IVA offer

Sparkyalice

Just need a few more opinions on this so I will start very briefly with a summary:
Married, three young kids, £250k mortgage. Both myself and wife work full time. My net wages frozen for foreseeable future at £1900 PCM. Limited equity in house...maybe 25k.
We owe my ancient mother £40K from when we bought the house 6yrs ago that I repay at £250 pm. I also have personal debts on 5 cards and one loan of £48k. Now, I have struggled this last year as you can imagine to meet my monthly demands and some cards have been subject to late payments ( but no missed ones). Now the card comps are reducing my credit limit as I clear and three have upped the APR which means I am just paying interest back.
Now...I have had advice from one IP that strongly suggested I go for IVA at £710 PCM for all my cards. I thought about this and because it left me with nothing after all other commitments met, I declined. I think he was gobsmacked...so much so that he rang back 30 mins later having spoken to his 'boss' (old trick!) and now reckons he can get £500 PCM...£13000 off in 30 mins. Is this a good deal under the circumstances, meaning a freeze on £48k with a total payback of £30k is manageable but I cannot see the creditors going for it. Any advice welcome...I have not called him back as I am waiting on outstanding PPIs before committing to anything. Any comments/ advice welcomed.

FiatFan_2

Hi, welcome along. Was it a reputable iva provider you've been speaking to? From when we set ours up we could have had a 10er here or there but they couldn't just knock off a couple a hundred in a flash. Have you done an income/expenditure sheet that show's how much you'd have left for iva payment?
Trouble with owing your mother is they'd be expected her to carry the debt as it can't be included in the iva or allow you money to continue servicing it.

Sparkyalice

Thanks for the reply Fiat...

It was through Debt Advisory Centre...filled in a basic online QA and then recvd a call, gave some specifics and then a call from, I presume, the IP.
Thing was, it was just a general enquiry as I have only just decided to do something about my debts after a year of living off card credit.
I know they won't recognise my payments to my mother who needs them, but accept it or not, I will be paying her before banks that announce tens of billions in profits each year.
I don't consider myself bad for wanting the best possible monthly payment for my circumstances, even if a lot of the debt gets written off. I am even considering bankruptcy as an alternative, having negative equity in the house means I wipe 50k off in one fell swoop.
Frankly, if they get back 60% of what I owe, they've already made on it from the years of ridiculous interest out of me.
I have worked out pretty much what my commitments and income will be over next 5 years and a figure of £500 seems manageable although very tight. My creditors get 60% of total debt back.
Problem is, the cost of living is just going up and up. What may be sustainable now, may not be in 2-3 years. Any clues as to whether there is any flexibility in these IVAs?
I will shop around, enquire with step change etc for other ideas, offers as quite frankly, the IPs ability to just wipe £13k off the deal scares the hell outta me. I know they want my signature, so why not offer this first?
Thanks for your reply and any other advice you may have, I'd be grateful for your input as this is all new to me, and I do so want to make the right decisions.

cheesedoffwithdebt

The whole thing sounds disturbing to me to be honest.
An IVA isn't something you haggle-at the end of the day it's a five year commitment to repaying a negotiated part of your debt - so anyone looking at your situation should, as Fiatfan has said- look at your income and expenditure, the amount of your total debt, and whether an IVA or bankruptcy is the best option.
If your income is £1900 a month I cannot see how you are managing to eat let alone pay the debts you have.
So I strongly recommend you see someone who will give you an honest and realistic view on your best option-don't try and do this yourself, you need as you say, a realistic budget for the next five years, and you need to allow for everything you spend.

cheesedoffwithdebt

PS I am not sure you wipe out negative equity with bankruptcy- the IP often sells the house later when there is equity in the property so it's not that straightforward.

