Is an IVA my best option

Time_to_sort_this_out

I have been reading up on an IVA for quite some time and have now got myself in such a pickle i dont know wheather im comong or going.

I have approx £36k of debt, i am currently working in a temp role and am living with my partner in a rented house.

I have set up a few repayment plans with some of my creditors as i thought this was the best thing to do, now i am not so sure as my circumstances have changed.

I have a few questions that i was hoping someone who has been through it can advise me on.

Me and my partner have moved in together recently so my outgoings are now higher than when i lived at home. If i where to go into an IVA would they look at his income too?

We are looking to have a child in the next 2 - 3 years, if this was to happen how would it affect my IVA?

I owe my parents money, would i have to wait til i have completed my IVA before i can pay them back?

Any help, advise or support would be really appreciated as i currently do not know where to turn

sourcrates

Hi,
Your income would be looked at as a household income, yours and your partners, obviously your outgoings would increase, and you have to budget for this.

As regards any future children, you are able to vary the amount you pay, dependant on your circumstances, your IP would need to be informed, and they have discretion to vary payments when needed, they can also call a creditor meeting if the amount you have for your IVA payment falls considerably, and they would vote to allow it or not.

Any money you repay to family must be budgeted for in your income/expenditure.

friendlyface1

My advise. Ring Stepchange. Or equivalent. They will tell you the best thing to do.

I started an IVA 2 and half years ago and, so far, I can honestly day it's the best thing I could've done. It's literally changed my life.

I'll try answer your questions to the best of my knowledge, but I'm far from an expert so really - ring someone like Stepchange.

Partners income is ignored providing it's not a joint IVA.

Having a child has no effect on the IVA. But they won't take into account any extra costs incurred in the future, it's reviewed annually so make sure you can afford repayments for the full duration of the IVA. Children might have to wait.

Family debts: I'm sure they treat them as a debt as well. Not in the legal sense but it's "allowed for" - if that makes sense.

If I have any of that wrong please someone correct me.

Oh and ring Stepchange!

sourcrates

friendlyface1 wrote: »

Partners income is ignored providing it's not a joint IVA.

Not true !!


Your income is looked at as a whole, your partner is not responsible for paying your IVA, but is expected to contribute to household bills etc


If you are living as a couple, then your income is assessed as a couple.

friendlyface1

sourcrates wrote: »

Not true !!


Your income is looked at as a whole, your partner is not responsible for paying your IVA, but is expected to contribute to household bills etc


If you are living as a couple, then your income is assessed as a couple.

Ok yes, in terms of paying bills yes. I was really referring to paying the IVA.

Time_to_sort_this_out

Thanks everyone for your responses. So they would look at my boyfriends income and mine and then outgoings? We split the rent half way but he earns alot more than me, this was my choice as i want things to be done equally. Will this be an issue when being in an IVA?

Thanks friendlyface1, i will call Stepchange one night this week to discuss things, i feel like this is the thing that is stopping my life from moving on

dapast

I would imagine they would assume you pay 50% of rent and bills unless you say otherwise, but that could only go down not up, there would accept you only paid 30% but not that you paid 70%.

On the family debt, that won't be able to put in the iva, purely for the fact that you 'could' not 'would' but 'could' say you owed your parents say £30000 so they get a big vote in the creditors meeting, or to give you more money a month if it's added to your allowances as a cost.

UpToMyNeckInIt

sourcrates & friendlyface1, you are both sort of right regarding income assessment. I believe it is worked out as follows:

If only you are in the IVA, then technically only YOUR income is assessed. Saying that, a partner/spouse in the household will be expected to contribute proportionally towards household bills etc, which will be factored in.

For example: If your household income is £30K, but you earn £10K. The IVA repayment factors in your disposable income based primarily on your £10K salary.

But when your IP goes to look at your 'household' expenditure, it will be assumed (quite fairly IMO), that the partner pays 2/3, with you contributing the remaining 1/3.

