Anyone with IVA knowledge

scared-sick

can someone please help?

I cant think straight I have so many questions going round in my head and dont know what to do for the best.

I am in a DMP that is going to take about 25 years to pay off.
I have been in it for 2 years and for one reason or another my payments have had to go down and my years have gone up.

On a recent review I was asked if I wanted to talk to someone about an IVA and I said yes.

However, I really dont know what to do for the best.

The only good thing I can really see about an IVA is it will take 6 years maximum and then be over.

I have got used to my dmp and budget accordingly so manage fine now.
I am currently single and if I happened to get a partner at some point and they moved in and shared te bills etc, I could look to increasing my dmp payment and paying it off earlier.
Apart from this scenario I could not realistically see myself increasing the dmp payment.

I am worried the the iva will all be too official and ridged and dictated to and they might tighten by budget so i struggle for the next 5/6 years.

I have may more questions, but could anyone help me answer them before I write an even more long winded essay for nothing??
thanks.

RuthnJasper

Hi Scared-Sick,

Obviously everyone's situation is different; but I have just finished my IVA and I must say that it was right for me.

About half way through my circumstances changed quite drastically, in that I had to move out of my parents' house into my own place; which was a major development - I suddenly went from paying a peppercorn rent and a share of bills at my parents' to paying all my rent, council tax and utility bills by myself.

I spoke with the IVA provider and they and I were able to re-negotiate payments that were more suitable for my altered budget (the term of the IVA was extended, but the payments were much more manageable for me).

One word of caution though - use an IVA provider sourced via http://www.stepchange.org/ or Citizens' Advice - there are plenty of providers out there - but a lot may charge for their "services"!

Good luck with it - hope all turns out well. x

scared-sick

thanks, did you go through stepchange?

RuthnJasper

scared-sick wrote: »

thanks, did you go through stepchange?

No... But I HAVE used them for some advice recently; they are excellent - I mentioned it so that you wouldn't make the same mistake that I did!

scared-sick

I am with stepchange for my dmp and wanted to ask if anyone has done an IVA with stepchange?

Foxy-Stoat_3

Simple maths I think:

Take home salary less adequate living expenses, multiply the answer by 60....what is the that as a percentage of your debt?

If its 20-30% then I would say an IVA is good for you at the present time.

Noone knows what the future holds and life is too short....if you meet someone who knows what their finiancal situation will be like. At least this way you are done after 5 years (assuming you have no mortgage) and another 12 months and you will be back to square one....which isn't a bad place to be considering a lot of folk who are not in an IVA or DMP are still managing their debt, but they will probably have debt for many years to come.

Where are you living at the moment, with family cheaply, in a nice place or a hole?

longtermplanner

It sounds as though you might have three options:
- your current 'easy' DMP taking 25 years (too long!)
- an IVA (taking 5/6 years. having a definite end point is a huge plus point!))
- a less easy DMP on a tighter budget (taking how long?)

Because if you are paying say £100 a month to your current DMP and your IVA would be say £200 a month, then that isn't really a sensible comparison, is it?

Do you have a mortgage?

Find_The_Real

A DMP for that length of time isn't really a long term option and I think you are right to consider alternatives but the best advice I can give is to take your time to fully research what impact an IVA will have.

Although I had a DMP with StepChange, I went with another IVA company after researching information. I would google 'IVA company reviews' which will probably give you a lot more results to see what issues there may be when thinking about an IVA. I would certainly seek advice from 2-3 companies before deciding on this as it is binding.

All IVA companies will charge fees if you do enter into an IVA, but most companies that have a good reputation will offer free advice as to what an IVA will mean in your personal circumstances, so whilst you are correct to take advice from SC, I would seek as much advice elsewhere also as you can.

A IVA can be the right solution for you if you are going to be looking long term at debt and like all forms of debt solutions you read of some horror stories, but don't let that put you off any decision. Many of us in an IVA feel we have made the right decision to go down that route but research is something that is essential. Another thing is to see if your situation changes and to perhaps review things in the next 6 months or so. Although everyone would like a quick option to reducing debt, it's more about getting it right for your own situation.

Good luck.

UpToMyNeckInIt

Hi scared-sick,

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

Please consider the ramifications before entering an IVA - Do your research and 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.

If you feel the IVA is worth considering (it should be: a 25 Year DMP!!!), 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 15-20 years to pay off my debt + loads of interest).

As you are aware: Stepchange, on the aparently rare occasion that they suggest an IVA, will likely refer your IVA to Grant Thornton anyway - nice cosy partnership, rather puts the kibosh on Stepchange caliming to be 'impartial and independent' don't you think?. (Just google 'Grant Thornton Complaints' or have a look at some of the other forum posts here to see why that may not be in your best interests). They are very competent etc. I'm sure (most of the problems seem to be associated with delays in closing the IVA, associated with reclaiming PPI). But with only a handful of IP's to cover their 20,000+ customer portfolio (nearly half the IVA market basically), one-to-one customer service is probably not their strong suit.

Saying all that, I am sure that some private firms will ‘over-sell’ IVA’s to people for whom it may not be the best solution. (Based on your information though, an IVA does seem a reasonable solution - especially if you have assets to protect).

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 out in October 2013, 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, your IVA payment should be set at quite an affordable level. I have come across people who underestimate their expenditure and subsequently have difficulty.

If you go the IVA route, 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: 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 (or secured loan with the advent of the 2014 protocol), up to 85% LTV to increase creditor dividend. IMPORTANT: This is subject to the resulting payment being max. 50% of you current IVA payment for affordability reasons. Your existing lender also has to agree to this. I assume as well, a lot depends on how much your existing mortgage debt is in relation to multiples of your income.

For most IVA customers CURRENTLY, 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 any of your debts are with your existing bank, you need to open a full current account with a non-creditor institution now. 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 insolvency register, as you will then probably be limited to a handful of basic accounts. (To be fair, even being on a DMP may limit your choices as well).

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.

Take your time, thoroughly research all your options. At least you are already in a presumably affordable DMP, so there is no need to rush anything.

Plenty of support on this forum if you need it as well.

scared-sick

Thank you for the very helpful responses.

I had a phone meeting with an IVA advisor this morning who answered LOADS of questions for me.

I still have one major question though.

Does this new 2014 IVA protocol 9.2 mean i could be forced to take out a secured loan to release equity?

I have AGAIN asked a different advisor who apparently asked the IP and they stated NO THEY WOULD NEVER MAKE ME TAKE OUT A SECURED LOAN!
They said basically the secured loan IS the remortgage so i would be expected to take out a secured loan purely because that is what a mortgage is.

What am i expected to believe?

Anondebtadvisor

The wording of the IVA protocol is:-


9.1 Theamount of the net worth to be released will be based upon affordability fromincome and will leave the debtor with at least 15% of his/her net worth in theproperty. Remortgage includes othersecured lending such as a secured loan. Where it is appropriate to remortgagethe property, the specific limits will be:



· Remortgageswould be a maximum of 85% Loan To Value (LTV).

· The incremental cost of the remortgage, including cost ofany new repayment vehicle, will not exceed 50% of the monthly contribution atthe review date.

· Thenet worth released will not exceed 100p in the £ excluding statutory interest.

· Theremortgage term does not extend beyond the later of the debtor’s Stateretirement age or the existing mortgage term.

· Theamount of money introduced into the arrangement will be the mortgage proceedsless the costs of the remortgage, including any costs to redeem any existingmortgage and/or secured loan