Positive Experience with an IVA

Hi All
My hubby and I are currently on a DMP with Payplan. This is only a temporary solution as our debts are £61500 and we are only paying them off at £100 per month.

Payplan told me at my DMP review last week that we could be eligible for an IVA paying £100 a month.

I have read through some of the posts here and there doesn't seem to be a lot of positive ones about IVA and I am just wondering if anyone has been in a similar situation to us but who an IVA has worked for.

We are likely to be able to increase our payment amount as my hubby has just landed a better paid job where he will hopefully be earning some commission.

Does anyone know if the repayments are calculated in the same way as our DMP payments are? If so is there somewhere I can find this information out?

Sorry for all the questions but I just want to be really informed before we go ahead.

:j
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Comments

  • UpToMyNeckInIt
    UpToMyNeckInIt Posts: 884 Forumite
    Part of the Furniture Combo Breaker
    edited 5 October 2014 at 11:59AM
    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: Have you considered bankruptcy? Might be the best option, especially if you are not a homeowner

    Have a look at the 'Debt Camel' website to compare your options 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.

    Saying that, it has left me with a lot more spare cash than when I was £35K in debt (IVA repayment: £275pcm, vs 'managing' my debts beforehand: £c£700pcm).

    Despite having a better trading year to the tune of a £6,000 p/a net payrise (I'm self-employed), my IVA company have just completed my second annual review, and kept payments the same.

    Also the IVA allows me to keep both my properties - whereas with BR, both would be at risk.

    My alternative was a c15-20-Year DMP. (You are right to see a DMP as a temporary solution, at this rate, yours will take over 50-Years to pay off!!!).

    If you feel the IVA is right for you, Google 'IVAcomparison' - that should take you to a nice review comparison site. Contrary to what some might have you believe, many companies 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 (I know Payplan do IVA's and I am sure thay are OK, but not read great things about them recently, so I would avoid the temptation of the 'easy option' to stay put). This is important, as you will not be able to change providers once your IVA is up and running.

    If you are on the verge of getting an improved income, get the IVA in place before the commission starts rolling in: That way you will usually get to keep the first 10% of any net bonus, and 50% of anything more than that. If on the other hand, you wait until your new income is established, your repayments may be based initially on that higher income, with 100% of your 'spare' income going into the IVA.

    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 last Year, 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.

    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 worthy of consideration).

    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 bank accounts 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 such as 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 recent, more stringent mortgage rules, 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?

    NOTE: I understand that some IVA companies are NOT specifying the 2014 IVA protocol equity release terms. This means only having to attempt equity release via remortgage, not remortgage or secured loan. Worth asking the question when shopping around for your IVA.

    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.
  • Wow thank-you so much for your very comprehensive reply!

    We have no assets as such but a little bit of savings in an ISA that are put by for emergencies ie car repairs. These only amount to around £300. Would the IP want to take that? If so then I will withdraw the money now in preparation.

    An IVA sounds the most palatable(if any of the debt remedies are) as we would be allowed to keep some of any extra monies we get. This wouldn't happen with bankruptcy as far as I am aware, as I think they take everything spare for 3 years.

    Can an IVA take into account a bonus payment, even if it is not guaranteed? My hubby hasn't started the job yet but he does know that receipt of the bonus is dependant on meeting targets. If he doesn't hit them he doesn't get the extra money. It seems unfair for them to have a total claim on the money if he does get it. Where is the incentive in trying to improve our situation?

    I have had a look at some of the IVA company reviews but it is mind boggling, there are so many of them and several different review sites recommending different companies. Totally confused.

    With regards to the debt charities-I though they were working for the debtors not the creditors. Is this not the case? If so, where are we meant to go for impartial advice?

