IVA support and discussion thread

UpToMyNeckInIt

Excellent post.

It shows that with proper research and thought, you can have a life in an iva.

Good luck with the rest of the plan.you have broken the half way point, so it's downhill from here.

Find_The_Real

A great post Millie and it certainly covers a lot of aspects people may be worried about when looking at IVA's as a solution. I do have to agree with the aspect of reliance on advise about debt charities, although they do a great job, I think there are far better firms out there at the moment than who the charities recommend.

I must admit when I had my DMP through SC they were great but having researched IVA's there was no way I was going to go with them for one due to their relationship with a certain firm.

I also totally agree that not throwing everything penny at your debt and living a life in poverty is the way to go, which I know goes against a lot of the advice here, but it seems to be one of the main reasons so many debt options fail because sensible living costs are not taken into account.

Good luck with the rest of the term and I hope you keep positive that you are working towards the end.

milliemonster

I must admit, after our iva was approved and the initial overwhelming relief wore off, i did feel like I was walking around with 'I'm in an iva' tattooed on my forehead and it took me a while to feel good again and realise that we hadn't failed, we'd just got to a point where we knew we couldn't continue to tread water anymore.

Hundreds of thousands of people in the uk are currently treading water, denying to themselves that they are in fact insolvent and instead carrying on, protecting that credit rating, relying on credit to get them through each month, every month and waiting for that lottery win etc etc to get them out of the mire, why? I know this seems such a scary step indeed it was, but looking back now I don't know what I was afraid of really, we should have done this years ago.

Despite all the morals about repaying what you spent etc, well yes in an ideal world I would prefer that, but I'm not prepared to spend the rest of my working life in poverty to achieve that, with the amount of interest I was paying back we've repaid the original amounts we borrowed anyway I'm sure.

Now I smile when my friends tell me how skint they are, yet hours later are going to the pub for tea because they can't be bothered to cook, I know this is all going on credit, they're just in denial, but it will get them in the end.

No one who knows us knows about our iva, that's the level of impact it has had on our daily lives, in fact people who know us think we are quite well off, because with what we have to spend on things now compared to when we were restricting ourselves so much to repay debts, we are.

It's been a fantastic lesson for our kids who are now 10 and 14, they are learning the value of money, that you have to earn it before you can spend it and that the essentials must come first, they understand that and it's hopefully a good life lesson for them.

Oh and I love the fact we are now over half way, I see it that we've finally reached the summit of that mountain and are on our way down the other side

Depth_Charge

UpToMyNeckInIt wrote: »

DC, you make a fair point.

Sadly, I have read anecdotal accounts of unscrupulous providers (there is a clear financial incentive after all), where the customer is under the impression that they have to accept a 'secured loan' offer where an application to 're-mortgage' has been declined.

I personally agree with your sentiment on this practice. But worryingly, I don’t think it is as clear as you suggest.

The protocol quotes:

‘where the debtor is unable to obtain a remortgage, the supervisor will have the discretion to consider accepting one of the following alternative proposals:

• a third party sum equivalent to 85% of the value of the debtor’s interest in the property; or

• 12 additional monthly contributions (with the aggregate sum paid to the supervisor being limited to 85% of the value of the debtor’s interest in the property).’

Could you argue that a secured loan constitutes ‘a third party sum’? …Legal fodder for the lawyers to chew over I think.

I posed this question on another forum a few Months back, and as I recall, consensus from the IP’s that posted a reply was that the intent of the statement is - eg: a gift or informal loan from a friend/relative, or from a redundancy payment for example.

Assuming then, that protocol-compliant IVA customers cannot be compelled to take out a 'secured loan', they should quite rightly be offered the 12-Month extension where they have been unable to remortgage. Customers need to stand up to any IVA firm attempting to ram a secured loan down their throat (I am aware of one customer, armed with this information, whose IVA firm ‘gave in’ without too much of a fight).

The only time you would want to consider the secured loan route is IF you are unlucky enough to be offered a remortgage as per your IVA terms: Then, it may be cheaper to take out a sub prime loan for a relatively small amount at say 20% APR, than to remortgage the entire debt on your property at presumably a naff rate (say 9-10% APR).

In the event of a remortgage offer, the customer cannot then 'opt' for a 12-Month extension, but could theoretically offer to release the same amount of equity by way of secured loan.

Will be interesting to see how this evolves over the years. History has a tendency to repeat itself: Ultimately, banks are in the business of taking risks to make money. It follows that some will eventually take the risk of routinely offering sub-prime remortgages again soon. When that happens, IVA customers will presumably clamour for the secured loan.

Happy Days!!!

PS: Other Equity Release 'avoidance' tips to follow soon. ('Dodge' perhaps is not the best choice of wording on my part)!

