Firm to help with non-standard IVA

toomuch2

I first posted on the forum in November, and it has taken this long to really start moving. I have now contacted Stepchange and completed my SOA. In a nutshell my situation is this. I lost my job in March this year, but managed to get some sporadic freelance. I went from having streched but 'do-able' debt to something I could no longer afford, and that is when I started sinking. Since I posted I have been lucky enough to get some regular freelance work. However when I completed my Tax return the amount due was far in excess of what I thought it would be. I am not sure the calculation was correct, but nevertheless I now have a huge debt (c£90,000) when everything is taken into account.

I am in the totally-ashamed-at-my-utter-stupidity combined with the raw-terror phase.

I am currently weighing up my options between an IVA or BR. In many ways BR would seem to be the logical route however I have a potential role that will require me being my own company. Up to now I have managed to get "on the books" with the jobs I have taken, but they are few and far between. To move realistically forward I need to have a business set up. For that reason Step Change recommended an IVA. Because they only look after standard IVAs they have also recommended I talk to Grant Thornton.

Right now I have an awful lot of questions - the number of which multiplied after reading the excellent "IVA support and discussion" thread - Thank you Find The Real, UpToMyNeckInIt and Depth Charge.

My most urgent question is with regard to Grant Thornton. It didn't take much Googling to realise they might not be the best firm to go with, however I need I firm that can advise me on a non-standard IVA. I used UTMNII google suggestion and looked at the review sites, I am just unsure as to which one or two I should approach. Given I am unsure if I would even qualify for an IVA - i have not yet set up a company and therefore have no proof of earnings beyond the PAYE work I have done - I need to make sure I get the right advice. Any tips on what to look for (beyond ratings) would be gratefully received.

Secondly I did my SOA over the phone with Stepchange as soon as I rang them. I know that I left some of my expenses off the calculation, can this be adjusted or is the SOA now on record. As an aside they were not quite as non-judgemental as I had been led to believe!

Many thanks and sorry for the length of the post

Anondebtadvisor

After you have read some reviews it is recommended that you seek advice from 2/3 IVA companies to see what different advice you get as sometimes it can differ and you will also get a feel for which company is right for you.

I guess it depends what you are looking for from your IVA company, some people go with the 1st company they speak too and then do the research after they have a problem.

Another deciding factor for you maybe if you get to speak to an insolvency practitioner of the company you choose. Many firms you just cannot get to speak with an IP....

Some are large call centres where you never get to speak to the same person twice and some smaller teams that offer a tailored personal service and advice.

This site very much favors Payplan and Stepchange, but SC refer their self employed to GT and i think you are right to be doing your research before hand.

toomuch2

Thanks Anon

I think I will take your advice and ring a couple. The one with the best ratings all seem to be quite small - I wonder if that makes a difference?

Still trying to get my head around this.

UpToMyNeckInIt

Hi toomuch2,

Worth looking at the 2013 'Insolvency and Rescue Awards' as well as reading reviews. Here is the link:

http://www.insolvencyandrescueawards.co.uk/content/winnersfinalists

(The winner of 'Personal Insolvency Practitioner of the Year - Small Firms' comes highly recommended, but I guess any of the other finalists are worth a call).

Personally, knowing what I know now, I would have gone with a smaller firm - I think that it provides better customer service, and I would hope that you are treated more as an individual, rather than just a number.

You mention going self-employed / setting up your own company, so here is a bit of advice which I hope you find useful:

Are you going to be working under an umbrella company set up by your agency? or setting up your own company? From experience, I can tell you that you will usually be far better off doing the latter (but umbrella arrangements are more convenient). IMPORTANT: In the same way that you should set up a new personal bank account with a non-creditor institution, if setting up your own company, get your business bank account up and running NOW (before your IVA is in place). You will otherwise have VERY restricted banking options.

Assuming you are not going with the umbrella arrangement, my first bit of advice to you: GET AN ACCOUNTANT. Worth their weight in gold. Now that you are self-employed (or will be if you go ahead), you will be amazed at what you can claim tax-relief against, that you cannot as an employee, eg: mileage at 45p/mile and/or other travel expenses to/from your place of work, as well as any travel whilst you are at work, meals at work, and even a proportion of your gas/electric bill for running your 'home office'.

