About to start IVA - PLEASE HELP

FrozenS

After many months of pondering I have decided to start the process for an IVA. I owe approx. £28,000 to 5 creditors. I also have a loan from a family member, fortunately they are aware of my situation and are in no hurry for me to pay this back.
I have completed the budget tool on the step change website which has recommended an IVA. I just have a few questions if anyone is able to answer them for me?


I have a joint mortgage with my husband, generally he pays the mortgage, council tax and utility bills and I pay for food, insurance, TV licence, school meals etc. I have only entered the payments I make on the budget planner - Is this acceptable or do things need to be shared out more equally?


I am aware I need to change bank accounts as one of the debts I plan to include on the IVA is my overdraft. I have checked the basic bank account with Nationwide however, I don't qualify as I already have a current account (at the moment). Can I open another current account with them and switch DD/Payments etc to that new account before I officially start the IVA process?


I am due to make credit card payments within the next week or two, should I still continue to pay these?


Thank you in advance.

mwarby

Re the loan to the family member, might be worth mentioning this to the IVA company, while you won't be allowed any budget to repay them during the IVA, they will get something(same as rest of creditors) and they can vote on the IVA.

Re the income and expenditure, I think it's fair enough to put down only what you pay. The IVA company will want to make sure your budget is accurate and sustainable (as you'll be expected to stick to it with minor revisions, for some years, although it can change more if your circumstances change significantly). They will also probably want to know a bit about what your partner earns and pays for, to ensure your not paying more than your fair share of household expenses.

Although you don't pay the mortgage, it's worth clarifying what will happen re any equity in the house

Re Nationwide, do you owe them any money (overdraft, credit card, loan, or mortgage) ? If so you really need to bank elsewhere, at least until the IVA is approved (even then not best idea IMHO, as accidents can happen, which no doubt would be put right, could be very inconvenient). If no debt with Nationwide, no need to move, and maybe no need to even downgrade your account, but I'd talk to them

I would suggest not using the switch service, but doing the move manually (is transfer balance, and setup new direct debits) as you don't want to move direct debits for old debts, or allow your old bank to claim money from direct debits hitting old account, from your new one

I personally would not make the payments, as they are clearly not affordable, with preferring one creditor over the others. You could pay the creditors a proportion of what you can afford split by share of debt, but this is going to be difficult especially as the creditors won't be happy with less than minimum payments. I would just try to live in new budget, keeping the surplus to one side(if not too much, the IVA company, will likely let you keep as contingency fund)

It is also worth speaking to more than one IVA company, as this will be a 5-6 year relationship, which without failing your IVA is difficult(pretty much impossible) to exit from/switch

FrozenS

mwarby wrote: »

Re the loan to the family member, might be worth mentioning this to the IVA company, while you won't be allowed any budget to repay them during the IVA, they will get something(same as rest of creditors) and they can vote on the IVA.

Re the income and expenditure, I think it's fair enough to put down only what you pay. The IVA company will want to make sure your budget is accurate and sustainable (as you'll be expected to stick to it with minor revisions, for some years, although it can change more if your circumstances change significantly). They will also probably want to know a bit about what your partner earns and pays for, to ensure your not paying more than your fair share of household expenses.

Although you don't pay the mortgage, it's worth clarifying what will happen re any equity in the house

Re Nationwide, do you owe them any money (overdraft, credit card, loan, or mortgage) ? If so you really need to bank elsewhere, at least until the IVA is approved (even then not best idea IMHO, as accidents can happen, which no doubt would be put right, could be very inconvenient). If no debt with Nationwide, no need to move, and maybe no need to even downgrade your account, but I'd talk to them

I would suggest not using the switch service, but doing the move manually (is transfer balance, and setup new direct debits) as you don't want to move direct debits for old debts, or allow your old bank to claim money from direct debits hitting old account, from your new one

I personally would not make the payments, as they are clearly not affordable, with preferring one creditor over the others. You could pay the creditors a proportion of what you can afford split by share of debt, but this is going to be difficult especially as the creditors won't be happy with less than minimum payments. I would just try to live in new budget, keeping the surplus to one side(if not too much, the IVA company, will likely let you keep as contingency fund)

It is also worth speaking to more than one IVA company, as this will be a 5-6 year relationship, which without failing your IVA is difficult(pretty much impossible) to exit from/switch

Thank you so much for your reply.


Reading back I didn't word the part about my bank very well. I currently bank with Barclays, whilst I am not at my overdraft limit yet, I will be if the payments are made to my credit cards etc. Would you suggest just cancelling the direct debits for the credit cards etc while I set up a new bank account with Nationwide? If these are cancelled do you suggest I still manually change the other direct debits to the new account with Nationwide or would it be possible to use the switch service?


Re Equity - We don't have any equity in the house at all, if anything we may be in negative equity. As we are on an interest only mortgage at the minute I do not expect things to change that much during the course of the IVA. Also I should add we do not have any assets that would could cash in.