Hi

Yes, good post again

On your point about the possibility of arguing a secured loan as a third party sum, well never in a million years in my opinion.

A secured loan is a secured loan as a mortgage is a mortgage or re-mortgage a re-mortgage, there is a clear difference between all these and a lump sum.

A number of questions -

Are IVAers being approached by secured lender brokers in relation to the 12 month payment extension where a re-mortgage is not possible?

Who benefits financially from secured loans in IVA equity release clauses?

Are there any financial and referral connections between these secured loan brokers and any individual IVA companies?

The subject of equity release, 12 month clauses, re-mortgages, secured loans etc should be clearly set out with full transparency, anything less leaves things wide open and uncertainty for those in the IVA. It is their home we are talking about not a loan debated product. I thought the idea of going into an IVA is to become debt free.

Fair points and perfectly legitimate questions in my book, deserving clear, precise answers.

Just my opinions, views and respectfully taking into account that all circumstances are not always the same.

UpToMyNeckInIt

...glad you concur with not deeming a third-party sum to be a 'secured loan'. Maybe I am reading too much into this.

The few allegations I have read about seem to be associated with DebtFree Direct. Yes, the allegation is usually that an individual (claiming to have a protocol compliant IVA), has felt pressured to take out a loan, where a remortgage attempt has (as you would expect in the current climate) failed. IE: NOT where a remortgage has been offered, but a well-meaning IP has suggested a secured loan as a cheaper alternative.

Everyone benefits HUGELY, apart from the poor sod who is 'forced' to accept this product of course.

Then there is the question of impartiality - in all cases, the IVA company has 'found' this product. ( an 'associated' loan firm possibly?)

as you say, the whole point of entering the IVA is to become debt-free, not turn unsecured debt into secured debt. (Albeit, I am fully aware of the equity release provision).

The most recent example I read about (admittedly this IVA pre-dates the 2010 protocol, but gives you an idea of the numbers involved). Customer is paying £450ish pcm into the IVA, and is being pressured into taking out a secured loan of £14,500 over 15 years. (They did have a fair amount of equity mind you). APR 12.9% Monthly repayment of £185 - so it is deemed 'affordable' as per the IVA criteria. Doesn't sound too bad so far does it? ...But then there is a 'lender completion fee' of £995, and a (you are going to love this), 'broker advice fee' of £1,900!!!! - I bet that's a phone call between the lender and the IVA company lasting about 10 minutes. They are taking the p**s in my opinion.

I make that a shade over £33,000 over the 15 year term.

...nice work if you can get it.

Depth_Charge

UpToMyNeckInIt wrote: »

...glad you concur with not deeming a third-party sum to be a 'secured loan'. Maybe I am reading too much into this.

The few allegations I have read about seem to be associated with DebtFree Direct. Yes, the allegation is usually that an individual (claiming to have a protocol compliant IVA), has felt pressured to take out a loan, where a remortgage attempt has (as you would expect in the current climate) failed. IE: NOT where a remortgage has been offered, but a well-meaning IP has suggested a secured loan as a cheaper alternative.

Everyone benefits HUGELY, apart from the poor sod who is 'forced' to accept this product of course.

Then there is the question of impartiality - in all cases, the IVA company has 'found' this product. ( an 'associated' loan firm possibly?)

as you say, the whole point of entering the IVA is to become debt-free, not turn unsecured debt into secured debt. (Albeit, I am fully aware of the equity release provision).

The most recent example I read about (admittedly this IVA pre-dates the 2010 protocol, but gives you an idea of the numbers involved). Customer is paying £450ish pcm into the IVA, and is being pressured into taking out a secured loan of £14,500 over 15 years. (They did have a fair amount of equity mind you). APR 12.9% Monthly repayment of £185 - so it is deemed 'affordable' as per the IVA criteria. Doesn't sound too bad so far does it? ...But then there is a 'lender completion fee' of £995, and a (you are going to love this), 'broker advice fee' of £1,900!!!! - I bet that's a phone call between the lender and the IVA company lasting about 10 minutes. They are taking the p**s in my opinion.

I make that a shade over £33,000 over the 15 year term.

...nice work if you can get it.

Hi

Good stuff UTMNII

Really good, it must have been, I have pressed the thank you button:)

The homework has been done my friend, as always, not expecting any rich tea answers however from the other forum my stooleys tell me.

Quite sure you know what I mean

DC

Find_The_Real

Rather glad I don't have the equity problem as it does seem to be dependent on so many factors as to what the equity amount and subsequent repayments could come to if you take into account the additional money paid on the loan in the years after.