    Any more help you can offer would be very much appreciated as you have been through the IVA process.
  • UpToMyNeckInIt
    UpToMyNeckInIt Posts: 884 Forumite
    Part of the Furniture Combo Breaker
    edited 5 October 2014 at 8:08PM
    No such thing as 'impartial' as far as Iva's go. Important therefore to speak to all sectors, and the CAB and making up your own mind before taking the plunge.

    Yes, your IP will want your isa. If it were me, I would close the account, that way it is one less thing to mention, and that £300 is a useful emergency sum. Keep quiet about any cash you may have at home as well.

    If you are not a homeowner, do not be quick to dismiss going BR. Living allowances are similar to those in an iva, and at worst, you will be looking at a 3-year IPA, vs a 5-year iva.

    Even factoring in the bonus income issue, over 5 years I would guess that going BR is the quickest and cheapest way for you to get a fresh start. I'm no expert though, but certainly something to discuss with CAB and any private sector companies you chose to speak to.

    Hopefully someone here with better BR knowledge might be able to clarify your concerns.

    Best of luck whatever you decide.
  • BR should only be considered as a last resort. Doesnt matter if you rent your property or not. The implications of BR versus an IVA are huge.

    DMP's are genuinely a complete rip off. In my profession I have heard of people in DMP's for 10 years and have got nowhere with their payments.

    Also be very wary of DMP that offer you an IVA. If you are in a DMP and you decide to go for an IVA with another company and your DMP provider says they can do one for you, ask this....why was it never offered in the first place. A lot of DMP providers do not have an insolvency practioner so therefore they sell your account to an IP.

    IVA's are probably the best way of getting your debts sorted especially if you are considering repairing your credit file once you have completed your IVA. With BR its soooo much harder to do.
  • CKhalvashi
    CKhalvashi Posts: 12,130 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    cwalkero wrote: »
    BR should only be considered as a last resort. Doesnt matter if you rent your property or not. The implications of BR versus an IVA are huge.

    DMP's are genuinely a complete rip off. In my profession I have heard of people in DMP's for 10 years and have got nowhere with their payments.

    Also be very wary of DMP that offer you an IVA. If you are in a DMP and you decide to go for an IVA with another company and your DMP provider says they can do one for you, ask this....why was it never offered in the first place. A lot of DMP providers do not have an insolvency practioner so therefore they sell your account to an IP.

    IVA's are probably the best way of getting your debts sorted especially if you are considering repairing your credit file once you have completed your IVA. With BR its soooo much harder to do.

    Any DMP/IVA/BR should be considered as a last resort, and it is completely wrong to suggest one over another as a 'one fits all' for everyone.

    Is there any reason you seem to intent on IVA's over any other option?
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  • UpToMyNeckInIt
    UpToMyNeckInIt Posts: 884 Forumite
    Part of the Furniture Combo Breaker
    edited 6 October 2014 at 1:54PM
    cwalkero wrote: »
    BR should only be considered as a last resort. Doesnt matter if you rent your property or not. The implications of BR versus an IVA are huge.

    DMP's are genuinely a complete rip off. In my profession I have heard of people in DMP's for 10 years and have got nowhere with their payments.

    Also be very wary of DMP that offer you an IVA. If you are in a DMP and you decide to go for an IVA with another company and your DMP provider says they can do one for you, ask this....why was it never offered in the first place. A lot of DMP providers do not have an insolvency practioner so therefore they sell your account to an IP.

    IVA's are probably the best way of getting your debts sorted especially if you are considering repairing your credit file once you have completed your IVA. With BR its soooo much harder to do.

    Some very fair points

    I agree with your sentiments on DMP's: In my opinion, unless you can clear it in less than 6 Years or so, they are best used as a 'holding patern' to give the customer breathing space to make a proper decision.

    In my mind to some degree, insolvency is insolvency regardless of which form you choose/are forced down.

    Being both a homeowner and a company director, I never really looked into BR - it really was not an option for me, so I'm no expert.

