IVA? Be very wary!

Richard_Carver

milliemonster wrote: »

Can I just ask why you think it is reasonable for your creditors to allow you to fund your daughter through university? as essentially that is what you are asking.
.

No, I suppose what I am actually asking is why the Student Finance System do not take disposable income rather than total household income into consideration when deciding how much finance they will extend to a student for university funding?

When obtaining a mortgage or loan, the creditors are interested in the affordability equation. Income is one factor but outgoings in terms of financial commitment is the main determining factor that the loan will be based upon.

If Student Finance would lend/award the University finance package to the student based upon the available household disposable income (as per the IVA agreement) then there would be no problem.

lulu_92

Richard_Carver wrote: »

No, I suppose what I am actually asking is why the Student Finance System do not take disposable income rather than total household income into consideration when deciding how much finance they will extend to a student for university funding?

When obtaining a mortgage or loan, the creditors are interested in the affordability equation. Income is one factor but outgoings in terms of financial commitment is the main determining factor that the loan will be based upon.

If Student Finance would lend/award the University finance package to the student based upon the available household disposable income (as per the IVA agreement) then there would be no problem.

They just don't. They told my parents they earned enough money to support me, even with an IVA, child maintenance for my step-siblings, a large mortgage and feeding the family!

whodathunkit

Richard_Carver wrote: »

Yes, yes....

In the meantime things are the way they are. I just wish that she could receive the same funding that other people receive. People who are demonstrably better off than us, people whose children receive a greater and more adequate degree of funding.

The more tax money you put into the system, the less benefit, value or consideration you receive from it.

Inequality is unfair.

If you weren't in an IVA, as you're on a good income, you'd be able to give your student children far more money than those from poorer families get in student loans and grants. I doubt you'd worry about the unfairness of that.

whodathunkit

Richard_Carver wrote: »

No, I suppose what I am actually asking is why the Student Finance System do not take disposable income rather than total household income into consideration when deciding how much finance they will extend to a student for university funding?

When obtaining a mortgage or loan, the creditors are interested in the affordability equation. Income is one factor but outgoings in terms of financial commitment is the main determining factor that the loan will be based upon.

If Student Finance would lend/award the University finance package to the student based upon the available household disposable income (as per the IVA agreement) then there would be no problem.

If they were to operate in this way it would mean that the children of those parents who chose to have large mortgages or large amounts of consumer debt would receive more money than those (on the same income) who chose to live in more modest homes and avoid buying what they couldn't afford. How would that be fair?

Richard_Carver

whodathunkit wrote: »

If you weren't in an IVA, as you're on a good income, you'd be able to give your student children far more money than those from poorer families get in student loans and grants. I doubt you'd worry about the unfairness of that.

Yeah, and if I won the lotto, I'd not worry about the unfairness of anything.

I think the point is that I am on an IVA and I do worry about the unfairness because it is deeply affecting our lives.

It's a bit like the credit score thing. In the past a bank manager would access a loan or finance in a meeting with an applicant based upon their actual financial circumstances.

Nowadays the credit score is finite, if the computer says 'no' then it is no. Bank managers no longer have the powers to adjudicate; assess individual cases upon merit and circumstances etc.

These automated system cater for most people but not for cases where unusual circumstances apply. An IVA situation is unusual because the whereas the 'joint family' income may be quite healthy, the disposable income is low. The disposable income in the case of an IVA family household is probably as low as 'the poorer families' you cite. The IVA family household do not have the disposable income that the 'good income' people who are able to sponsor or subsidise their children though university

I don't know what your agenda is, but you seem to be insinuating that because the IVA is my fault, my adult children should suffer as my punishment and I shouldn't worry that my tax money funds other peoples children through an education system from which my own children are financially excluded.

I'm an idiot, I know that. I started a business that failed and my life is ruined. Blame accepted.

I'm working hard to repay my creditors. Every spare penny goes to repay my creditors. No issue. I feel that repaying my creditors is my duty.

Because I work hard to repay my creditors, my adult children are not eligible for anywhere as near as much funding as they would be if I didn't work hard to repay my creditors.

To you that seems right and correct, but from this position it seems unfair.

Right or wrong - I feel that people who are considering entering into an IVA should be aware of my situation. Judge it, judge me as you may; I still feel that the awareness of a potential situation is the key point here

Richard_Carver

whodathunkit wrote: »

If they were to operate in this way it would mean that the children of those parents who chose to have large mortgages or large amounts of consumer debt would receive more money than those (on the same income) who chose to live in more modest homes and avoid buying what they couldn't afford. How would that be fair?

We are not talking about those people. We are talking about 20 year old adults in their own right. Technically, legally, they are not actually their parents.

You generalisation above works for most of the people, most of the time. I agree with it in the general sense. As with any generalisation there are a small percentage of individual cases that don't fit. An IVA case is one such example. So rather than simply dismiss these cases, written off with that horrible explanatory phrase 'falling through the cracks' there should be an adjudication system were the cases that don't fit the norm are at least looked at and dealt with one way or another.

Tixy

Richard_Carver wrote: »

I feel that people who are considering entering into an IVA should be aware of my situation.

The same situation would be true for a high income family in a DMP or a high income family where the parents had gone bankrupt and were paying an IPA.

These 3 are often the options that people struggling to pay debts will be choosing between, and whichever option chosen would mean an inability to support student children at University.