Fancy a new laptop, camera or any other equipment ...keep the receipt: it all counts as work-related expenditure, which in turn you can claim tax relief against. (May also worth you looking at going VAT-Registered as well, especially if you think you will need to get a lot of extra kit initially).

You should let your accountant know about your IVA, and instruct them to advise you on the most tax-efficient way to keep as much of your income as possible, whilst making your earnings look as small as legally possible on paper (thus minimising your IVA repayment).

Example: I typically turn-over £50,000, but after the accountant works his (totally legal, I hasten to add) magic, I have a 'taxable profit' of around £30K. It is the taxable profit that your IP will use to calculate your contribution NOT your turnover. The great part is that I get to keep a fair proportion of that 'lost' £20K.

Realistically, working in this way, for every £1 that I turn-over (or earn 'gross'), I take home 83-86p.

My IP asks for my most recent accounts and bases my income on those. You of course will not have your first full set for at least another 12 Months, so you will have to ask your accountant to produce a 'profit forecast' based on your own circumstances. Your IP should accept this, but check with them to be sure.

Best of luck whatever you decide.

lindsayr2403

toomuch2 wrote: »

I first posted on the forum in November, and it has taken this long to really start moving. I have now contacted Stepchange and completed my SOA. In a nutshell my situation is this. I lost my job in March this year, but managed to get some sporadic freelance. I went from having streched but 'do-able' debt to something I could no longer afford, and that is when I started sinking. Since I posted I have been lucky enough to get some regular freelance work. However when I completed my Tax return the amount due was far in excess of what I thought it would be. I am not sure the calculation was correct, but nevertheless I now have a huge debt (c£90,000) when everything is taken into account.

I am in the totally-ashamed-at-my-utter-stupidity combined with the raw-terror phase.

I am currently weighing up my options between an IVA or BR. In many ways BR would seem to be the logical route however I have a potential role that will require me being my own company. Up to now I have managed to get "on the books" with the jobs I have taken, but they are few and far between. To move realistically forward I need to have a business set up. For that reason Step Change recommended an IVA. Because they only look after standard IVAs they have also recommended I talk to Grant Thornton.

Right now I have an awful lot of questions - the number of which multiplied after reading the excellent "IVA support and discussion" thread - Thank you Find The Real, UpToMyNeckInIt and Depth Charge.

My most urgent question is with regard to Grant Thornton. It didn't take much Googling to realise they might not be the best firm to go with, however I need I firm that can advise me on a non-standard IVA. I used UTMNII google suggestion and looked at the review sites, I am just unsure as to which one or two I should approach. Given I am unsure if I would even qualify for an IVA - i have not yet set up a company and therefore have no proof of earnings beyond the PAYE work I have done - I need to make sure I get the right advice. Any tips on what to look for (beyond ratings) would be gratefully received.

Secondly I did my SOA over the phone with Stepchange as soon as I rang them. I know that I left some of my expenses off the calculation, can this be adjusted or is the SOA now on record. As an aside they were not quite as non-judgemental as I had been led to believe!

Many thanks and sorry for the length of the post

Hi there - I have a DMP with payplan and they've genuinely been amazing from the start - I'd got to the point where I no longer opened any post and worried every time the doorbell went. I phoned them, and after a long in-depth account of my finances, they contacted everyone, arranged payments and sorted it all out. They're on the end of the phone whenever I need them and I also have an assigned advisor to email as well.
I can manage my own income exp etc online through their portal and whenever my income changes, i update it and then they contact everyone again. I've been in it for 4 years now - and honestly, it was MEGA embarrassing at the time, but they were brilliant.

Good luck and it does get better - whatever you decide to go with.

toomuch2

Thanks UTMNII

Wise words. I will speak to GT as well as a couple of smaller ones. The winner was one I had on my list - she seems to get some excellent reviews. I hope she has room for just one more!

I have used an "Umbrella" company before, while better than being on a company's books, you are correct there is not the flexibility that comes with owning your own company.