    Saying that, based on what I have read over the last couple of Years, IVA's do seem to offer a little more flexibility and convenience than going BR - especially if the OP's concerns are true - relating to the total loss of bonus/commission income in an IPA, vs keeping 50% of it in an IVA. Homeowner or not, the latter option will allow a more tolerable lifestyle.

    Some insurance companies will not insure BR customers (past or present), but will cover those in IVA's. I'm sure the same principle applies to the availability of other financial products: My IVA allows me to obtain £500 credit, and I'm not sure if the same applies to BR/IPA customers etc.

    Also, IVA expenditure guidelines allow for a few small 'luxury' items: Sky TV, mobile phone contract etc... as well as a half-decent car. All of which are not available to BR customers.

    It would be interesting to hear of other implications of BR vs IVA - all useful stuff for people with large debts to consider.

    Saying that, as difficult as credit file recovery may be, people clearly do move on after going BR and IVA.

    So I guess the OP needs to consider if the additional flexibility/convenience offered by a 5-Year IVA is better than taking more financial pain, but for a shorter period, in a 3-Year IPA (of course, it may well be the case that the OP could get discharged pretty much straight away, if they are deemed to be unable to afford an IPA).
  • Well after much research and reading the very helpful replies on here, we have decided to go down the IVA route and have an appointment to speak to Payplan about it next week.
    My experience with them so far has been a good one and despite some of the reservations on here, I feel they are a good fit for us.
    Will let you know how it goes.
  • wba31
    wba31 Posts: 2,189 Forumite
    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)..


    Step Change and NDL are not sponsored by banks/credit card companies, they receive fair share contribution, its a way of charging the creditors for their existence, and not people needing debt advice. They are also charities so cannot make a profit, so why would they be trying to con money out of people? Payplan make a profit, so maybe we should push people there, or to the Gregory Penningtons and Baines and Ernst fee chargers of this world... The whole industry is being looked into by the FCA, so will be interesting to see their findings. If you had a bad experience you should have made a complaint and let them deal with it, in my opinion the free debt advice providers should be the only place people go to for debt advice, include payplan in that if you wish, but if i cannot help someone, I utilise the free providers who are nothing but excellent.

    I asked someone i spoke to at StepChange about referring IVAs to GT, and they said they do this with Self employed and northern irish IVAs. I cant remember why they said they do this, but its not all IVAs.
  • UpToMyNeckInIt
    UpToMyNeckInIt Posts: 884 Forumite
    Part of the Furniture Combo Breaker
    edited 14 October 2014 at 11:10PM
    Sorry for the lengthy reply, but allow me to address each of your points:

    1. Stepchange et al are looking out for the people who fund them, ie: The Creditors is all I'm suggesting.

    2. Trust me: you will be surprised how much money can be made whilst 'not making a profit'. When I look at what my accountant does, nearly half my turnover gets lost in the ether.

    3. Who cares about the fees? The IVA fee forms part of your Monthly contributions. Only becomes an issue if you have a windfall etc.

    4. ...got better things to do than waste my time being fobbed off by some lengthy complaint process.

    5. PayPlan are a private sector fee charger, just like the rest, so why suggest them particularly?

    6. The practice of referring cases to GT is I suggest far more widespread than you suggest.

    Numerous other posts that I have read here and on another IVA forum, (where this was confirmed by 2 other IVA companies, one account coming directly from arguably one of the best IP's in the business:

    http://www.iva.co.uk/iva_sitemap/Anyone_had_an_IVA_through_Stepchange_CC_51769.asp

    ...suggest that this policy is clearly not limited to the just the self employed.

    Also, just Google 'iva stepchange grant thornton'. Loads of other accounts suggesting the same, and read this review:

    http://www.ivacomparison.com/iva_review_detail.iva.asp?r=7517

    Only reaffirms my belief that SC are not the 'impartial charity' some would have you believe.

    I know some CAB offices refer to GT as well. Again, not good. Great example of that here:

    http://www.ivacomparison.com/iva_review_detail.iva.asp?r=6435

    The above links took me about 2 minutes to find, suggesting that this is quite a widespread practice.

