Thinking about an IVA.

Enchanted21

Hi everyone!!

Hope you are all ok?

Just this morning Hubby and I have been talking in earnest about our debt situation. I've been thinking long and hard about it for a few months now, and it seem like he is too. Anyway, a chance opening came where we were able to talk about it fully (previously nervous about it) and we have decided to look into our options.

A big one is an IVA..... Currently I'm looking at a shortfall of £1300 a month to pay our bills and debts. The gap is increasing each month and we both know this cannot continue. I know this should have been addressed months, heck, even years ago, but we are here now trying our best.

What I'm wondering is...... Has an IVA been worth it for you?

My head is spinning with options at the moment and before we commit to anything, I would love for you to share your thoughts with me, as knowledge is power....... So they say :-)

So, hit me with it..... How has life been on an IVA...... Compared to how it could have been?

Going to make some important phone calls tomorrow and see what our options are. Any hints or tips for a newbie?.????

Thank you soooo much, I'm a wee bit nervous Xx

Enchanted Xx

UpToMyNeckInIt

This is purely my opinion, speaking as an IVA customer:

You are right to thoroughly research the subject of IVAs. Please consider the ramifications before entering an IVA - speak to a few providers to see if it is the right option for you. Remember: It is a form of insolvency, which in turn puts all sorts of restrictions on everything from the ability to open a bank account, or even get a mobile phone on contract.

I only went down the IVA route as I had no real option after an unexpected change in financial circumstances.

Glad I went the IVA route in the end - can now sleep at night, Hope you get back on track financially soon as well.

Initially seek advice from the ‘charity’ organisations, but don’t be afraid to approach a private firm if they don't think you are eligible for an IVA.

Google ‘insolvency practitioner reviews’ and contact a couple of well-reviewed Insolvency Practitioners. Contrary to what some might have you believe, many don't charge you anything, and their fees would be paid out of your monthly IVA payment (and agreed by your creditors).

The following link to Stepchange, gives a brief ‘iva pros & cons’ guide though which is a useful starting point:

http://www.stepchange.org/Debtinformationandadvice/Debtsolutions/Individualvoluntaryarrangement/IVAprosandcons.aspx

Google ‘Straightforward Consumer IVA protocol’ which the vast majority of new IVAs are compliant with, much of which will form the basis, word-for-word of you IVA agreement. This should direct you to a link to download the pdf document. Well worth a read.

Similarly, you will have to work out your income and expenditure. Whatever is left over is your IVA payment. Regarding what is deemed 'reasonable' expenditure, google: ‘CCCS Budget Guidelines Report 2011’. All IPs that I’ve come across make reference to this. Download the pdf.

(I understand that there may now be a newer version, but I cannot find a link to download it. I believe the 2011 document was effective from October 2011, and used in my IVA implemented in August 2012).

However, even if the figures are a little off, it is well worth a read, as it covers every form of expenditure, right the way down to allowances for hairdressing, kid's school dinners, meals at work, even hobbies etc if so required.

If you are careful to correctly record your income and expenditure, your IVA payment should be set at quite an affordable level. I have come across people who underestimate their expenditure (in the mistaken belief that their IVA will more likely be accepted), and subsequently have difficulty from day one.

Equity release (if applicable): Bear in mind that, however unlikely it is currently likely to happen, most IVA's require homeowners to (subject to a property valuation in Month 54 of the IVA), attempt to release equity via remortgage / secured loan up to 85% LTV to increase creditor dividend up to 100p in the £. (Subject to the resulting payment being max. 50% of you current IVA payment for affordability reasons). For most, equity release is not possible, so your IVA goes on for a 6th Year instead (which usually works out a lot cheaper). But who knows what the economic climate will be like in 4-5 Years time?

Bank Accounts: If you still are in the pre-approval stage, and any of your debts are with your existing bank, you need to open a full current account with a non-creditor institution now! (less overdraft of course). Best not to reveal that you are considering an IVA though (no requirement to volunteer such information).

Important to do this before you are on the insolvency register, as you will then probably be limited to a handful of basic accounts.

