Iva...the negatives?

Fizz_Bomb

Hi all. I have been recommended an Iva by both pay plan and step change and am just waiting for my phone call on Monday coming from their iva team to see if I can proceed.
I'm terrified, full of self loathing and to be honest, still desperately trying to think of another way, which is looking hopeless.
I've been doing a lot of reAding online on forums and suchlike, and I have to ask a question, you'll have to forgive my ignorance or my being nieve, but a lot of the posts on the forums have been about how hard it was for the duration of the iva and how many of them fail etc. I guess I'm just curious, because I am currently paying £490 a month on repaying my debts (albeit borrowing from Peter pay Paul) and StepChange have recommended a monthly repayment of £140. Obviously this is a massive difference which would help me enormously...so I guess I'm just wondering how it could be hard if you're better off?
Sorry if this post offends or sounds stupid, I'm not intending that at all, I'm worried I'm missing something really. Obviously I'm fully aware of how serious an iva is so know about the impact on credit file etc.
Grateful for any replies.

foxy-stoat

5 or 6 years is a long time to be in an IVA if (like me) you may have lived most of your adult life with some form of credit. You will learn how to budget and only buy things with your own cash, not the banks.

I used an excel spreadsheet and still do, very useful to plan your yearly/monthly budgets.

Everyone is different but if you have talked through with the charities and they have come up with this as your solution then good luck! Just do the PPI reclaim thing before going into the IVA, as at the moment any refund is yours.

DorisTrousers

Foxy Stoat makes a really good point there.

Is it possible, maybe through another charity, that you can make token payments for a while, in the event of there being possible PPI you could reclaim? £1 per month to each, put away the rest of the suggested payment. In 3 months, say, you will at least have a "kitty" for emergencies, or you could view it as starting from a position of strength rather than weakness. PP and SC won't do token payments so you will have to speak to someone else if you think that is an option. If you are in line for any PPI refunds, then that will either reduce balances if creditors offset, or will provide a pot that can be used for full and finals, or even a single premium IVA (so no 5 year struggle)

Of course, you may have no PPI at all, which makes waiting a less attractive idea. If this has to be done then the sooner you start the sooner you finish.

I'm more of a fan of IVA's than most on this forum, they are a massively better option in a lot of cases than DMP's for example, but only when they are done right. Make a mistake now and you will regret it for sure.

To answer the point re how hard they are, the answer to that is that they are as hard or as easy as you make them. They will look to take what you can afford, but clearly that is a fair deal if you are paying off debt with probable debt forgiveness at the end. Sure, it may involve lifestyle changes. Holidays may no longer be affordable, lavish Christmases etc. The question there, though, is not whether they are affordable going forward, more whether they were a cause of the problem in the first place. It does take work, and a different mindset/point of view, but usually well worth it in the end.

foxy-stoat

Fizz look at it this way, if your £20K of debt was and will be interest free until its all paid off (which it wont be) you would need to pay £333 for the next 60 months and not take out a single pound of credit. So an IVA is a cheaper way of dealing with your debt.

Just make sure that you are not entitled to any PPI refunds as if say you had £5000 refund, it may tip you over the edge to be able to pay back everything in 5 years without an IVA.

Fizz_Bomb

Thank you all. Unfortunately i have no ppI so nothing to gain there.
Another thing is, I haven't had to give my exact amounts to pay plan yet (phone call on Monday), and ive used my cards a fair bit this past week since my initial call to them. I've withdrawn some money and bought some things I desperately needed for my children. Will the creditors view this negatively when agreeing to my iva or not?
Foxy, you're right, the idea of having no safety net in the form of credit is very scary.

foxy-stoat

Unless your planning on withdrawing thousands of pounds in cash or buying a 50inch curved K8 (or whatever) TV then I wouldnt worry....a few hundred pounds is not going to make any difference. The figures you give to your IP will be different as you will be told to stop paying the cards once you proceed and the interest will be added anyway.

DorisTrousers

I would suggest casting your net a little further afield than SC and PP as well, talk to at least 2 or 3 others. Not that I have anything against them, but when it comes to IVA's both organisations are profit making commercial ones, so effectively no different to anyone else.

Where they do differ is that their nominees fees tend not be driven down at MOC by creditors, meaning that in the majority of cases that I have seen from them the fees are higher. In the event of failure (obviously, it is hoped that that would not be an issue), that will be a massive factor in relation to what you owe at that point.

Foxy Stoat is again right, any recent spending on essentials will not ruffle any feathers at all.

Fizz_Bomb

Thank you. Could you suggest who else I could try to speak to? I have phone calls from both PP and SC on Monday, but the more time I am left to stew over things the more I am terrified to proceed.

DorisTrousers

I don't think forum rules allow any recommendations, but certainly do your own research, you will be having a long relationship with who you choose to instruct.

greenbrucelee

I am in an IVA and I will give you the negatives that I have.

1. You will only have money for what is set out so forget about being able to do anything other than pay your bills, buy food and essentials.

2. You will basically have no social life what so ever

3. If you do a job where you have to do overtime often it will feel like you are working for nothing because you are allowed to earn 10% more than your basic wage but after 10% you have to give 50% of it to the IP.

4. If for any reason you have to take a payment break like I did they will not add an extra payment onto the IVA they will increase the amount you pay which will make you even more skint than you already are.

5. It can be very mundane just to work and not be able to do anything when your not working.

6. Christmas and Birthdays are crap because you are skint and can't really get anyone a decent present.

Positives

1. No interest applied
2. Creditors don't hound you.
3. Your IP distributes the takings from the IVA to the creditors.
4, after 5 years your debit is written off.