Considering an IVA - what's the best way to start?

mwddrwg

Evening all,

My partner and I were discussing our finances and we seem to have had our LBM and realised that we're paying our minimum payments but still struggling to live. We're paying at least £600 per month in unsecured debt, have no arrears at all but it's only the minimum payments that we can afford.

I'll post and SOA tomorrow, but in the meantime I was wondering who best to contact with doing an IVA? I have read up on this and looks like it's the best option for us.

Thanks for any advice

chevalier

http://www.stoozing.com/calculator/soa.php

Welcome to the boards. The link above is for the SOA calculator. If you format it for MSE then you can copy and paste it into here.

Once you have done that you will have a better idea of where you stand.

I would also put your figures as they stand now into the SOA calculator (link in the newbies thread above), to get yourself a debt free date.

You need to understand how formal an IVA is. IF you creditors agree to it, then the amount you pay each month is binding, no way or varying it if things go wrong. Also you quite often have to find a lump sum towards the end of the IVA to further fund it. Note too that some jobs view IVAs in the same way a bankruptcy - ie it is not allowed, so you need to check that as well.

The alternative is to go through a Debt Management Plan (DMP) with a free provider eg, Payplan, Stepchange, Christians Against Poverty. This is an informal arrangement to stop interest and charges. (don't go with a fee charging DMP provider it will take you longer to pay off your debt).

Good luck
chev

mwddrwg

Hi all,

Here's my current SOA (grim reading)...

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1
Monthly Income Details
Monthly income after tax................ 1405
Partners monthly income after tax....... 1460
Benefits................................ 134
Other income............................ 13
Total monthly income.................... 3012
Monthly Expense Details
Mortgage................................ 714
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 115
Electricity............................. 67.5
Gas..................................... 25
Oil..................................... 90
Water rates............................. 54.22
Telephone (land line)................... 22
Mobile phone............................ 44
TV Licence.............................. 12.21
Satellite/Cable TV...................... 25.5
Internet Services....................... 20.42
Groceries etc. ......................... 700
Clothing................................ 20
Petrol/diesel........................... 150
Road tax................................ 12
Car Insurance........................... 15.13
Car maintenance (including MOT)......... 20
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 50
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 32.89
Contents insurance...................... 0
Life assurance ......................... 79
Other insurance......................... 14.73
Presents (birthday, christmas etc)...... 20
Haircuts................................ 20
Entertainment........................... 50
Holiday................................. 0
Emergency fund.......................... 30
Total monthly expenses.................. 2403.6

Assets
Cash.................................... 0
House value (Gross)..................... 175000
Shares and bonds........................ 0
Car(s).................................. 1
Other assets............................ 0
Total Assets............................ 175001

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 144000...(714)......4.25
Total secured & HP debts...... 144000....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
Natwest Loan...................4366......221.......4.99
Northern Rock Loan.............4000......79.33.....0
Santander Credit Card..........1555......38........0
Evans Card.....................150.......6.........0
Debenhams Card.................700.......25........0
Argos Card.....................900.......34........0
Cahoot Overdraft...............500.......10........0
Laptop.........................100.......12.11.....0
Credit Union...................600.......65........0
Simply Be......................200.......20........0
Natwest Overdraft..............700.......15........0
Santander Overdraft............1000......20........0
Santander Overdraft............1600......22........0
Metropolitan (HSBC)............360.......20........0
MBNA Credit Card...............500.......25........0
Next ..........................206.......20........0
Very...........................147.......11........0
Barclaycard....................1800......0.........0
Natwest Credit Card............600.......15........18.9
Total unsecured debts..........19984.....658.44....-

Monthly Budget Summary
Total monthly income.................... 3,012
Expenses (including HP & secured debts). 2,403.6
Available for debt repayments........... 608.4
Monthly UNsecured debt repayments....... 658.44
Amount short for making debt repayments. -50.04
Personal Balance Sheet Summary
Total assets (things you own)........... 175,001
Total HP & Secured debt................. -144,000
Total Unsecured debt.................... -19,984
Net Assets.............................. 11,017

I'm having a hard time finding the APR's on anything at the moment. They are pretty standard though.

We have heating oil for which we spread out the payments over the whole year - £90 per month is the current DD level.

The 'other' insurance is British Gas plumbing and electric cover (has come in handy in the past).

The big Natwest loan finished in 18 months and the Northern Rock loan has 4 years to run.

Any advice on the debts would be greatly appreciated. Thank you

sourcrates

chevalier wrote: »

You need to understand how formal an IVA is. IF you creditors agree to it, then the amount you pay each month is binding, no way or varying it if things go wrong. Also you quite often have to find a lump sum towards the end of the IVA to further fund it. Note too that some jobs view IVAs in the same way a bankruptcy - ie it is not allowed, so you need to check that as well.

It is a formal arrangement, but you can vary your payments if you need to, your IP can vary the terms of your IVA, for example if you find you cant afford the agreed amount, you can pay a lesser amount if your circumstances change, normally this would extend your repayment period by 10 months at a time, so it could take you longer to pay off, but if you stick to agreed payments then in 5 years you are debt free, if you own a property you may have to release funds to your creditors in the final year by re-mortgaging, although how you are expected to do this within an IVA I don't know as your credit score will suffer big style, on the up side you are protected from all creditor contact for the full IVA term, I chose Debt Free Direct for my IVA, they were good on the whole, all IVA`s will cost you money regardless of who you choose, however these fees are deducted from your agreed monthly payments, you have a lot of smaller creditors which might make getting your IVA approved a little tricky, as you need to convince 75% of your creditors by value of debt, that its the best option, so the creditors with the largest debts need to approve it for it to be passed, they always look for the best return so they need to be convinced they will get a better return from an IVA than from how you are paying now.

Tixy

Hi

It would definitely be a good idea to start by contacting one of the debt advice charities - as in this link - IMPORTANT - Where to seek professional impartial advice about your debts.

They'll talk through the implications and suitability of an IVA and of other possible options.

However I would also find out all the APRs, most will be on the monthly statements.
Estimating an average APR of 15% - if you could up your current repayments to £800 a month then you could clear all your debts in 2.5years.
As you currently have £608 to put towards your debts if you could for example reduce your grocery spend down by £200 then you could likely make a real impact in these debts and get them paid off much quicker than paying minimum payments.

Though that said I would think carefully if you are really only spending the items in your statement of affairs, as at the moment you are only showing a £50 shortfall each month, and yet the £20k of debt has obviously built up from somewhere.

Your grocery spend does look high for 4 people - might be worth taking a look here - http://www.moneysavingexpert.com/shopping/cheap-supermarket-shopping
and http://www.moneysavingexpert.com/shopping/downshift-challenge/