IVA Confused?- income / Expenditure calculation confusion?

Galeeno

[FONT=Verdana, Arial, Helvetica]Monthly Income is £1300
Monthly Debt going out is £1000 (credit card minimum payments, added up)

(£1300 - £1000 = £300)

So they have £300 spare a month of disposable income, (for use on food, petrol, rent, clothes, leisure, etc)

Then the income/expenditure calculation is, Everything in (£1300).. - Everything out (food, rent, clothes etc)... but NOT considering the £1000 debt

a)...so in this example, if they have £200 for their outgoings,..(food etc, which is a low amount of money)
then how can they show that they need a 'high' amount of money for food/petrol/rent? or could this extra money be coming from a 'surplus' excess amount of savings in their bank account?

b) in otherwords, £1300 - £1000 = £300 left for outgoings,

but if they 'actual' use £700 for outgoings (food etc), then where is that excess £400 coming from? (if they have £400 excess AFTER the debt is removed, then they have £700 spend on food etc, then they are using an excess of £400.. (£700 - £300 = £400)

or could this extra money be coming from a 'surplus' excess amount of savings in their bank account?-

c) and if there is debt on a Santander Credit card, and the person has santander current accounts, then once the santander credit card debt it turned to the IVA, will the santander current accounts be frozen?
(they have 0 balance in, No overdraft).

get back with a) b) c)[/FONT]

milliemonster

sorry, you've totally lost me

Anondebtadvisor

I dont really understand what you are asking?

Disposable income is calculated by taking income minus all living expenses what is left is disposable income to pay towards any debts

milliemonster

I think what he's saying is if they have been managing on an income of 1300 and repaying 1000 in debt repayments and using the remaining 300 for everything else, how come once in an IVA they suddenly have 700 to spend on the 'everything else' when they were managing on 300 previously, am I correct?

If that's the case, well clearly most people cannot pay 'everything else' on only 300, why do you think in these situations debt increases? because half of that 'everything else' ends up being put on the credit cards.

in my case, we previously were paying over 1000 a month to our debts, our income didn't change but when we went into the IVA and our budget was set correctly, we actually only had £260 a month spare to pay the debts, we didn't have an additional £740 in an account somewhere we were siphoning off each month, just slapping that extra back on the credit cards each month and the debt never decreases.

You would be amazed how many thousands of people out there think they are solvent and doing exactly the same thing each month, the debt never decreasing.

Anondebtadvisor

Yes MM i agree with you :-)

Most people will make their miminum credit card payments every month without fail so never seemingly in arrears but then have to put food, bills and petrol on the credit cards which increase the balance and only add to the problem until the cards are approaching their limits and have no option other than to seek debt advice

Galeeno

milliemonster wrote: »

I think what he's saying is if they have been managing on an income of 1300 and repaying 1000 in debt repayments and using the remaining 300 for everything else, how come once in an IVA they suddenly have 700 to spend on the 'everything else' when they were managing on 300 previously, am I correct?

If that's the case, well clearly most people cannot pay 'everything else' on only 300, why do you think in these situations debt increases? because half of that 'everything else' ends up being put on the credit cards.

Yes! that is what I am saying

milliemonster wrote: »

in my case, we previously were paying over 1000 a month to our debts, our income didn't change but when we went into the IVA and our budget was set correctly, we actually only had £260 a month spare to pay the debts, we didn't have an additional £740 in an account somewhere we were siphoning off each month, just slapping that extra back on the credit cards each month and the debt never decreases.

You would be amazed how many thousands of people out there think they are solvent and doing exactly the same thing each month, the debt never decreasing.

"our budget was set correctly"

Question 1
so is this 'expenditure'/output based on what you would 'typically need' after, the IVA has been set up? - in an ideal situation?

or the expenditure is what you are outputting 'right now'? (before the IVA is set up)

Question 2
"our budget was set up correctly" ?
Who set it up? you ? or the IVA practitioner?

Question 3
Can they (the IVA practitioner) 'bump' up your outgoings? (so that the IVA amount you pay out was lower ? )

Question 4
Did they 'bump' up your outgoings? (so that the IVA amount you pay out was lower ? )

thanks

milliemonster

Hi Galeeno

Q1 - at the start of the IVA what they ask you to do is go through what you actually spend in relation to household expenses, insurances, rent/mortgage etc etc and supply evidence to corroborate this, they use Stepchange budget guidelines as a guide for allowable expenses as these are what creditors usually abide by also, but sometimes you may have an expense which is higher than the guidelines (for instance our fuel costs are much higher because we have long commutes) as long as these can be backed up then usually its not a problem.

From 1st review onwards, expenditure can be altered if you have a new expense which is allowable, or if you provide receipts to prove changes in expenditure, some things obviously won't be allowable, for instance, they give you an allowance for pets but that wouldn't stretch to owning a fleet of horses.

Q2 - it was a joint process, the IP asks what you spend in specific categories, you tell them, they advise if its likely to be accepted or not.

Q3 - No, however, what they will do is highlight areas you can claim for that you may not previously have thought about, when you are in severe debt you restrict your normal outgoings to severe levels to ensure creditors are paid in full, just look at some of the SOA's on the DFW board for examples, but as an IVA is for 5 years, you have to have a budget that is realistic that you can stick to, the only way to do this is to make sure your budget is as relaxed as it can be, whilst be truthful, to give you the best chance of it being accepted and you can live within in.

Q4 - No, but they highlighted areas of expenditure I could claim for that I previously never thought about (eg hairdressing, kids meals at school, work meals, hairdressing, newpapers and charity giving)

hope that answers your questions