    If these organisations believe an IVA is right for someone, they should maybe compile a list of reputable firms for perspective customers to contact, not just have a cosy arrangement with one.

    Still think the charities are impartial? Do you read 'Credit Today'?

    A little while ago, I acquired, a copy of Credit Today, circulated primarily amongst the credit industry. I don't think you can buy it in the shops. The centre page spread is a huge advert for Stepchange (when they were still CCCS), boasting about how they are going to help many more people in debt. This is not going to come from ever more creditor referrals, but from massive advertising on TV, Press and internet. Where is this money coming from? Is it the millions in cash that they sit on perhaps? Let me quote a couple of lines from an advert that no ordinary man in the street/on the internet will ever see, as they will not dare publish it a newspaper,

    "For those in debt distress, that means a more caring and considered approach to their problems. For UK creditors, it means the best possible help and advice for your customers. And, importantly, more debt repaid."

    "With our debt management plans, all money repaid goes towards clearing the debt, None goes to us, Last year, we repaid over £312 Million to UK creditors. By referring customers to us, not the commercial sector, you're assured of better rates of debt recovery."

    "Call us now to find out more on **** *** ****. If you'd like to know more about how we can help your customers overcome debt problems, and manage their debt repayments, contact us now."

    This is an advert aimed solely at those creditors that do not refer directly. It blows away completely any lingering hint of impartiality that Stepchange claim to have. They mention no other solution than DMP, and are promising creditors a better return. Why? so they can earn more commission. It stinks. Stepchange receive, I believe, around an 11% "dividend" or "donation" on what they collect. Meaning £30-odd-Million per Year.

    Does running the charity really cost that much? Someone's doing quite nicely somewhere along the line I suspect.

    ...No surprise they rarely recommend anything other than DMP is it?
  • wba31
    wba31 Posts: 2,189 Forumite
    edited 15 October 2014 at 8:50AM
    Sorry for the lengthy reply, but allow me to address each of your points:

    1. Stepchange et al are looking out for the people who fund them, ie: The Creditors is all I'm suggesting. As an advisor who has referred to Step Change and NDL and dealt with them first hand, I have only ever received good advice and support

    2. Trust me: you will be surprised how much money can be made whilst 'not making a profit'. When I look at what my accountant does, nearly half my turnover gets lost in the ether. As a charity their accounts should be available online. SC in particular have grown in size phenomenally in recent years, maybe they are reinvesting into trying to help more people

    3. Who cares about the fees? The IVA fee forms part of your Monthly contributions. Only becomes an issue if you have a windfall etc. IVA fees and paying for debt advice are 2 different things. heard about the company in Rhonda Cynon Taff who tried charging clients £300 for a DRO? not everyone can do an DMP or IVA

    4. ...got better things to do than waste my time being fobbed off by some lengthy complaint process. but you'll sit on here discrediting and trying to put people off getting the free help they need. If they approach someone and dont like the advice they're given they can go elsewhere. problem i find is there are too many experts at debt advice that are not trained debt advisors who give all the expert advice based on opinion. The industry needs free debt advice providers

    5. PayPlan are a private sector fee charger, just like the rest, so why suggest them particularly? Payplan are free to client, they are just not a not-for-profit

    6. The practice of referring cases to GT is I suggest far more widespread than you suggest.

    Numerous other posts that I have read here and on another IVA forum, (where this was confirmed by 2 other IVA companies, one account coming directly from arguably one of the best IP's in the business:

    http://www.iva.co.uk/iva_sitemap/Anyone_had_an_IVA_through_Stepchange_CC_51769.asp

    ...suggest that this policy is clearly not limited to the just the self employed.