It could also be true of someone with debts they were unable to maintain payments on who didn't enter in to a DMP/IVA and whose creditors obtained CCJs against them.

In terms of your situation, what might be useful for others to know is - if you had known of this funding situation before you entered the IVA would you have still gone that route? and if not what alternative do you think you would have taken for dealing with your debts?

Richard_Carver

National_Debtline wrote: »

I'm really sorry to learn about your situation. IVAs can be very inflexible - although recent changes have made them a little better than they used to be. In my work I have come across countless callers that have taken out an IVA - and often without having impartial, independent advice. Don't get me wrong, I think an IVA can be a very powerful solution but for a relatively narrow proportion of those with unmanageable debts. Although it isn't as bad as it used to be, the industry still (unfortunately) has a number of firms that expect their customers to live on very small amounts of their outgoings. I personally speak to a handful of callers each week that are about to fail their IVAs for one reason or another, and I'm sure that my colleagues here and at the other advice agencies have similar experiences. It's never easy to learn about the difficulties some people face - and although it is possible to modify an IVA we often see unreasonable extensions being demanded.

I think it's really important that the pros and cons of all debt options are made clear to an individual when they're investigating the best route forward. It's only then that they would be able to make an informed, objective decision about the best route forward. Most IVA firms (certainly the four we refer our callers to) adhere to the 'common financial statement' guideline figures for housekeeping and so on, these are pretty reasonable.

I feel bad that IVAs have had a bit of a bad time of it over the years due to some unscrupulous firms. Luckily, things do seem to be improving but I would still urge anyone planning on having an IVA on doing as much research as they possibly can.

Best wishes,

David @ National Debtline.

Thanks David.

I did take advice upon the IVA and found it quite thorough, informative and as it turns out accurate.

The one thing that never cropped up at the time was the question of my children’s possible University education.

I am a fool and had assumed that like any finance or loan, the loan eligibility and degree of funding a student would be offered would be determined upon the basis of affordability when legitimate outgoings are balanced against income.

This is not the case and with Student Finance the degree of loan/funding is based upon the total income of the applicant student’s family household. Affordability or actual disposable income is not considered. Therefore in the case of an IVA family that has a healthy income (albeit completely spoken for with the IVA agreement) the applicant student will be offered a reduced or minimum financial package that is likely to require parental subsidy. In my case I’ve been informed that such subsidy is not an allowable expense within IVA guidelines and subsequently we cannot readily fund ourdaughter.

The IVA itself is okay. We manage, things are very tight but we are working through it. The only issue is that we cannot afford to fund our daughter by way of subsidy in university

Other students are offered adequate funding whilst my daughter is not (given our situation).

I know that many here consider the situation my own fault and feel that I simply have to accept it as a consequence of my circumstances. I accept their opinion although I personally think that the Student Finance system could be fairer. I do wince at paying taxes that finance the university courses of other people’s children, whilst my own children do not qualify for the same degree of funding… but that is just human nature. It is akin to growing and cooking food that you yourself cannot afford to eat.

I'm not here to garner sympathy, my tale is purely cautionary and told because when considering the IVA process, even if you take advice you may not be alerted to the possibility of the Student Finance situation that we find ourselves in.

Richard_Carver

Tixy wrote: »

The same situation would be true for a high income family in a DMP or a high income family where the parents had gone bankrupt and were paying an IPA.

These 3 are often the options that people struggling to pay debts will be choosing between, and whichever option chosen would mean an inability to support student children at University.

It could also be true of someone with debts they were unable to maintain payments on who didn't enter in to a DMP/IVA and whose creditors obtained CCJs against them.

In terms of your situation, what might be useful for others to know is - if you had known of this funding situation before you entered the IVA would you have still gone that route? and if not what alternative do you think you would have taken for dealing with your debts?

Good questions!

Armed with hindsight I ultimately wouldn't be in the IVA situation in the first place.:)

However, if I'd known the situation in advance of the IVA, (wise after the event and having been informed of a few of the workarounds the canny people use). I'd have had my daughter go live with my widowed mother, her grandmother for two years prior to leaving school/sixth form. The household income would then be my mothers state pension and my daughter would qualify for loans and bursary that would cover the university course, her accommodation and something to live on for food and clothes. We'd pass her what we could for some social and non-essential stuff.

As I've mentioned elsewhere, apart from the Student Finance aspect, the IVA works quite well.

My 2nd daughter starts 6th form college after the summer and we have to find a hefty daily bus fare for her.

If only we were in the EU where full-time students are entitled to free public transport to/from school or college. (if only the UK still had public transport) I watch almost empty buses go past and it's three quid for my school aged kids to go to town.

Sorry, I digress.

milliemonster

It's not about fault, blame or ruining your life, you have to turn this around! At the moment you are acting like a victim, life dealt you a blow and you're dealing with it by means of an iva, it doesn't mean you have failed or ruined your life, good god it's money at the end of the day, things will improve over time.

For the time being though you have to deal with the cards you have been dealt, the student loan system is what it is, stop behaving like your daughters life is now going to be ruined aswell as yours, that's not giving her a good impression at all, be a supportive parent, you can't continue to provide for your now adult daughter unfortunately, that is just the way it is and no amount of procrastination will change that, so you have to now look at ways you can support your daughter that don't directly involve you financially supporting her.