Should I start IVA?? Help needed please!

Supersteph

Hi all,

I wonder if anyone can advise me on whether or not to apply for an IVA?

I currently have about £14,000 debts on two loans, one credit card. I have been in a debt management program with Gregory Pennington for about seven years. I know I could've probably managed it myself, but feel more comfortable dealing with them as clearly I am not good at sorting it out myself, my debts were above £20,000 to begin with.

They called me on Thursday to see what my situation was like and if I would like to apply for an IVA. Currently I pay £122 a month so my debt at the current rate will take about 12/13 years to pay off. Although I am managing it at the moment, the guy I spoke to said that I could apply to pay the same amount ( as its all I can afford at the moment)

My fianc! and I are in a stable position at the moment, he has a steady job, and I am a self employed child minder. We rent, and have two cars that are worth less than £7,000 all together.

I really want to see a light at the end of the debt tunnel and I think this way I could have the debt paid off by the time my oldest child starts secondary school. But my fianc! is worried about it, and I have reservations too.

Sorry for rambling, but can anyone help?

Thanks

Steph

Vikipollard

I'd strongly advise you to seek advice from the free debt charities (National Debtline, Stepchange etc).

I'm an IVA survivor. Mine had a six-year term and I'm waiting on the completion certificate now. It was at times hard, but in honesty was the right choice for me.

No one can actually tell you whether or not you should go for an IVA, but you shouldn't be paying someone (which I understand Gregory Pennington take a fee out of your contributions? I could be wrong though.)

An IVA is a legally binding arrangement, which will inevitably have consequences for your credit file. That said though, it may be less of an issue given you are already in a DMP, so have perhaps already a trashed file.

There are other implications, but you really do need impartial non-fee-charging advice. I say that because they have less of a vested interest in getting you tied in to a legal agreement. As you stated, the DMP you know you could have run yourself (and then all the money chipping off your debt).

Depth_Charge

Supersteph wrote: »

Hi all,

I wonder if anyone can advise me on whether or not to apply for an IVA?

I currently have about £14,000 debts on two loans, one credit card. I have been in a debt management program with Gregory Pennington for about seven years. I know I could've probably managed it myself, but feel more comfortable dealing with them as clearly I am not good at sorting it out myself, my debts were above £20,000 to begin with.

They called me on Thursday to see what my situation was like and if I would like to apply for an IVA. Currently I pay £122 a month so my debt at the current rate will take about 12/13 years to pay off. Although I am managing it at the moment, the guy I spoke to said that I could apply to pay the same amount ( as its all I can afford at the moment)

My fianc! and I are in a stable position at the moment, he has a steady job, and I am a self employed child minder. We rent, and have two cars that are worth less than £7,000 all together.

I really want to see a light at the end of the debt tunnel and I think this way I could have the debt paid off by the time my oldest child starts secondary school. But my fianc! is worried about it, and I have reservations too.

Sorry for rambling, but can anyone help?

Thanks

Steph

Hi

I agree with the previous poster.

You need to fully explore the pros & cons of an IVA along with any other possible options based on your overall circumstances.

Have you looked at any potential PPI claims?

An IVA is a formal insolvency solution with 5 years (if appropriate) being a very long time and a lot can happen.

Make sure you fully understand the situation with an IVA (including the fee structure) or any other debt solution before making a decision.

MSE link on where to get advice, no harm getting a second or even a third opinion

https://forums.moneysavingexpert.com/discussion/4228011

Your decisions at the end of the day

Best Wishes

Supersteph

Thanks very much guys. Will take what you said on board

Steph

cheesedoffwithdebt

Just a comment to Vicki- all IVA's involve fees, even with the charities, so there is no option but for them to be paid. However they are taken into account at the outset, and are taken from the overall payments made so if you are in an IVA you don't pay fees on top, and creditors don't ask for any more money at the end.

a debt management plan involving fees is outrageous but not an IVA.