    Also, just Google 'iva stepchange grant thornton'. Loads of other accounts suggesting the same, and read this review:

    http://www.ivacomparison.com/iva_review_detail.iva.asp?r=7517

    Only reaffirms my belief that SC are not the 'impartial charity' some would have you believe.

    I know some CAB offices refer to GT as well. Again, not good. Great example of that here:

    http://www.ivacomparison.com/iva_review_detail.iva.asp?r=6435

    The above links took me about 2 minutes to find, suggesting that this is quite a widespread practice.

    If these organisations believe an IVA is right for someone, they should maybe compile a list of reputable firms for perspective customers to contact, not just have a cosy arrangement with one.

    Still think the charities are impartial? Do you read 'Credit Today'?

    A little while ago, I acquired, a copy of Credit Today, circulated primarily amongst the credit industry. I don't think you can buy it in the shops. The centre page spread is a huge advert for Stepchange (when they were still CCCS), boasting about how they are going to help many more people in debt. This is not going to come from ever more creditor referrals, but from massive advertising on TV, Press and internet. Where is this money coming from? Is it the millions in cash that they sit on perhaps? Let me quote a couple of lines from an advert that no ordinary man in the street/on the internet will ever see, as they will not dare publish it a newspaper,

    I would encourage you to read the publications step change put out in 2012. about how long it took people to get debt advice from first struggling. about how many people do not know where to go for free advice. that's why they advertise. This country has a real debt problem and i see their ads as a good thing. I wish CAB and NDL could advertise. the MAS has gone a little way toward it.

    "For those in debt distress, that means a more caring and considered approach to their problems. For UK creditors, it means the best possible help and advice for your customers. And, importantly, more debt repaid."

    "With our debt management plans, all money repaid goes towards clearing the debt, None goes to us, Last year, we repaid over £312 Million to UK creditors. By referring customers to us, not the commercial sector, you're assured of better rates of debt recovery."

    "Call us now to find out more on **** *** ****. If you'd like to know more about how we can help your customers overcome debt problems, and manage their debt repayments, contact us now."

    This is an advert aimed solely at those creditors that do not refer directly. It blows away completely any lingering hint of impartiality that Stepchange claim to have. They mention no other solution than DMP, and are promising creditors a better return. Why? so they can earn more commission. It stinks. Stepchange receive, I believe, around an 11% "dividend" or "donation" on what they collect. Meaning £30-odd-Million per Year.
    The creditors are key in referring for debt advice, i see that myself in the clients i see, often told by creditors to get help. they arent going to sign up to refer if they are told that budgets are gonna be maxed to the hilt and £1 token offers will be made. The same way that not everyone is suitable for an IVA or DMP, not everyone is suitable for BAnkruptcy or DRO. AMAZINGLY i have had perfect DRO and BR cases that want a DMP!

    Does running the charity really cost that much? Someone's doing quite nicely somewhere along the line I suspect.

    ...No surprise they rarely recommend anything other than DMP is it? Recent publication by the Insolvency Service on DROs shows that SC have 2% of intermediarys and complete 20% of DROS. I refer DRO clients to them a lot and deal with them myself. I ahve also seen figures that only 25% of their clients do DMPs. i have remembered it because it shocked me that the number is so low. If you wanted an up to date figure im sure they would provide it, i heard this around 2 or 3 years back

    I've added my opinions in red above. I think we both know we could argue the toss for days, or simply agree to disagree as we have both had differing experiences of SC (in this case) but NDL for myself too.

    I cannot comment on IVAs and GT from SC point of view, i dont know much about them, most my clients are BR or DRO clients. I have said it before in these forums, if we cannot direct people to SC or NDL for free impartial (optional word in this conversation) advice, then where can we send them? CAB doesnt suit everybody, there is CAP (a charity who also recieve fair share contribution) or Payplan, who because they take a profit i trust less than the charities. I respect your reservations, but on a forum for people looking for help, i do not know where else people are supposed to go, which is why i fight the cause for the big 3 (CAB, SC and NDL)
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