My question is (sorry I haven't studied this bit much) given the possible figures added on even when the IVA is completed, is it really worth entering into an IVA with the equity release clause unless you have significant assets that would be lost if you choose bankruptcy?

In all honesty I can see why working towards reducing the amount of equity in the property would be a tempting option when you consider you would pay probably less by extending another year rather than equity release.

Going slight off topic but I think a lot could be debated about just how much extra fees can be made from the IVA in terms of PPI claims and from ER referrals. Whilst I appreciate once in an IVA the IP becomes the supervisor and is now working more on behalf of the creditors, I still feel there should be a better duty of care towards the clients needs as well.

Find_The_Real

milliemonster wrote: »

I must admit, after our iva was approved and the initial overwhelming relief wore off, i did feel like I was walking around with 'I'm in an iva' tattooed on my forehead and it took me a while to feel good again and realise that we hadn't failed, we'd just got to a point where we knew we couldn't continue to tread water anymore.

Hundreds of thousands of people in the uk are currently treading water, denying to themselves that they are in fact insolvent and instead carrying on, protecting that credit rating, relying on credit to get them through each month, every month and waiting for that lottery win etc etc to get them out of the mire, why? I know this seems such a scary step indeed it was, but looking back now I don't know what I was afraid of really, we should have done this years ago.

Despite all the morals about repaying what you spent etc, well yes in an ideal world I would prefer that, but I'm not prepared to spend the rest of my working life in poverty to achieve that, with the amount of interest I was paying back we've repaid the original amounts we borrowed anyway I'm sure.

I think you have summed up a lot of points really well. Very few people actually go out of there way to rack up debts and most people do feel like they have failed and are scared to miss payments but I think it is more responsible to admit there is a problem and seek to resolve it. For someone that had always paid in full and on time, the first couple of months of not paying my debts in full did make me feel like I had failed but I decided it was better to just move on and concentrate on sorting my life from the chaos it was in.

I do still think it is interesting how there is a barrier speaking about debt for a lot of people and perhaps this is why they are reluctant to deal with it or seek help. It is kind of hard to hide a house repo anyway but I seem to be one the very few that is incredibly open to all my family, friends and work colleagues about my debt problems. Obviously I don't flaunt it but on the other hand I am not ashamed of informing people why I don't have a lot of money.

UpToMyNeckInIt

Going back to the issue of secured loans for equity release, this comment from an IP on another forum got my attention:

'this will become an issue time and time again. Creditors are already getting wise to IVA proposals where there is significant equity by putting in minimum dividend requirements based on the projected equity release. This could mean that some properties will have to be sold in the future to meet these requirements'.

One of the significant reasons I went for an IVA is that my property is protected. It would seem that, going forward, this may not be the case for some new IVA proposals.

I suppose a customer faced with this clause in their IVA contract may well find the thought of a secured loan a lot more acceptable than selling their home.

Depth_Charge

UpToMyNeckInIt wrote: »

Going back to the issue of secured loans for equity release, this comment from an IP on another forum got my attention:

'this will become an issue time and time again. Creditors are already getting wise to IVA proposals where there is significant equity by putting in minimum dividend requirements based on the projected equity release. This could mean that some properties will have to be sold in the future to meet these requirements'.

One of the significant reasons I went for an IVA is that my property is protected. It would seem that, going forward, this may not be the case for some new IVA proposals.

I suppose a customer faced with this clause in their IVA contract may well find the thought of a secured loan a lot more acceptable than selling their home.

Hi

Can the leanings of the quoted comment be evidenced or is this just another way of laying the foundations of getting money out of people?

They might also ask that they thought the whole idea of going down the IVA route in the first place is to become debt free after years of paying their disposable income, not to face the risk of losing their home or get lumbered with a secured loan at the end of the struggle.

We keep hearing about these never ending Debt Management Plans and you are better off in an IVA, really! when you look at the equity issue and now the secured loans. I wonder how much is paid back over how long with this equity clause and don't forget anything secured on the property puts your home at risk if the are problems making the payments, what do these brokers care then when they have disappeared with their commission and fees?

Write off large percentages of your debts the IVA adverts say, really!

Reading some of the stuff around now, it makes you wonder if people will steer clear of IVAs altogether as probably do a fair percentage of the tens of thousands of failed IVA 'customers' already feel they should have done (I know quite a few, most of which ended up going bankrupt)

There does not seem to the same clamour as far as the returns on PPI claims where huge percentages (thousands of pounds in some cases) are going outside the IVA and into the pockets of the commission agents and profiteers!

Are people currently in IVAs where the 12 month clause is clear being approached by brokers with regard to considering, discussing and taking out a secured loan and if so, why?

Are IVAS just a money making 'product' where the goalposts just keep being moved?

Fair questions that people might think to ask maybe?

My take