Please help if you can !!!

tomace

hi folks

ive just had the worst week of my life. i am in debt to the tune of 48k on unsecured loans and after months of burying my head in the sand i finally told my wife who was unaware of it. she knew of about 1/3 of the debt but i had convinced her that i was on top of it.

anyway i have a secure job and 2 kids and a mortgage and the payments are £800 for next 5 years approx which i cannot afford - ive been able to do so up to now using the loan surplus in my account (how terrible /stupid is that) but very shortly i will not be able to afford.

i have met with a free non profit debt organisation here in belfast who have advised me to go the route of IVA.

im looking for some help with this and if anyone can take me through their own experience of them good and bad i would be much appreciated . things i am looking to find out include

- reputable firms (Grant thornton have been advised but have read a lot of unsatisfactory posts)
- how an iva is monitored (what exactly happens - ie do i put all my earnings into a new account which is fully visible to all)
- how to come up with realistic figures for the financial statement and are these queried if you do not exceed the trigger point limits.
- il be very happy to live a simpler life for the rest of my days but will i be able to save any money in an iva for very small
- my house has some equity in it at the minute - will this be taken off me after year 5 or is it more common to pay for the extra year.


anything else that you can add that may be of help i would be much appreciated. anyway im feeling pretty ashamed of the hurt i have caused to my family and vulnerable so would appreciate any words of wisdom that you may have

thanks

Tom

we_r_the_people

if u want to private message me,im also from belfast and on an iva

longtermplanner

hi Tom,

Reputable firms - what matters most is a firm you feel you will be able to deal with through the term of the IVA if things get difficult. My preference would be to avoid the large firms such as GT as they are too impersonal and also they seem to have a poor reputation for taking a very long time to get people their completion certificates at then end, more than a year often... Have a look at https://www.iva-co-uk and some of the firms that most there. AFAIK you don't have to use a NI firm, I think the IVA rules are just the same as in England.

I would really suggest you talking to at least 2 different firms. You may feel you want this set up as fast as possible, but better to take your time and make the right choice.

You will have to ask the IP how they monitor things, but most seem to have an annual review point with you obliged to notify them of large changes immediately. They won't be able to see your bank account, it isn't as intrusive as that.

Realistic figures for the financial statement is very important. Can you keep a spending diary for a month so you know what you actually spend? Again it is better to take some time about this rather than rush into it. If you are panicing about not being able to pay debts in full this month, then start up a temporary DMP. This can be done fairly easily using this self administed DMP system: https://nedcab.cabmoney.org.uk/dmp.asp. It is actually good to not be paying the full amount when your IVA goes forward as it convinces your creditors you really do have problems!

When you are working out realistic figures, also sit back and think how your life may change over the next 5 years. Mortgage rates are likely to go up, there is no point in agreeing to pay £250 a month to an IVA is in 9 months time you won't be able to afford this if your mortgage has gone up 0.5%. What could go wrong in the next 5 years, how might your income fall or your expenses rise? Might you ahve another child? Will any of your children be going to uni so you lose child benefit and have to help them with maintenence? Is your car going to get to the point where it is expensive to maintain?

You don't have to propose a fixed payment for 5 years, even though this is the 'simple' form of an IVA. You could say offer £450 at the start, reducing by £50 a month if interest rates rise and dropping by £100 in year 4 when your eldest will become over 18. It's up to you to talk about these options, as IVA firms usually assume you can keep on paying what is OK now.

Your IVA should IMO have a provision for a small emergency fund, say £30 a month. Other than that you are unlikely to be able to save much.

The equity release in the fifth year of your IVA is a "hot" topic at the moment because this year a clause has been added to say you may have to agree to a secured loan. Some of the loans being discussed are very expensive (15, 20% plus)

Do you have a lot of equity? If you don't have much and your house is in joint names, then might it be possible for you to go bankrupt? Perhaps a parent could help your wife 'buy' back your share of the equity from the Official Receiver so you could go bankrupt and stay in your house?

Words of wisdom, you are not alone! Thousands of people opt for insolvency (IVAs, bankruptcy) every month.

UpToMyNeckInIt

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

Please consider the ramifications before entering an IVA - 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.

Research other options as well: Debt Management Plans, and bankruptcy.

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

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

I only went down the IVA route as I had no real option after an unexpected change in financial circumstances.

However, if you feel the IVA is right for you, Google 'IVAcomparison'. Top result is a good site.

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).

Speak to 2-3 well-reviewed companies, and choose one that feels right for you. This is important, as you will not be able to change providers once your IVA is up and running.

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).

Be aware: Stepchange, on the aparently rare occasion that they suggest an IVA, will likely refer your IVA to Grant Thornton anyway. (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).