DO NOT switch to HSBC/First Direct: when they find you on the insolvency register, (which they will), they will make you close your account.

Most IP's reckon on a 96-99% IVA-acceptance rate. After all they don't want to go to the time/effort in putting together an IVA proposal, unless they are reasonably certain of creditor approval (they don't get paid otherwise).

Enough for starters!!!

LittleLegs

I too have been looking into an IVA, I do have huge concerns about it though. I rent and I am assuming it would affect my credit file if we had to move, no guarantee our current land-lady will keep renting where we live. Did you find you we're better off with an IVA as the figures I've been given looks as tho I'll be no better off which I'm sure isn't right?!

UpToMyNeckInIt

LittleLegs wrote: »

I too have been looking into an IVA, I do have huge concerns about it though. I rent and I am assuming it would affect my credit file if we had to move, no guarantee our current land-lady will keep renting where we live. Did you find you we're better off with an IVA as the figures I've been given looks as tho I'll be no better off which I'm sure isn't right?!

You are right to be concerned when renting - OK you know your IVA will only last 5 Years, but if you want to move, most letting agencies run a credit check.

Have come across people in your position with this difficulty.

Best advice: Rent privately as private landlords are less likely to run credit checks. Alternatively, stick with your existing letting agent (they are unlikely to run credit checks if you renew a tenancy with them, even if it's at a different address).

Be up-front with a 'new' letting agent: On the plus side, and IVA specifically allows for rental payments, so in some ways their payment is 'ringfenced'.

Good luck.

sort_me_own_yard_out

I have not had a good experiance with IVA. So sorry to sound like Ms Doom and Gloom but feel that you need to go into IVA with your eyes wide open.

My first mistake was to contact was in June 09 when I contacted an IVA company rather than CAB or the now named step change debt charities. I was desperate and as soon as the IVA company told me that I wouldnt be contacted any more b y my creditors I was sold on the idea.

It went through all too fast from the first day of contact to having it passed was 4 week my allowances were never realistic. I was told that my child care costs would be questioned so they set them about £150 a month less than my actual costs even though I had reciepts, and my tax credits reflected this too. Yet again I didnt question it as I just wanted to go through and as the man said I had other allowances like road tax and car maintaince that i could use each month.

So my robbing Peter to pay Paul continued I ended up getting clothes, shoes, presents on a catalogue, pay day loans to fix my car and paying on the tick to replace my washing machine at my local electrical shop.

I lived like that for 9 months and my child care and fuel bills increasing finished me off as they said there was no chance of adjusting it it failed.

Fast forward 4 years. I am plagued with constant hounding phone calls , letters I am hoping to go bankrupt in the next couple of months.

Had I of looked at the right place for help bankrupcty would of been the right solution in the first instance. I dont own a property, no assets at the time I had 32k of debt I now have slightly more with no way of repaying it.

CAB have been wonderful and I am also having help with my fees from the British Legion who have been equally good.

My advice is not to go into it blinkered, if IVA is the right way for you to go look into the companies properly the one I used was "Money, Debt and Credit" although their admin side was good and fast their fixation was "to get it through" and didnt help me in the slightest.

Good Luck on your journey which ever path you choose.

patchy987

My personal experience ..

We also got sucked in with a private company who basically told us that we needed £250 a month spare money minimum or the iva wouldn't be accepted.

They fudged all our expenditure and left us just £35 a week to live on between us.

It has been the hardest and lowest 6 years of our lives but we stuck at it, even when I had a serious breakdown we just kept struggling on.

However we completed out last payment at the end of November 2012 and can honestly say that I'm glad it's all over and we now have our lives back but please do plenty of research and don't be too quick to use the first company who say they can help you

LittleLegs

I've now spoken to 3 different companies who have all suggested an IVA, sorry if I'm hijacking your post Enchanted21.
I've read that bankruptcy damages your credit file for less time, or have I read that wrong?
Although £35pw to live on doesn't seem a lot to you it's £35pw more than I currently have.
6 years just seems such a long time and things could change so much in that time.
I'm so silly having got myself into such situation ��

sort_me_own_yard_out

Littlelegs, have you spoken to the debt charities rather than companies? What tends to happen is that companies that offer IVA will sell that to you as they get the fees. Bankruptcy wont earn them anything as you are able to do it without their help.

