IVA Failure Rates

UpToMyNeckInIt

Hi DC,

I always enjoy your posts (don't necessarily agree with all your points, but we are all entitled to opinions, and there is nothing wrong with healthy debate). That's as complimentary as I get on an internet forum.

I've certainly 'bookmarked' many of the weblinks you post. I think one key to getting trough an IVA (especially if times become tough), is knowledge: this could make the difference between making your IP fight your corner or not in some circumstances.

You clearly see the ugly side of IVA's - dealing with people who ultimately fail them and go bankrupt, and it is right that you warn others of this pitfall.

Question for you: Do you deal with a predominant customer type in IVA failures? Eg: Are most of them people with few/no assets, on low incomes, possibly solely benefits etc (ie: the possible victims of mis-selling)?

Or are many of the result of divorce/relationship split ups, unexpected redundancies etc?

(I only ask because some IPs cite such examples as making up the bulk of their failures).

Or do you genuinely get referred customers from all walks of life.

...I bet you know for sure which IVA firms NOT to recommend!!!

Interesting you mention about me taking up debt advice. It's not for me, but I do know of several employees of IVA firms who are, or used to be in an IVA (my case handler for one). From them, I get the positive side of the IVA argument, and find their advice/support enormously beneficial.

As always one has to weigh up the pros & cons of each side of the argument and decide if an IVA is right for them or not.

milliemonster

It's been an interesting read through this thread, as someone in an IVA (coming to the end of my 2nd year) I'm neither pro nor against an IVA, I think we made the best decision we could at the time for our circumstances (57k worth of debt, own our home with little equity, husband in a job where bankruptcy would cause him to be sacked and a DMP would take 20 years to repay) but I still took 6 months to get our budget right before we went ahead and sent back our proposal numerous times before I agreed it.

Obviously many of you many the CFS guidelines being more realistic than CCCS but as a member of the public we cannot access CFS guidelines anyway so they are irrelevant are they not? unless someone is prepared to post them on here? In fact even when people in debt ask for the CCCS guidelines, most people are told to just put down in their budget what they spend and they will be told if it's too much, however if it can be justified then that's fine.

We had an issue with our fuel spend, we both work 30 miles away from work and work shifts so our monthly diesel costs are around £350 between us which I know is way above CCCS guidelines, but we could provide proof and evidence to back this up and made the decision if our creditors asked to reduce this we would just reject it as the only way to reduce it would be to move!, fortunately it wasn't questioned.

Since our 1st review our utility costs increased, car maintenance was twice what CCCS guidelines stated they allowed at the beginning but again these new allowances were agreed on review as I had evidence to corroborate them, so surely guidelines are just that? and open to interpretation

UpToMyNeckInIt

Hi milliemonster,

Sounds like you have a good IP who fights your corner (I hope mine will be the same come review time). It just shows that the guidelines figures are, as you say, just that, and that if you can prove that your expenditure is higher than the guideline figure, this can be accounted for. 'Proof' of course is as simple as forwarding on receipts/bank statements as required. (I too was able to negotiate a higher fuel allowance).

I agree with your sentiments over the CFS guidelines. There is no point in referring to them, if no IVA company uses them in their proposals. (I read another posting stating that this is because creditors insist on the lower figures agreed with their buddies at CCCS (Stepchange), who are funded by the very same creditors. Cynical I know, but hardly surprising).

milliemonster

I agree, isn't the whole point of an IVA to leave you enough money for essential expenditure and the remainder of your disposable income is your IVA payment, therefore in my mind, guidelines are totally irrelevant. Despite the hardship we faced when we made enquiries into an IVA, if we had been told that our fuel expenditure was too high I would have just said 'tough, that's what it is' and that was the end of the matter.

I was very careful to ensure that we were realistic with our budget, I wasn't prepared to go through a 5 year IVA restricting ourselves as much as we possibly could just to get it through.

I still find living in an IVA hard, but that's only because I still spend willynilly and don't have credit to fall back on anymore (which is no bad thing!), I'll get there in time I'm sure.

UpToMyNeckInIt

Hmm,

I can see your point (and agree with your points), but I would not call the CCCS Budget guidelines ‘irrelevant’. (A little out of date, certainly. But I believe that they are being reviewed now). You IP has to have due regard to them in preparing a protocol-compliant IVA for starters.

Also, I know that I was pretty poor at ‘budgeting’ of any sort prior to the IVA. I was paying so much to (and prioritising) my creditors that I could not even budget for what is deemed ‘reasonable’ in many areas of the CCCS guidelines.

In fact, I recall being surprised to learn that the guidance allowed for spending in some areas that I had not even thought to consider budgeting for. Consequently, I never had previously.

For example, perhaps my biggest omission prior to the IVA: I was cutting back so much that I had not even allowed for a ‘clothing budget’. So at the proposal stage, my company advised me that they would use CCCS clothing allowance figures for now. Fair enough I think, and as it goes we are doing OK on that.

I agree however, that there are other areas, such as car maintenance, and household repairs where the CCCS figures are clearly unrealistic. Like you, I have kept the receipts, and will ask my IP to take the increased expenditure in these areas, into account come review time (particularly if it offsets any income increases). I want to ensure I keep my IVA repayment as low, and as affordable, as possible, and I advise others keep receipts etc, so that they may be able to do likewise.

That said, I have so far ‘under-spent’ on other allowances, so despite coping with Christmas (with surprisingly few cut-backs), £400 on a boiler repair and £650 on car servicing, MOT + repairs – all in December, I have found the money for this, and all without the help of credit cards.

Prior to my IVA, I was having to find £800-£900 pcm to repay min. amounts to my creditors. My IVA repayment is £277. To me that’s really affordable. Like you therefore, I can still find the money for the odd little luxury (I would not say I spend willy-nilly, but we all need to enjoy the occasional treat). Hope the rest of my IVA goes like that (I draw inspiration to some extent from your account so far, and I hope you continue with your IVA to successful completion).

I know some people don’t bother ever budgeting or keeping receipt etc. throughout their IVA. I suppose this forces their IP to rely solely on CCCS budget guidelines. Possibly then, some of those struggle to sustain their IVA payment, and ultimately fail.