Sparkyalice

Thanks Cheesed

The last few years I have cut my cloth accordingly, my wife meets some of the payments as they are actually her debts. I have always been in debt the last 30 years or so, but in the last few years, the banks have been complete #####s with raising interest rates on a whim and lowering credit limits without notice. I do not buy in to the attitude that they ' are working within guidelines' or ' it's a business'. As far as I am concerned they are as much responsible for my financial hardship as myself. I don't holiday abroad, two days b&b in England is as much a break as I get. Car is an old beat up crap heap that I maintain. My clothes are changed when the holes outnumber the material...through matalan. I have two pints of beer a day, 4 days a week. No smoking, no gambling, pay all taxes and bills and claim no benefits.
We were just unlucky with the house purchase. We had new baby, living above a pub...and in 2007 stretched ourselves to buy first home before a small three bedroom was out of our reach. We completed, then the collapse and 6 years of recession follows with my pay frozen (in fact, my pay has gone down by £60 PCM compared to 6 years ago. Add in petrol that has risen 40% and even skinflints like me get scuppered. Don't get me wrong, we contributed to my downfall getting a kitchen and conservatory, but who would have thought we would be in recession 6 years on.
If the IP had offered £500 at the outset, I would have just about taken that. I am just worried that it was originally £700 and in half an hour it changed and that kind of behaviour seems disingenuous to me.
I will shop about, but does anyone know what happens if an IVA fails to be accepted? Clearly, like paying poker with your hand on show, the banks will know what your up to and freeze you out. I am looking in to new bank account for my wages as one of my creditors is my current acc owner but should I be doing anything else?
Thanks for your help this far guys, it feels better to talk to people who have been through same experience.

FiatFan_2

Good on ya for doing something about your debts, it'll be just over a year now since we started our journey.

Were you looking at a joint iva? If the debts are hers or a mix of both then you'll likely have to have a joint iva then your wifes income will need to be taken into account as I assume £1900 is your personal income not a joint income.

My only suggestion for repaying your mother would be to try and pay for it out of your allowances but that will be tough believe me. Most things are regular payments but food and fuel can be very variable and you get a set amount to make do, you should get enough to live on though.

UpToMyNeckInIt

Hi Sparkyalice. It is essential that your IVA is affordable. My advice to you is to review your essential expenditure. To help, I recommend yo download a copy of the 'CCCS budget guidelines 2011' (google it to get a link to the pdf document), and use it as just that - a guide.

Read it carefully. Make sure you submit as many 'allowances' as you can (the guidelines even allow for 'essential' luxuries such as hairdressing, sky TV, kids pocket money, hobbies/interests etc. Get that initial IVA payment as low as possible (lets face it, dividends as low as 10p in the £ are not unheard of). This way if you have unexpected essential expenditure one month, you can cut back on a 'luxury' item, and hopefully the process won't be quite so painful.

That's what I did, and it's working well for me so far.

I also suggest having a chat with 2-3 other insolvency practitioners. It is amazing how much some of these firms can vary in the amount that they deem you can 'afford'. (I recommend you check out come customer reviews at iva.com). Also you need to be comfortable with the IVA provider you are working with, as it is nigh on impossible to swap company once you are in the IVA.

Good luck.

ciderwithrosie_2

We've been paying £470 pm on debts of 55K, so I would 'shop' around a bit if I were you. My first IVA proposal from Nationaldebtline was for over £600 a month - I couldn't afford that and told them so and managed my own dmp for a year until I was still getting nowhere with one of my creditors. I'd been in touch with the CAB from the beginning but on seeking their advice on this one creditor they suggested I talk again to an Insolvency practice they were working with.

They've been great, even though they're not a charitable organisation, it's a private firm but we're just 3 payments away from the end of it. I'm praying there's no sting in the tail, (and we get our completion certificate fairly promptly, we've not been asked to claim any PPI) but that's just me worrying!

People say do an IVA if you've got a property to protect, but I don't understand this, as you often get asked to remortgage to raise some equity anyway. We rent and have no other assets, not even a car, so ours has been fairly straightforward I guess.

At times, with 3 kids to support, money has been tight (more so of late) and we were very lucky both of our jobs have stayed secure during the 5 years. The house is looking a bit neglected as we've not had spare cash to redecorate/new carpets etc, so looking forward to being able to do that soon.

Best of luck with whichever route you decide to take!

FiatFan_2

UpToMyNeckInIt wrote: »

Read it carefully. Make sure you submit as many 'allowances' as you can (the guidelines even allow for 'essential' luxuries such as hairdressing, sky TV, kids pocket money, hobbies/interests etc.

are you really allowed sky tv as a 'essential luxury'? will have to try blag that when the review comes around although I doubt they'll be too impressed by our astronomical utilities increase

UpToMyNeckInIt

Yes you can - off the top of my head I think it's £24 pcm.

Well worth downloading those guidelines as I say.

as for your utilities: Put down what you actually spend. If it's above the guidelines, it doesn't matter - you can prove your spending with bills, direct debits from your bank statements etc. As long as you are doing your best to save energy etc, your IVA company will be hard-pressed to fight it. Lets face it, we have all probably spend a lot more on gas/electric recently, so I am reckoning on an increase in my bill before too long as well.