As for the £35 a week it may be £35 a week more than you have now but IVA is a long time. I am guessing Patchy had their own property with equity as it ran for 6 years rather than the normal 5years and despite it being hard and near on impossiable it was hopefully worth the sacrifice because of their home.

Your credit will be damaged which ever route you take.

UpToMyNeckInIt

Hi All,

Goes without saying that an IVA is clearly not for everyone.

If you have no assets, but a big debt, and you are not in a job where bankruptcy is a no no, then it would possibly be the better route. (Not an option for me though).

LittleLegs: I believe you are correct in that the bankruptcy process is a shorter one over an IVA, so that's another point in favour of BR over an IVA.

FiatFan_2

Good to see opinions from both sides above, so far we definitely feel an iva was the best way to sort our finances out. Having used a debt charity who guided us to manageable allowances we feel better off knowing we have the money to pay for things instead of scrabbling to gain credit like we did in the past.

As some have mentioned in other threads, once you stop paying creditors and waiting on the approval, try and build a little savings pot up. We didn't really make the opportunity and whilst it's initially been difficult with Christmas, we can see the improvement and will get savings slowly built up this year.

Enchanted21

Hi everyone

Upto my neck in it, thank you so much for your well thought out and informative reply, you have given me a lot to think about, which is exactly what I wanted. You advice has been well thought out and informative x

LittleLegs, highjack away..... Lol. I don't mind..... All knowledge is good knowledge in my opinion. You might even ask and receive reply to questions I had not even thought about...... So keep asking . I hope it all goes well for you X

Sort me own back yard out and Patchy..... I need the negatives as well as the positives, which is exactly what I was after when I posted this thread to hear all sides of the 'IVA story'.

£35 a week sounds impossible to live on, but you are a shining example as to how we can over come adversity.... You have persevered and won..... An amazing story. If you have a diary on here I would love to read it . Well done Patchy!!!!

SMOYO.... Thanks for your experience, I'm so sorry it hasn't worked out for you :-(. And thanks for telling me which company to avoid. Every little helps, as they say. I hope you can find some relief from your debt worries, there is nothing worse. I'm pleased to hear you have some relief from speaking to someone at CAB and help from the British Legion..... Do let me know how it's going.

Fiatfan, I like you have contacted a debt charity, Stepchange. The first phone call was placed tonight where a lovely gentle man went through our income and outgoings..... I have to say, I felt very comfortable discussing the details with him. Not at as embarrassed as I might have originally thought and he was very polite.

I will receive a 2nd phone call at the end of the week once I have checked out some facts and figures.

The biggest surprise is Hubby. I really thought I would find it difficult talking about all of this with him, admitting fault and feeling like I have let him down. He has been amazing!!!! So much so that I feel like I'm the one that's freaking out. He makes some very compelling arguments, that when I'm worried or feeling out of sorts about the whole situation, he is able to make me focus better on the picture at hand, without reproach or reprimand. Amazing Xx

Fiat fan, I'm glad you have seen improvements in such a short space of time, it gives me hope Xx. I wondered what you meant about payments and approval? Do you stop paying creditors whilst you are waiting for an answer? I wonder?

The next job on our list is to open a new bank account, with a different provider..... Thanks Up to me neck in it :-). Then it's the long, fight to make sure our wages are paid into it. I'm wanting to wait until after the 1st when our mortgage is paid before we officially start the ball rolling, as I would like to be assured that it is paid on time and we have a 4 weeks before it's paid again, just incase there is a c-up somewhere down the line.

It's hard work and a hard decision, but we will get there, I'm sure. At least me and Hubby are on the same page, and Princess and Munchkin are at an age where they are too young to understand, but will be old enough when we are through for us to give them a shot in their future.

Once again, heartfelt thanks for the repliesXx

If you can tink of anything else that might be good to know, don't hesitate to post

Enchanted Xx