course there is the issue of the cost to the person in debt if they end up back at square one, close to or worse.
Its goes without saying though (in my opinion) that if the same circumstances, figures etc are used for income & expenditure in Debt Mangement Plans then it has to go hand in hand that people are facing the same issues and problems, but a debt management is not a formal insolvency solution as we keep hearing from the pro IVA brigade, you cant have your cake and eat it.
As far as failing debt management plans are concerned then in my experience creditors are not likely to petition for bankruptcy, however in IVAs you enter a formal agreement and terms are agreed in writing with the IVA providers more or less duty bound to raise assets and monies for the creditors and of course they have a financial interest with their fees. I have seen many letters from IVA companies in failing IVAs where bankruptcy proceedings are lets say 'intimated' at least.
Im not saying that Debt Management Plans are perfect as they are certainly not and some people do not have much choice other to go down that route either temporary or long term. This is why the OFT amended / updated their guidelines as to help people who are genuinely struggling and doing their best to manage under the circumstances and I believe these guidelines should be followed as they are supposed to be and pressure put on creditors and collection agencies who do not adhere.
Im also not saying that IVAs are not the right solution for some and everyone should have the choice at the end of the day
There does not seem to be an easy answer under the current economic circumstances, but those who plug the same old sales lines on IVAs should be brought to account. Just look at some of the job adverts for the profit makers, seriously just google around and have a look.
In my opinion the IVA companies have to recognise the situation and act / respond accordingly in helping their clients the best they can, as some are doing, the ones that arguably do not will not survive in the long run and lets not forget that the whole idea is to help the people in debt.
The bottom line is this if you have debt problems make sure you understand the options, fees, possible implications, risks and that any payment arrangement is affordable and sustainable and your choice at the end of the day.
Whichever way I have ever looked at debt advice and through genuine first hand experience on a daily basis I cannot conclude that where commission and profit is involved it can ever be truly independent and impartial, with some absolute shockers along the way too date.
To be honest, it also has to be said that some of the things I am currently seeing in the charity and not for profit sectors do not excactly fill me with confidence, unfortunately funding issues seem to be playing their part here.
People are not stupid though and the money in their pockets cannot lie
Time will tell as always
My genuine take.
PS - Have you asked the questions on the other forum yet, it would be interesting to see who replies as some of the providers dont seem to be around much lately it would seem?0 -
my iva is for 72 months, which i am not happy about and i'm paying £130 a month!! i am not hapy with my iva at all!!0
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Just heard today that my creditors meeting is to be held on 21 January at 11 am, so lets hope for good news.0
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I know one of the discussion points here was the vaildity of an IVA, based on the large amount of apparent equity.
One IP quoted the following:
'The equity you have in your property is not necessarily a barrier to presenting an IVA any more - as creditors do understand that it may not be the right thing to turf a family out of their home. I would definately explore this as an option, as I have got a few IVAs accepted recently where there has been high equity, but we have been able to put forward good reasons why the property should not be sold.' (Ie: because you live there).
(This was in response to a customer wanting to ditch their 40-Year DMP (What!!!) and enter an IVA (can't say I blame them).
Just goes to show how there are so many variables based on everyone's own financial circumstances. But is seems that creditors are not as likely to go for the house, in these cases as some might believe.0 -
UpToMyNeckInIt wrote: »I know one of the discussion points here was the vaildity of an IVA, based on the large amount of apparent equity.
One IP quoted the following:
'The equity you have in your property is not necessarily a barrier to presenting an IVA any more - as creditors do understand that it may not be the right thing to turf a family out of their home. I would definately explore this as an option, as I have got a few IVAs accepted recently where there has been high equity, but we have been able to put forward good reasons why the property should not be sold.' (Ie: because you live there).
(This was in response to a customer wanting to ditch their 40-Year DMP (What!!!) and enter an IVA (can't say I blame them).
Just goes to show how there are so many variables based on everyone's own financial circumstances. But is seems that creditors are not as likely to go for the house, in these cases as some might believe.
Hi
Interesting
But what might happen if the IVA fails, could bankruptcy proceedings be instigated to get at the equity?
It is all about making sure that people considering and entering IVAs fully understand them especially any potential implications if the arrangement runs into trouble or fails and of course that the payments are affordable and sustainable from the outset.
6 years can be a long time and a lot can happen especially in these uncertain times
Also bear in mind the dreadful IVA Termination rate figures
IVAs are a disaster area in the current climate, you only have to read whats going on all over the forums to see this and it can only get worse before it gets any better Im afraid,
Are some of them listening or is it carry on regardless and sell, sell, sell
Ive already seen some interesting ones since returning in the new year
The way things are looking its struggle and misery ahead and it will just all fall apart
Never mind we can always go out and try selling timeshares or something similar
Just my take and humour as always0
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