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, 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.

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.

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 up to 100p in the £. (Subject to the resulting payment being max. 50% of you current IVA payment for affordability reasons). It goes without saying that the other usual affordability criteria apply suchas limitations based on multiples of household income etc. For most IVA customers, equity release is not possible, so your IVA goes on for a 6th Year instead (which usually works out a lot cheaper). If anything, with the implementation of the new, more stringent mortgage rules coming in from tomorrow, most of us wont stand a snowball's chance in hell of getting a remortgage/further secured borrowing (unless you have stacks of equity of course and a very high disposable income).

But who knows what the economic climate will be like in 4-5 Years time?

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 insolvency 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.

Lloyds are pretty hostile now as well (so I have read).

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

Just my opinion though.

tomace

Many thanks for the words of advice folks. You have given me a lot of food for thought and although im just at the start - i feel a bit more positive about the future than i did yesterday when i posted.

one thing bothers me mind you....

say it transpires that i can afford £400 which is probably likely per month

£400 x 60 months =24K + 3k likely payrise/extra income given to IP/creditors over 5 years plus then 85% on probable 20k equity = 44K + interest on 17k secured loan which could be another 10 k for example = 54K total paid for a 48k debt.

Can anyone tell me if this is likely to happen as it seems to me that that may be the case in which case id be better off trying to pay back to £800 while having no standard of living for 5 years.

Dont get me wrong - ive messed up and i want to pay back my debts but in this instance not sure if IVA is right for me

UpToMyNeckInIt

...OK, a few things to bear in mind:

1. You won't know for sure until an IP thoroughly examines your finances, exactly how much you will have to repay. (Have you checked out the expenditure guidelines as well?). If you can only afford £400pcm, you will not be repaying 100%.

2. Even if you do pay back 100% + IP fees (allow a ballpark £3,000 for the latter - but check with your proposed IP!!!) because of a big windfall/equity release, whatever. Ask yourself how that compares to the interests/charges that you are enduring at the moment? (Remember: In an IVA, further interest/charges are FROZEN, something that is by no means guaranteed with a DMP, or an informal arrangement).

3. Assuming you have got an accurate ballpark, this is your projected IVA outcome: £400pcm over 6-Years (assuming you, like the majority of IVA customers, cannot release equity) = £28,800. Saving you a shade over £19k written off. Add that to the saving in interest that you would repay over the same 5-6 Year period (shall we say £15,000 for the sake of argument?), and I think you will agree that enduring a bit of hardship to save £35K is worthy of consideration. That was my line of thinking at any rate.

Equally, who knows what the state of things will be come equity release time in Month 54. If you have a large amount of equity in your property, and a lot of disposable income, you may face the prospect of equity release via a secured loan (max. LTV currently c75%). Something you will have to THOROUGHLY discuss with your chosen IP, and get what they say IN WRITING.

However, an IVA is a HUGE commitment, so like I say, do research ALL your options, and speak to several well-reviewed companies. Better to do that, rather than jump into something you are not comfortable with.

Believe me, I know what you are going through - been there myself. It took me a good 4-6 Months from realising just how much debt trouble I was actually in, doing the research, comparing my options etc, before finally plumping for the IVA, and I still managed to choose a naff IVA provider!!! (Didn't know about the IVA comparison site then).

we_r_the_people

tom i have sent you a private message

althas

I have just completed my IVA and more than happy to recommend my IP. So PM me if you would like their name

What I will say is go to iva.com. they have a whole list of firms big and small, and they are all reviewed by the poeple who matter. Their Clients
Select 2 or 3 and ring them all to discuss. You need to ensure you are comfortable with them as you will be dealing with them for a number of years

Good luck on your journey whoever you decide upon, but take a little time now to get it right it will save a LOT of hastle down the line

National_Debtline

Hello there,

Do ensure that you choose an IP that is well versed with the slightly different rules and nuances in Northern Ireland when it comes to debt.

Very best wishes,

David @ National Debtline.

UpToMyNeckInIt

althas wrote: »

I have just completed my IVA and more than happy to recommend my IP. So PM me if you would like their name

What I will say is go to iva.com. they have a whole list of firms big and small, and they are all reviewed by the poeple who matter. Their Clients
Select 2 or 3 and ring them all to discuss. You need to ensure you are comfortable with them as you will be dealing with them for a number of years

Good luck on your journey whoever you decide upon, but take a little time now to get it right it will save a LOT of hastle down the line

Just had a look. That site has been taken over by Vincent Bond now. (I believe they sponsored it previously).

'Ivacomparison' is where all the reviews are now.