Debt Management V IVA??

daz69kay

Good morning

I have been on a Debt Management program for over a year now with Harrington Brooks. I have over £14,000 paying £125.00 per month. Although i can pay £125.00 easily its like 15-16 years to pay off.

I can still do things as disposable income is reasonable. I have been advised by work colleagues to do IVA and HB keep emailing me as IVA recomendation

I am scared in doing an IVA as i am assuming they take a lot more off you and leave you with just enough to live ?

I have a lot of outgoings and happy with debt management but i have a 2 year old son and it's not really ideal to have my plan in place for over 15 years ?

What would you suggest ?
Thanks :T

savingjenny

15 years is NOT a realistic timescale - you do need a better option.

That doesn't mean an IVA though. Have you looked at a Debt Relief Order or (if you don't qualify for that) bankruptcy?

Look at the pros and cons of all 3 options here and pay absolutely no attention to HB who will make a lot of money out of an IVA: http://debtcamel.co.uk/debt-options/

If you decide to wait and see if things get better, then move your DMP to Payplan who will not charge you anything for it and all your money will go to your creditors each month. If you could up your payment to say £150 and HB didn't take any of it, the number of years would drop.

UpToMyNeckInIt

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

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 potentially 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.

Google 'Insolvency Practitioner Reviews'. Contrary to what some might have you believe, many don't charge you anything 'up-front'. In any event, their fees are paid out of your monthly IVA payment (and agreed by your creditors).

By all means 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.

I have a cynical view of the so-called 'independent' charities (Stepchange, National Debtline etc…) - they are all sponsored/funded by the banks/credit companies, and I can't help feeling that was who’s interests they were looking out for when they advised me. They tried pushing me towards a debt management plan (would have taken 10-15 years to pay off my debt + loads of interest).

You will have to work out your income and expenditure. Whatever is left over is your IVA payment. Regarding what is deemed 'reasonable' expenditure: All IPs that I’ve come across make reference to the Stepchange Budget Guidelines Report here.

https://docs.google.com/file/d/0B7LabJy69BP1M0gxeHQ1SDFiN1E/edit?pli=1

(Sorry, have not yet been able to get hold of the latest version that came in at the start of this Month, but the figures only differ by a couple of quid here and there).

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 you are careful to correctly record your income and expenditure, and to broadly claim the 'maximum' allowance figures, your IVA payment should be set at quite an affordable level. I have come across people who underestimate their expenditure and subsequently have difficulty.

As for stopping creditor payments: best take the advice of your IVA company. Personally, I would try to keep up with min. payments until I know my IVA proposal is viable.

In the interim, it is worth trying to withdraw what you can IN CASH, NOW. This is because many creditors, once they get wind of an IVA application, will freeze your account without warning. You may therefore need this cash buffer to tide you over.

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 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.

Another thing to consider is that come year 5-6, your IVA is completed, with your credit rating restored 6 Years from the start of the IVA. With a DMP, your rating remains damaged for the duration of the plan AND for 6 Years afterwards.

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

Just my opinion though.