Iva need advise

rahurajr

Hi,

Sorry for the long message first and thanks for taking time to read in advance.

I am trying to get my dad in to an IVA proposal and we are in talk with one of the charity. He has been struggling with debts for a long time and we have been kind of helping him to keep up with payments for the last few months, but cannot continue to support as its putting pressure on us and he doesn't want to get in to bankruptcy.

His debt stands around £45k with 8 creditors, but 5 creditors make up the big chunk.

He will have £230 surplus income after all the expenses including life insurance for him and his wife. Do you think this is sufficient enough to convince the bank? He is not a home owner and at the moment they are paying board payment to me and my sister as they are staying with us and our mom doesn't work.

I do not want bank to cancel their insurance policies and I have read online that Banks have requested people to contribute less or not to contribute towards insurance.. Could I contribute towards their insurance policies and declare as other income in the budget. Will the creditor agree to that fact that the money I am paying them is for their contribution to insurance policy payment only?

This will raise his surplus income to £300.

One more question, as per the calculation if he pays £300 per month in 5 years he would have paid back £17880 (39.91% of actual credit) and if the creditors extend it to one more year then he would have paid £21456 (47.89% of actual credit). As a rule of thumbs up, people usually say Bank expect 30p for every £1 he owe's.

But my question is, does that 30p includes the IP nominal and supervisor fee, as after all there deductions they will get money less than 3op for every pound owed right?

Thanks in advance

mwarby

My IVA was for a similar amount of debt with slightly lower repayment(but done as full and final from start).

The key is that the proposal is the best you can do, rather than the actual amounts and percentage repaid, some repay less than 1%. The idea of the IVA is to give you and the creditors an alternative to bankruptcy and this is one key way the proposal is accessed, does this proposal give the creditor the same or more than they'd get through bankruptcy

A big chunk of mine was barclaycard who i had 3 cards with(they took over 2), but they were no trouble at all. Obviously the individual creditors will vary

mwarby

Not sure about the insurance part of the question. but heres my thoughts

One thing you'll need to be careful of is your contribution being seen as income, and the creditors wanting the income without allowing the expenditure

Does the insurance have a cash in value ? if it does the creditors would be keen to cash it in. I'm pretty sure if going down bankruptcy route the OR would look to do the same

rahurajr

Hi mwarby,

Thanks for your reply.

Insurance has no cash in value.

How can I show the creditors that the income of £70 that they will be getting from me is only for insurance payment and not for anything else. In other words, how can I let them know that they wont get any money from me if this is not going to contribute towards their insurance?

As they have been paying for long, I do not want that hard work amount that they have paid up until now to end up in vain.

Many Thanks

Lincsdebt

I have had a life insurance policy throughout my IVA, I declared it and it was included in my annual budget. It is a straight policy, doesn't accumulate money and was a policy I had from way back to pay towards our mortgage if I passed away before a certain date. So as long as it's that kind of policy I can't see how it would be a problem.

adyj73

I've finished my IVA but if I remember rightly you had to have some form of Life insurance in place as a term of the IVA so I would discuss it with the IVA company

Max_Maxwell

The policies shouldn't pose a problem as long as they are insurance and not investment based. I entered my IVA with critical illness and income protection insurance policies running costing £50 per month. I was offering only £110 per month to the IVA with £30k debts and was accepted.

Everyone's circumstances are different, so no guarantee, but a reasonable IP should understand that the payments you are making to insurance policies is, in part, protecting their income.

Try Payplan - they were thoroughly decent with me.