Is an IVA a good idea?

Frazzled10

Hi there
I'm currently in a DMP with Payplan and have been for about six years although don't feel like I've paid much off (debts approx £32k). They have contacted me today to arrange my annual review suggesting there may be more suitable options as a DMP is not - I'm guessing this is because I'm only paying £20 into it at the moment, they've spoken to me before about considering an IVA and am thinking this is probably the best option for me. I just wanted a bit of feedback from anyone else who's entered into an IVA with Payplan just so I have a better understanding of what I'm letting myself in for and if it is the best option?

Many thanks for your help :beer:

Stevie_Palimo

Info here :-

What is an IVA?

An IVA, or Individual Voluntary Arrangement, is a formal debt solution for people living in England, Wales or Northern Ireland.

An IVA can only be proposed through and administered by a licensed Insolvency Practitioner and as part of his role the Insolvency Practitioner acts as supervisor over the arrangement.

Introduced as part of the Insolvency Act in 1986, IVAs were created to act as an alternative to bankruptcy for anybody suffering an overwhelming debt problem yet wanted to avoid the full consequences of bankruptcy.

An IVA introduces a new repayment schedule that is based on affordability for the applicant, ensuring that the applicant's personal living costs are taken into account before the IVA payment is agreed.

Once the IVA has been agreed, creditors are legally obliged to freeze interest payments and to stop charging late payment penalties on any outstanding debts. They must also agree to refrain from contacting the applicant for the duration of the IVA.

An IVA has a fixed term, which is normally 5 years, after which all payments into it stop. At the end of the IVA the applicant is completely debt free, with any outstanding balances being legally written off under the terms of the agreement.

An IVA offers people protection over their assets, which may otherwise be vulnerable under bankruptcy proceedings, such as any equity in their home

An IVA also acts as an alternative to bankruptcy for those people whose profession precludes bankruptcy as a debt solution, such as people serving in the Armed Forces, the Police Force, the Prison Service, and certain professions working within the Legal and Financial sector.

An IVA is considered to be a private arrangement because even though it will be recorded on the insolvency register, unlike bankruptcy, is not advertised in the press

An IVA will have a negative effect on the applicant's credit rating for 6 years from the start date of the IVA, during which time the IVA applicant will find it extremely difficult to gain further credit. However, once this time period has passed, the applicant will soon regain the ability to successfully apply for credit.

sourcrates

If you only have £20 a month surplus to pay debts with, then its extreamly unlikely an IVA would be approved.

All IP's will manage your IVA in a similar way, National Debtline have an approved list of insolvency practitioners on there website, may be worth a look.

Best to fill out a statement of affairs so we can see what you have coming in and going out.

Link here :

http://www.stoozing.com/calculator/soa.php

National_Debtline

Hi

I agree with sourcrates that £20 per month for an IVA on £32k of debt doesn’t seem viable. It’s a good idea to take some advice from another independent advice charity to get a second opinion on your options, taking your whole situation into consideration.

James
@natdebtline

SPELLKASTER

I was in an IVA and it was the biggest mistake of my life.

Although my debt were around £11K at the time, they included my DLA as income and expected me to use it to pay my debts and it affect my disability as I had no money left at the end of the month.

After the 2nd year review they wanted more money off me then I could afford, so I told them where to go, plus by then I had paid nearly £3K into this, and the IVA company had only paid £158 towards my debts.

All the IVA company did was take money for themselves.

DONT do it it will damage your credit rating as well.

Frazzled10

The £20 I pay in at the moment is based on what I could afford in my last review last year, however my income has increased now so I do need to do a new budget and I know I'll have at least £50 to put towards my debts now, which when I have spoken to Payplan previoiusly, they have said is the minimum amount that an IVA can be set up with. I just wanted to hear people's experiences of doing an IVA with Payplan so I can go in aware.......I'm not going to go through any dodgy financial company that keeps most of the money I pay for fees!

sourcrates

Frazzled10 wrote: »

I'll have at least £50 to put towards my debts now, which when I have spoken to Payplan previoiusly, they have said is the minimum amount that an IVA can be set up with.

Hi,

I'm sorry to say I doubt £50 won't be enough either.
All IVA providers will charge you a fee, payable out of your monthly payments.

From my own Experience you would be looking at a minimum of £200 a month.
I would say, average monthly IVA payments are usually between £200-£600 upwards.

The reason for this is the fees involved, they amount to quite a few thousand pounds, £50 a month, even over 6 years, would not even pay the IP's fees, so there would be nothing in the pot for the creditors.

On those figures there's no way your creditors would approve it.

National_Debtline

It’s still worth posting a statement of affairs using the link sourcrates gave earlier to get an idea of how much you can realistically afford each month. Don't feel pressured to pay more than you can really afford.


James
@natdebtline