Early into IVA application and stressed

csan

Having finally given up on the denial I had about my debt problem (shopping has been my version of comfort eating i s'pose when I've had other difficulties in my life like long term relationship breakdown and my mums death) which has built up over the last five years I have finally decided to do an IVA with GW Finance.
I have about £20k plus worth of debt and had to date just managed to keep the wolves from the door but it was proving more and more difficult.
Upon advice of GW I stopped paying creditors last month and find myself in the scary world of arrears for the first time.
I have the big companies (loan and Credit cards) chasing me now by email and phone which is not just unnerving, as this is unknown territory to me having always paid on time, but the phone calls have been when my Girls' dad (my ex) have been around which has now roused his suspicions and due to one of the companies having my parents number from wayback I only just managed to intercept a chase up call on my Dad's answer machine and though I have changed the number with them am now still in fear as I have not disclosed my debt to anyone around me.

GW have said this is normal that companies will chase and that it will stop soon when they present my IVA but does anyone out there know how long I can expect this to continue as its really stressing me out?

I am having trouble dealing with the shame of being in this situation and while I hope that an IVA is a way forward to retrain my thinking on money and improve my finances in the long term by not being a slave to debt for the next twenty years I still hate the thought of family finding out or that it makes me less favorable in the eyes of a future partner? - How do you broach it with a new partner that your insolvent?

I have family who could probably pay off the debt for me but feel it my problem to fix, my responsibility and don't want them suffering because of it whilst selfishly I can't also bare their disappointment in me and disapproval. My family are financially solvent and successful at managing their money and having savings.

Any thoughts would be valued and appreciated!!

Thanks

UpToMyNeckInIt

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

Firstly, there is no shame in tying to responsibly sort out your debt problem, but I have not heard of ‘GW Finance’. How did you come by them? If they ‘sold you’ on the IVA as a result of a ‘cold-call’, I urge you to seek opinions on other options such as bankruptcy as well (If you don't own your own home, or have much in the way of assets, going BR may be a lot easier).

Remember: Many private firms will ‘over-sell’ IVA’s to people for whom it may not be the best solution, but it makes them a bucket-load of money.

Don’t get me wrong, an IVA can be a great solution for some people (including me), but before you commit yourself, please do your research.

I came across this website (set up by a CAB advisor), which has about the easiest to read comparison of IVA with BR:

http://debtcamel.co.uk/hard-choices/iva-vs-bankrutcy/

Other options are also discussed on that site like ‘debt management plans’.

Seek advice also from the ‘charity’ organisations (Stepchange, National Debtline etc…). Just bear in mind though that they are all sponsored/funded by the banks/credit companies. 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 DMP - would have taken 15+ years to pay off 100% of my debt + loads of interest, if I had taken their advice.

As for stopping creditor payments: best take the advice of the CAB or your IVA company. Personally, I would try to keep up with min. payments (or even £1 token payments) until I know my IVA proposal is viable.

In doing your research, you then have to try and separate the genuine advice from the sales-patter.

Also worth a look at the 'IVA support and discussion' thread on this board, where many of the issues surrounded IVA's are discussed.

Finally, if you decide an IVA is the way to go:

Speak to a few providers to see if it is the right option for you. Remember, just like bankruptcy, 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.

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).

Choose a well-reviewed company, you won’t be able to swap companies once your IVA is up and running.

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

It is well worth a read, as it covers every form of expenditure, right the way down to allowances for Sky TV, hairdressing, kid's school dinners, meals at work, even hobbies etc.

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

IMPORTANT: 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.

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.

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

csan

Thankyou so much for your advice - it is greatly appreciated and I will follow up on all your recommendations!

Have seen good reviews about GW (Godfrey White Financial Solutions) and so far they have been supportive and communicative.
I understand that their fees come out of my IVA payment as this was one of the primary concerns I raised with them.
They have already advised me about new bank account and I have set one up but currently unable to close old current account as the O/D is part of the IVA. New account with N/Wide won't have switched my Direct debits across til 20th December though I don't have DDs going out btwn 12th and 24th so can arrange to get monies paid into my new acc from the 12th. Am nervous now what will happen to the wages etc paid in to my old account between now and then? Can the bank just take what I owe them in arrears or can they just help themselves to all of it which would then leave me unable to pay my bills?!

Have looked into a DMP which the company have said would be my fall back if IVA failed though they see confident about the IVA being successful.

DMP just represents years and years of debt which offers no new start and the stigma and complexity of my understanding of BR puts me off that too though will look into it some more.

I have been paying about £800 towards my debts each month and I earn £11k a year so paying around £200 towards an IVA each month feels much more achievable.
I am on my own with two young children - I hope I am doing the right thing?

Thanks again for your advice.

UpToMyNeckInIt

Hi,

OK - sounds like you have done a bit of homework, and that's a good thing.

You are right to be concerned about wages etc. I would suggest that your main priority NOW is to ensure that all future wages and other income such as any benefit payments etc, go into your new Nationwide Account.

I recommend you do this ASAP.

Otherwise there is a risk that your old bank will freeze your old account, and retain any more monies paid in to 'set-off' against your debt.

I believe that you may be able to get your money back, but I would not like to even contemplate the amount of grief involved (and you can bet it won't get sorted until after Xmas).

A £200pcm IVA payment sounds OK, but do check out those stepchange guidelines to see if you can get that down to near enough the minimum viable for an IVA (£100-£150). I say that because our household income is nearer the £30k mark, and I pay £275 (mind you, there are 2 adults and 1 child in our household).

Do you own your own house? or an expensive car?

If not, forget the stigma - BR might also be worth you considering. On your household income, you might be able to go BR without having to repay an IPA (I'm no expert though). But even if you did AND it assuming it also worked out at £200pcm, it is only over 3-years, rather than the 5-Years of an IVA, saving you £4,800 in the process.

Best of luck whatever you decide to do.

FiatFan_2

Hi csan, definitely get your wages transferred before your bank catch wind of the iva. My wages got paid into my overdrawn account after Bank of Scotland found out i had started down the iva road and off-set the months wage against the overdraught. Despite arguing with them for 8 months i never seen a penny back. Thankfully the paymaster in my previous job was aware of my situation and helped me bridge the gap.

We're just over a year into our iva and only a handful of people know about it. It's not something we shout about and it's not easily found out about. If you've done your research as UTMNII suggests then you should be able to lead a full life within budget. Old habits do die hard and it will be tough to begin with but it does get easier, although this time of year doesn't help with the amount of shopping and credit adverts on the tv/radio.

Good luck becoming debt free

csan

Thanks Fiatfan and UTMNII - I will take your advice on board and let you know how I get on - 'Have worked out that from 6th Dec is about earliest I can get people to pay into new account so am hoping having only missed one payment thus far that Santander won't yet freeze my account (My IVA company have reassured me that account won't be freezed at moment so am hoping they are right as it would be catastrophic for me especially before Christmas!

Thankyou again for taking the time to respond.

:A

headstuckinsand

I realise you are concerned about the potential disapproval from your family but I would urge you to bring at least some people into the loop to support you through the IVA. You'll probably find that they'll be a lot more understanding than you might think and 5 years is a long time to go-it-alone.. from my experience, you will need their support from time-to-time, if not financially then definitly emotionally.

Good luck with whatever you choose to do.