Lookin like an IVA for me

Angel-spirit

Hi... I am complely new to all of this and I'm just starting to get my head around what will be happening over the coming months and years.

My situation is that I live with my husband, 2 children and our dog.

I have built up a massive £53000 worth of debt. Don't ask me over how long as I couldn't really say. It seems I've been in more or less debt the whole of my adult life and over the last few years this has really got away from me. I've been building debt on the debt by financing the debt by taking out more debt to pay for the debt I already hadm!!! I knew I was in serious financial difficulty a year ago but put my head in the sand until very recently.

I've put my families home in jeopardy. I'm so ashamed of what I've done. I ran this debt up on credit cards and my husband had no idea of the magnitude of our problem until a couple of weeks ago! He is being super supportive but of course this will put a major strain on all of us.

I finally took the jump and got in touch with step change ... I did have Vincent bond ringing me too...but haven't followed that up. Step change have suggested an IVA would be the best step forward. I've been told an insolvency practitioner (I think?) will be getting in touch in the next few days.

I've been advised to get my wages paid into another bank I don't have debts with so I've set up a basic bank account with llyods. I've also been told to cancel my direct debits for my credit cards and to let them know I'm talking to step change. I've already missed a payment to my Barclaycard because I don't have enough funds available to access more credit to pay the minimum amounts anymore.

I will be ringing the credit cards this week to let them know. It was suggested I make a token payment to each company. Do I pay more to the ones I owe the most to and how much is an acceptable amount? I have 8 creditors to pay.

Has anyone done the changing of bank accounts? I'm worried about my other DD not getting paid when I do this such as mortgage, council tax etc.

Do you know if the IVA companies step change deal with are good to work with? Nothing is signed yet... So there is still time to consider my options if you have other ideas you'd be happy to share.

If anyone has made it this far through my post and has some words of wisdom or advise... Especially if you have been through or are going through something similar I'd love to hear what you have to say.

Thanks

dancingfairy

Hi, getting in touch with Stepchange and getting a new bank account are great first steps. You need to get a new bank account and give the details to the important people, so yes, making sure things like council tax, the mortgage etc get paid (you should be able to do 7 days switching now but if you think there's going to be a problem it might be worth phoning the mortgage people or council tax people and just letting them know you are switching bank accounts, you may need to make a manual payment to them for one month).
In terms of making a token payment, it is a token payment. You are defaulting anyway so it's sort of irrelevant. It depends what you have 'spare' after the essentials such as mortgage, council tax etc is taken out. You can either split this fairly between your creditors so the biggest gets the biggest amount to the smallest getting the smallest amount or send them all an equal amount such as £5 each and then keep the rest as an emergency fund. I've seen both approaches before recommended on here. I don't think, in the grand scheme of things it makes much difference to be honest.
I would have a look at different websites, such as Stepchange or National Debtline and read up about IVAs and bankruptcy. Given your level of debt it would seem on the face of it that either an IVA or bankruptcy would be your best bet.
I'm not a huge fan of IVAs, partly because a lot of debt companies tend to sell these as way to make themselves money and not to help their customers out but also because they are only suitable for a minority of people and yet, are often seen as the solution to everything.
df

dancingfairy

For some people they take on an IVA without really knowing what it involves and crucially that it can fail. With an IVA you are pretty much bound by the terms of it. You can vary it in some circumstances but unless you can commit to paying the installments for 3 or 4 years then your IVA could fail and you would have wasted valuable time when you could have gone bankrupt and had it all over and done with.
It really depends on a) how much you have 'spare' each month for a debt solution b) whether your job would be adversely affected by bankruptcy and c) crucially how much equity is in your home.
See this page for a discussion of the pro and cons of each:
http://debtcamel.co.uk/hard-choices/iva-vs-bankrutcy/
What I would say is read, read,read. Read about other peoples stories and situations and also how the process works and ask questions and be sure before you sign anything. IVAs and Bankruptcy are legal processes and you should understand exactly what you are signing up to. Don't be afraid to ask questions and take time to decide what to do, don't be rushed in to making a decision. You should be able to make token payments for at least 1 month (if not 2) whilst you decide on your best course of action.
Best of Luck
df

owlet

I agree with dancingfairy. Reading everything and preparing are essential.

I don't know much about IVAs but while I was saving for my bankruptcy, I made token payments of £1 a month to my creditors for 6 months. Once I said I was in financial difficulty, they asked for my Stepchange reference number & all accepted the token payment. This stage will be the same if you are looking at IVA.

For now, I would just pay £1 a month while you get sorted. I wouldn't think about paying more orcworking out percentage payments. Use the breathing space to relax a bit & decide what you want to do.

With both options (bankruptcy & IVA), being prepared is the key. I'm glad you went to Stepchange & didn't go to a fee charging company.

How much spare income to you have to pay into an IVA? As DF said, bankruptcy may be a better option considering your level of debt but it depends on the answers you give to her questions.

Have a read of the stickies on the bankruptcy board to get the full picture of this option & do come back with any questions.

debtfree2016

Hello Angel Sprirt
Welcome to the forum and reading the thread shows you have done some reading. Token payments are not necessary but if you wish to make them you can. You will need to check if Lloyds bank is IVA friendly by that I mean if they find out you are in an IVA they may close your account. Nationwide have a flexi account with no O/D, you will not be able to have an O/D of CC whilst in the IVA.
Once you have signed the paperwork there will be a period of time before the creditors meeting. This is the tricky time you will receive telephone calls from creditors chasing you for payment you should not make any payments, your IVA company will have the balances of your debts, if you make payments (token or not) you will be favouring creditors.
Take time to read through threads on this site to make sure you fully understand the pros and cons of entering an IVA. Do you have a mortgage ? is it INT only or RPMT ? Fixed ? the reason I ask is as soon as you sign the paperwork you are bound to those repayments. so if you have an increase in bills you wont be able to reduce the repayments unless you increase the term.
I started my IVA in 2011 and made d F&F in May 2015 it was a tough time but you learn lots from it.
One more question have you tried to claim all PPI of Bank Account Charges ?

helsbels72_2

Hi I believe Lloyds are one of the IVA unfriendly banks and once they get wind of it they have been known to close accounts down without warning - even if you don't owe them anything! I have a very basic barclays account and haven't had a problem.

National_Debtline

Hi Angel-spirit and welcome to the forum. I'm pleased you've felt able to seek advice here and more importantly that you've discussed the situation with your husband. These situations can be difficult enough as it is without feeling like you're alone in them.


Really sound advice from the posters above - the new bank account is an absolute must and if you need to pay some of your bills manually for now, so be it. I'd agree with owlet that simply paying £1 to each creditor for now is the simplest approach as it's just a short-term measure.


As suggested above, do make sure that you have definitively ruled out BR as a safe option before committing to any IVA you might do. It's often possible to declare yourself BR without necessarily putting your home at risk, but everything depends on the numbers.


Good luck


Dennis
@natdebtline

Angel-spirit

Hi everyone thanks for all the replies. Lots of information to absorb. I'm reading through this now. Will reply properly later as just finished my tea after a 12 hour day and I need my bed! Thanks for the support... It really means a lot ☺

notsurewherenext

Hi angel spirit I'm going for BR rather then IVA, we as a couple are sitting at £56,000. I'm currently saving for court fees at the moment. Hope it all goes well for you.

mwarby

Lloyds were IVA friendly for me about 2 years ago, had a forgotton about full account, which I switched to mid IVA(I spoke to an advisor in branch before switching). They were happy to open a second account, but they did remove the unused overdraft on the old account