So in this example, only 1/3 of the household expenditure would be factored in for the IVA customer, with the allowances reduced accordingly, which will result in an IVA repayment slightly higher than if say, both earned the same, with bills split 50/50.

This is quite a common concern. I have seen other forum posts querying what will happen if an IVA customer has a solvent partner move in with them for example. The worry being that most of their partner's income is 'surplus' to the bare minimum of running the household, and it is then assumed (wrongly) that the IVA repayment would increase massively by all of that amount. In fact, the IVA repayment will increase, but only by the amount of reduction of allowed expenditure, as your IP will assume the partner is contributing fairly to living expenses etc.

Time to sort this out: Difficult to advise definitively based on your limited information, but I am not sure if an IVA is best for you: No assets to protect (like property for example) and I am assuming your job will not be affected by going BR.

Also if you are planning a family, presumably this could hit your income and possibly the ability to repay the IVA. You will then be at the mercy of your IP and their willingness/ability to fight your corner with the creditors.

A good IP will I'm sure get you through it, but many (like mine) I suspect do the bare minimum at the best of times, and will do sweet FA if you get into difficulty. Worst case: This may result in you going BR anyway.

So, research other options as well: Debt Management Plans, and bankruptcy being the main 2 alternatives.

Have a look at the 'Debt Camel' website here:

http://debtcamel.co.uk/debt-options/

With going BR, even if it is deemed that after living expenses, you have more than £20pcm spare income, you are looking at a 3-Year IPA as opposed to a 5-6 Year IVA.

Might also be worth you posting on the main 'Bankruptcy & Living With It' board, where you will get some good BR advice.

Have a chat with CAB, Stepchange and National Debtline, as well as a couple of private sector insolvency practitioners. That way you will get the pro's and con's of each solution from each perspective.

All the best whatever you decide.

UpToMyNeckInIt

dapast wrote: »

I would imagine they would assume you pay 50% of rent and bills unless you say otherwise, but that could only go down not up, there would accept you only paid 30% but not that you paid 70%.

On the family debt, that won't be able to put in the iva, purely for the fact that you 'could' not 'would' but 'could' say you owed your parents say £30000 so they get a big vote in the creditors meeting, or to give you more money a month if it's added to your allowances as a cost.

Good point.

I think the problem with family debts is proving that they exist. Let's be honest, they are typically informal arrangements with no paper trail. So no IP or creditor is going to accept it exists unless you can prove it.

Otherwise anyone could say 'I owe £30,000 to a family member'(a scenario posted on another form a while back). Nice little money spinner for the fraudster, or to force through an iva vote.

I owe money to my Dad. We agreed that I can defer paying until after the iva, repaying as and when in the interim. He would rather wait a few years and get all he is owed, rather than get 35p in the £.

It is my only debt I intend repaying in full.

Elfbert

UpToMyNeckInIt wrote: »

sourcrates & friendlyface1, you are both sort of right regarding income assessment. I believe it is worked out as follows:

If only you are in the IVA, then technically only YOUR income is assessed. Saying that, a partner/spouse in the household will be expected to contribute proportionally towards household bills etc, which will be factored in.

For example: If your household income is £30K, but you earn £10K. The IVA repayment factors in your disposable income based primarily on your £10K salary.

But when your IP goes to look at your 'household' expenditure, it will be assumed (quite fairly IMO), that the partner pays 2/3, with you contributing the remaining 1/3.

The problem my partner and I found with this when he was on an IVA was that although they took my INCOME into account, they didn't take my expenditure into account - I technically earned more than him, but whereas he worked locally, I commuted to London, costing me £4000 per year, but they didn't care about that, just that they could take more of his money!!

Still, we're out the other end of it now, and it is a wonderful thing, starting over, debt-free

Good luck to you, whatever you decide.

UpToMyNeckInIt

Hi Elfbert,

That is a very insightful post.

Seems like you got a raw deal there.

I guess that this type of thing varies between iva firms, and how much expenditure you can prove.

Nice to hear that you have come out of the other end of the iva machine relatively unscathed though.