I will be getting an accountant, and have had a couple of recommendations. I will not be able to do this without one. In fact not using one has got me into the desperate (as opposed to just very difficult) situation.

I hope once I had a conversation with an IP I will know the chances of getting an IVA under my current circumstances.

lindsayr2403. Thanks also for you comments. Well done at reaching four years. I did speak to step change about a DMP, but the size of the debt makes it impossible.

I will keep you updated

longtermplanner

It sounds to me as though you should go bankrupt even if this means postponing setting up your own company for a year. Better this than a 5 year IVA on an erratic income. And on the figures you are talking about, it's not at all clear that an IVA proposal would be accepted anyway.

toomuch2

Hi Longtermplanner, thanks for the comment

I have thought about bankruptcy as an option. To be honest the thought terrifies me more than an IVA. A big reason is that I would not be considered for a lot of work if I didn't have a company. I could use one of the umbrella companies, but I have heard that some of those won't work with undischarged bankrupts.

I would almost certainly be 'eligible' for an IPO/IPA so it would be a two year difference in payments, I would not be walking away after a year. My understanding is that the an IVA would be slightly more generous in allowances than a bankruptcy. From what I understand is that under BR you have no money whatsoever beyond the very limited expenses. Having read the spreadsheet as to what is allowed I would have to choose between my gas supply or my electricity supply.

I have four children, while an IVA would be very hard on them a BR would be brutal. Three years of effective poverty - vs five years of slightly less poverty.

I have to try to get an IVA; yes I might be rejected but I have to try. I am very very sorry as to the hell I am about to put my children and wife through (particularly as they are teenagers) - but if I can alleviate even 1% of pain for them I will try.

Find_The_Real

I am with the small firm mentioned and I have to say they are very good and they do deal with self-employed and I have also found them to be realistic on what they consider to be the best way forward.

The BR amounts are guidelines and can be challenged if they are too low so there would never be a choice of not paying a utility bill and if you income is erratic then you may not be subject to an IPA if you do not earn enough to have a surplus after all the bills are paid. I certainly wouldn't discount it, although it does seem scary you have to consider which is better for you over the long term especially as you do not have an established business yet and so income is not regular at the moment. I'm just thinking in terms of should the IVA fail due to lack of a regular income then you may have to go bankrupt anyway a few years down the line. Sorry not trying to be all doom and gloom but it is a consideration and sometimes worst case scenario can be helpful when deciding your options.

Good luck and remember don't rush into anything and fully research your options. If you are struggling to make the payments at the moment then you can always opt for a DMP until you are ready to make a more formal decision on your debt problems. I did this and does give you some breathing space to make the best decision for you and your family.

toomuch2

Longtermplanner I re-read my answer to you. I appear a bit snotty and ungrateful. I am not, I really appreciate your thoughts.

With both you and Find The Real suggesting I should be a little less quick in rejecting BR, I am giving it a serious look. The issue as you say is, as you say, an IVA is dangerous with a variable income.

However, now that I have stopped to breath I went back through my tax. Yes I still have a lot of tax to pay, but it would appear that a very substantial part of the payment is tax on account for 2013/2014. Given that this tax year I have been paid PAYE I don't think this is a correct demand.

If my maths is correct I believe I could pay off the debt (if I can get interest stopped) within 6/8 years. I have no idea if that is a realistic alternative to BR or an IVA, but Find The Real and lindsayr2403 might just be on the right track in suggesting a DMP possibly as a stop gap to give me some breathing space.

I now need to go and research the ins and outs of a DMP.

I may of course be blowing smoke up my own a*** - but I do feel at least a little more positive. I am still getting used to the idea of being a complete idiot.

Have any of you used the Business Debt Line. SC suggested I call them.

Thanks

EDIT : Just found out that Tax can not be included in a DMP. There must be another way around this.

longtermplanner

It sounds as though it is essential to get your tax position sorted out.

Tax can't be included in a DMP because it is a priority debt. But if you can get the tax man to accept a sensible offer, then you clear that first, only making token payments to your non priority debts and then when the tax man is sorted, you up the DMP payments to the unsecured debts.