Beware IVA advice from stepchange

Willc

Today I've had my OR interview after recently filing for bankruptcy.

My expenses were listed based upon advice from stepchange. The budget step change allowed me was very tight. Very tight. One example being monthly food and housekeeping allowance of £450 being "at the top end of what is acceptable for a family of 4". It turns out the OR thought that £750 was more reasonable for a family of 4 one of whom was still in nappies. Step change also said we would be allowed zero for luxuries etc. this is also wrong after having been allowed expenses for holidays and after school clubs.

While I understand that stepchange only provide a guide in this situation, they then went on to suggest an IVA as an alternative to BR because an IVA would allow for a more lenient allowance. My debts came to £140K and i was the sole earner supporting a family of 4. They then put me in touch with a "recommended IVA company".

This really felt like my details were sold to this IVA company and when I suggested that it felt like a sales call they backed off immediately.

I decided to proceed with BR anyway and used the budget suggested by stepchange which turns out was way to stringent.

I'm not suggesting anything underhand I'm just suggesting that stepchange should not be used as a single source of advice in these situations. I guess that stepchange were doing their best to avoid me having to go BR. If that is the case in not sure that was the best advice that's all I'm saying.

Be careful, these decisions are for more important to you than stepchange. There are other sources of advice, probably the district court being the most reliable.

egrescrimp

Thanks for sharing, you seem to have got yourself a very generous OR

Good luck for the future.

DorisTrousers

Did you speak to StepChange at all or did you just go through the online remedy tool?

Willc

We were in touch with stepchange on and off for about a year. They initially suggested BR and we agreed. Although not a decision we took lightly. We handed back keys etc and saved up for BR, based on stepchange advice. At the last minute - because we stopped paying the mortgage and second mortgage payments - they suggested we should go for an IVA.

This was really quite unsettling and upsetting. After the sales call from the IVA firm we got some different advice which agreed with stepchanges initial advice.

I'm so glad we didn't change our minds.

UpToMyNeckInIt

...Stepchange still referring customers to Grant Thornton are they? ...not the 'Impartial Charity' some would have you believe eh.

Good luck with your BR - as has been said, sounds like your OR is generous.

When I took out my IVA (for me it was the best option), it allows Sky TV, Mobile phone contracts, as well as the ability to retain a half-decent car, VS BR which (to my understanding) allowed none of.

Not sure what's changed in 2-Years, but all the best.

thewhiteavenger

I would say £450 is "at the bottom end of what is acceptable for a family of 4". It's only a little over £100 per week

It's an acceptable figure but if there are special circumstances like nappies and baby items then it is reasonable to increase that - though £750 would be at the top end as 755 would be the trigger figure for 2 adults, 2 kids under 14

fatbelly

Willc wrote: »

Today I've had my OR interview after recently filing for bankruptcy.

My expenses were listed based upon advice from stepchange. The budget step change allowed me was very tight. Very tight. One example being monthly food and housekeeping allowance of £450 being "at the top end of what is acceptable for a family of 4". It turns out the OR thought that £750 was more reasonable for a family of 4 one of whom was still in nappies. Step change also said we would be allowed zero for luxuries etc. this is also wrong after having been allowed expenses for holidays and after school clubs.

While I understand that stepchange only provide a guide in this situation, they then went on to suggest an IVA as an alternative to BR because an IVA would allow for a more lenient allowance. My debts came to £140K and i was the sole earner supporting a family of 4. They then put me in touch with a "recommended IVA company".

This really felt like my details were sold to this IVA company and when I suggested that it felt like a sales call they backed off immediately.

I decided to proceed with BR anyway and used the budget suggested by stepchange which turns out was way to stringent.

I'm not suggesting anything underhand I'm just suggesting that stepchange should not be used as a single source of advice in these situations. I guess that stepchange were doing their best to avoid me having to go BR. If that is the case in not sure that was the best advice that's all I'm saying.

Be careful, these decisions are for more important to you than stepchange. There are other sources of advice, probably the district court being the most reliable.

I agree with your post except for the final six words!

The plain truth is that you can get poor advice from anywhere, including your local court, Stepchange and this forum. The way forward is to do your own research using as many avenues as possible and weigh it so that you are comfortable with the strategy you choose.

I am pleased that bankruptcy appears to have worked well for you and your OR seems generous.

swardean

Remember the "Charity" Stepchange is 100% paid for by donations for Creditors. So I question the "impartial advice" given by them.

There are so many sweeping statements across these forums, to go to Debt charities rather than private sector. This is not always good advice.

DorisTrousers

swardean wrote: »

Remember the "Charity" Stepchange is 100% paid for by donations for Creditors. So I question the "impartial advice" given by them.

There are so many sweeping statements across these forums, to go to Debt charities rather than private sector. This is not always good advice.

Rather a sweeping statement of your own there, and not strictly true. The key here is that StepChange are free to users needing DMP's etc, and to most minds where the funding comes from to do that is irrelevant. After all, even if creditors do fund it, then why shouldn't they help to clear up the mess that they are, in part at least, responsible for creating?

StepChange do operate a fee charging and very lucrative IVA arm, no IVA's are free, everyone charges for IVA's, and every IVA proposal I have ever seen from SC carries a larger nominees fee than other commercial firms, but, again, to a point, so what? If that helps fund the rest of the organisation and isn't paid to senior executives in the form of exorbitant salaries is that not a good thing?

I do feel that they could, and should, be far more transparent in certain areas than they are, as that would help to avoid any conspiracy theories of non impartiality, but even some CAB's now refer IVA cases on to a commercial provider for a referral fee.

That said, it is absolutely spot on that anyone needing a debt solution, whatever that may be, SHOULD speak to at least 2 or 3 different organisations before making any decisions.

Depth_Charge

Hi

Another very interesting thread on what seems to be a familiar trend

It is absolutely paramount that people are given full proper independent, impartial advice on what can be life changing situations, that is the whole idea of debt advice.

I agree with others on it has to be best to go to 2 or 3 sources, do your own homework if you can, make sure you fully understand the advice given and the pros & cons of that advice and options.

There are a number of solutions available both informal and formal, what is appropriate will depend on circumstances, it should have nothing to do with who funds what and how.

The most important thing is that you get the advice and genuine informed choice of the appropriate solutions that are in your best interests.

There seems to be more & more debate & discussion around the debt advice sector on this type of issue, some of it heating up so to speak, with the signs being that this will intensify over the coming months and rightly so in my opinion

There has to be transparency, control & consistency or the whole thing is in danger of becoming some kind of lottery farce, you simply cannot have advice & potential outcomes that can differ so wildly, it is unbelievable and so wrong!

I really hope the FCA look in on this forum, one wonders what they will make of some of it if they did or do

My take as always, nothing changes there

DC

wereallbladesarentwe

Who did you take your IVA with please? I'm thinking of having one but could do with some advice as I don't really no what's best.