To the original question- the issue here is that an IVA will ensure that your debts are paid off within 5-6 years whereas , as you say, using debt management can take over 10 years.

However like yourself I was very cynical when approached about doing an IVA because I had heard alot of negative press- now I understand more I fear in many cases it's the best way of ensuring you are debt free in a relatively short period (although half way through my IVA it feels like it is endless sometimes).

Debt management plans in my (new) view now ought to be only a temporary solution not a means of paying off debts in full because the period of time needed to repay is just too long in many cases, and of course creditors can and do still charge interest- with an IVA all interest is frozen.

You need to understand it better really, that will help you make the best decision- if you can get into a CAB office that might be the best because they have no axe to grind about what you do and can give some impartial advice.

best of luck

UpToMyNeckInIt

Hi Supersteph,

Good advice here already.

An IVA may be an option - indeed you would have been debt-free for 2 Years if you had taken one out initially. It is frustrating to hear that you were persuaded to do a DMP initially, as it clearly is going to take half a lifetime to get debt free.

BUT an IVA is not an easy option either. Do your research before deciding if this is the best route for you.

If the CAB or the charities advise you to go for the IVA, they will most likely refer you to a company called Grant Thornton, who seem to have a lot of customer service issues at the moment.

With that in mind, check out some reviews of insolvency practitioners at IVA.com, and speak to 2-3 companies to see who you will feel comfortable working with. (Contrary to popular belief many don't charge up-front fees).

Good luck with whatever you decide.

National_Debtline

Hello there.

On the face of it an IVA could be a much quicker option ti get you debt free. The only thing to bear in mind is that an IVA is contractually binding and can be difficult to modify once you're into it (although not impossible). If you are self-employed you will need to be sure that you can meet the instalments, we do see a fair number of IVAs failing due to the individual being unable to maintain the instalments. As Depth Charge has mentioned it's vital to do as much research as possible so that you're fully versed in the pros and cons of each option you consider. They also make a really great point regarding PPI, if you do have a potential reclaim it may be possible for you to significantly reduce your liabilities by using any lump-sum that you reclaim to make offers of Full & Final settlements to your creditors; more info on those here:

http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=24_full_and_final_settlement_offers

How much is your car worth? If it is of nominal value it *may* also be possible to consider the Bankruptcy route or potentially a Debt Relief Order. Both are likely to be cheaper and faster than an IVA although both have quite important implications and rules to consider.

We have a brief otherview of all potential options on our website, here's a link:

http://www.nationaldebtline.co.uk/england_wales/page.php?page=35_options_for_dealing_with_your_debts

Hope you find this information useful!

David @ NDL.

JillyJones

Just come to the end of my 5 year IVA with Debt Free Direct. Having paid £334 p/m for 5 years and £21,631.16 in total, I now have to remortgage my house to release a further £6,000 in equity to complete and get the certificate. I was also unaware that a loan I had secured on my house for £10,000 had not been included in the IVA. Therefore I now have a further £16,000 to pay to complete. I was contacted by a solicitor who was suggested by Debt Free Direct but is apparently independant to them, and i was told that after looking into my finances, it was not the best option to remortgage, however he could arrange a loan for the £16,000 for me. The payments would be £298.58 over a further 10 years.
Working this out, this comes to a total of £35,829.60 on a £16,000 loan I would have to pay back. So in the end I will have paid back £56,000 in total. Nearly double my origional debt . Need to seek advice on this asap i think.

milliemonster

Secured loans can never be put into an iva, this should have been explained to you from the start and also if you read your iva proposal it should clearly state on there which creditors were included? Your secured loan would not have been on there.

The remortgage issue comes up if you have equity at the end of year 4 above £5k, however, a new loan is not a remortgage, check the wording of your proposal carefully, if it states you will remortgage to release funds, and you can't get a remortgage only a secured loan, then strictly speaking you don't have to agree to a loan as that is not what was agreed in your proposal.