Thanks again.

mwarby

I would personally cancel all the direct debits, and then leave the account alone. When creditors call tell them you are looking to setup an IVA and you are in discussions with debt advisers, this for most companies will give you a months breathing space

You could cancel the direct debits to your creditors, then use the switch service, but i wouldn't
- switching an account with an overdraft at limit or not to one without, may not be so smooth
- your creating a link where transactions going to old account can be applied to new(meant to stop direct debits and recurring card bouncing and causing problems, you want them to bounce!)
- many or most of your direct debits will likely be to creditors anyway
- opportunity for a spring clean, do you still want the subscriptions etc

re the equity, bear in mind a lot can change in five years, I think a fair few people who started their IVAs after the 2008 crash found themselves with unexpected equity to deal with.

mwarby

oh most important thing IMHO, if you switch or move manually. Move or withdraw the money you need to live on ASAP, your overdraft could be pulled at any time (especially if you need to tell barclaycard you can't pay, word may get to barclays pretty quick). The IVA will take while to setup, but best to move to living without credit at an unconnected bank ASAP

The other important thing is to ensure your employer pays the new account, you don't want to rely on a creditor forwarding it on(especially before IVA is formally agreed)

FrozenS

Thanks again for your help


Are you able to point me in the direction of some of the better companies to arrange an IVA through?

sourcrates

FrozenS wrote: »

Thanks again for your help


Are you able to point me in the direction of some of the better companies to arrange an IVA through?

All will charge fees, they come out of your monthly payment.

National debtline has advice here :

https://www.nationaldebtline.org/EW/factsheets/Pages/individual-voluntary-arrangements/iva-advice.aspx

I used debtfreedirect who were very good and kept contact to a minimum.

FrozenS

sourcrates wrote: »

All will charge fees, they come out of your monthly payment.

National debtline has advice here :


I used debtfreedirect who were very good and kept contact to a minimum.

Thank you, I'll take a look

mwarby

FrozenS wrote: »

Thanks again for your help


Are you able to point me in the direction of some of the better companies to arrange an IVA through?

I can't recommend the firm I used (PJG recovery) as they sold out of the IVA business(they were excellent for me though). I can recommend Vincent Bond, who advised me in the early stages and passed my case to PJG(they do DMP in house, but not IVAs)

With a smaller firm its nice to be a name and not a number, which is great in setup stage, for instance I had a couple of in depth chats with the IP(not just the IPs staff) to ensure everything was just right with the proposal. In a larger firm it's often near impossible to speak to your actual IP(but then if all goes smoothly theres often no need, the systems they have in place are enough). But then the smaller firms are also selling out (fees are on decrease, compared to workload), which is often far from ideal

Vikipollard

FrozenS wrote: »

After many months of pondering I have decided to start the process for an IVA. I owe approx. £28,000 to 5 creditors. I also have a loan from a family member, fortunately they are aware of my situation and are in no hurry for me to pay this back.
I have completed the budget tool on the step change website which has recommended an IVA. I just have a few questions if anyone is able to answer them for me?


I have a joint mortgage with my husband, generally he pays the mortgage, council tax and utility bills and I pay for food, insurance, TV licence, school meals etc. I have only entered the payments I make on the budget planner - Is this acceptable or do things need to be shared out more equally?


I am aware I need to change bank accounts as one of the debts I plan to include on the IVA is my overdraft. I have checked the basic bank account with Nationwide however, I don't qualify as I already have a current account (at the moment). Can I open another current account with them and switch DD/Payments etc to that new account before I officially start the IVA process?


I am due to make credit card payments within the next week or two, should I still continue to pay these?


Thank you in advance.

Reference the emboldened bits above:

- when I did my IVA, despite it being only myself entering into it I was required to put ALL expenditure on the forms, plus both my and my husband's salaries and individual financial responsibilities. I'd be staggered if you weren't asked to do the same - after all, how would they know your OH wasn't earning 5 x your salary but still only paying half the bills?

- is there any reason why the current account with the Nationwide could not become your wages/DD account? Assuming that one is not going to be entered into the IVA that is?

FrozenS

Vikipollard wrote: »

Reference the emboldened bits above:

- when I did my IVA, despite it being only myself entering into it I was required to put ALL expenditure on the forms, plus both my and my husband's salaries and individual financial responsibilities. I'd be staggered if you weren't asked to do the same - after all, how would they know your OH wasn't earning 5 x your salary but still only paying half the bills?

- is there any reason why the current account with the Nationwide could not become your wages/DD account? Assuming that one is not going to be entered into the IVA that is?

Thanks for your reply.


I'll be prepared to put my husbands income/expenditure on the forms. He has quite a lot of debt himself but is unable to obtain an IVA.


Yes, the plan is to use the new Nationwide account as my salary/DD account. I initially looked into the basics account but as I have a current account with another bank they said this wasn't suitable. I have opened a normal current account with them online (without OD) subject to me taking into the branch relevant ID docs.