Help - missold IVA??

Muffin5

I have just found out that my husband applied for an IVA without telling me. He had around £15,500 credit card and overdraft debt. He earns £1888 a month after tax, spends around £1000 a month on bills, and was making debt payments of £700 a month.

I don't think they have explained the full implications of this insolvency arrangement with him, he was talking as though wverything is all sorted now, and this company are just sorting it all out for him and the debt will just be written off. I feel like this is a completely unsuitable product for us - I have £3000 in savings I could have given him towards this debt if only he'd spoken to me about it before.

Has anyone ever had an IVA? Can you get out of it if it has been missold? What happens to the debt then, does it go back to the original creditors? Is all of this going to stop us getting a mortgage in the future?

PrettyKittyKat

The IVA hasn't been missold on the basis that your husband didn't talk to you first about it. This is something you should be considering and addressing between yourselves. You are right that it is a solution that will impact you both so your husband should have considered this and been hones with your regarding his financial circumstances and decisions. Unfortunately this didn't happen but the IVA company can not be held accountable for this.

On what basis do you think it has been missold? You would need substantial evidence, not just that you 'think' they haven't explained things. It is extremely rare for an IVA to be missold as it is a regulated industry and the IP's can be personally fined for not following the rules. Not to say it doesn't happen but it is extremely rare.

Your husband would have received indepth documents regarding the IVA which he should have read and signed to confirm he didn't. There would then have been a period until the creditors meeting (I think usually 14 days) during which time he could have cancelled the meeting and not gone ahead. So he had plenty of time to think things through, speak to you, get alternative advice etc.

Your £3,000 wouldn't have touched his debt of 15.5k, he still would have been left with substantiate debt afterwards and of course the additional interest being added each month. Maybe your husband recognised this and wanted to put a solution in place that left him with more money left over each month (as going off your figures he only had £188 per month left after bills and debt repayments) and then debt free ready to move on.

Your husband is right that the IVA company will be running his IVA for him and a portion of the debt will be written off at the end of the (usually) 5 years. In this time your husband needs to maintain his payments, report and evidence his income and expenditure and pay in a portion of any additional monies due. If he does this then he will complete successfully. i am guessing that you don't own a property currently due to your question about getting a mortgage.

This will impact your husbands ability to get a mortgage for the next few years but the impact will be limited after this. For 6 years from the start date the IVA will show on his credit file, and in the current climate he will not be able to get a mortgage. After this time he will have a very limited credit history so will have the same chances of anyone else who has a very limited credit history. It may be best to build some history after the IVA but may not be necessary. Presumably this is several years away and alot can change in lender criteria in that time! However, it would be best to avoid lenders who he had debts included in their IVA as they are allowed to check their own records which will confirm he was previously insolvent.

Your husband can cancel the IVA and terminate it. The creditors would then be able to recover the debts as they did before so he would have to reinstate his payments and interest will continue to be added. The debts will also likely be in arrears as the full payments have not been received during the IVA. Your husbands credit history will still be affected as it will show a failed IVA for 6 years from the start date, and of course the arrears will then show.

Muffin5

Thank you for your reply. I wasn't suggesting it was missold because I was unaware of it - I hope I didn't give that impression. He just seems to have no real idea of what he has signed up for. I'm currently waiting for him to email me the documents he has so that I can look over them. I just feel so helpless and sad.

foxy-stoat

Not much you can do after reading the documents but you both should really know what he has signed up to, being as you are married.....if you already have a mortgage then this is particularly important.

For me the level of debt he was in isn't enough to take out an IVA, you need to be in over double your nett annual salary and have defaulted for a few months to make the hardship worth while, but it will be a lesson none the less - 5 years is a long time.

You have an option to offer a full an final settlement of the IVA if he can prove that someone will bail him out with cash - may be if you can get £7000 it may be listened to by creditors but I am not sure if the money can come from the "household" so to speak as he may of already stated that there are no savings - again not sure if spouse's savings are classed as separate but worth a go though.

PrettyKittyKat

it isn't uncommon for someone on an IVA to not know the ins and outs. It is usually a stressful tine that leads them to consider an IVA and then put a proposal forward. He will have been given three options debt management, IVA or bankruptcy and he would have needed to make a decision as to which was best for him. That's alot to take on board and digest, so it can take people a few months even a couple of years to get into the swing of running their IVA successfully.


It is also worth checking how he has filled out his income and expenditure in his proposal too. I have seen IVAs where in the proposal it states that the spouse knows nothing of the debt and therefore nothing of the IVA so creditors have to accept that the insolvent partner pays 50% of all bills. Or pays x y and z, whilst partner pays x y and z which equals approx the same amount. Check that your husband has properly declared this and not declared the full household costs as this will need rectifying for him to complete successfully if he has.

I can understand why you feel sad. But at least he has been able to speak to you about it now and you can help him ensure that the IVA completes successfully and you can both move on from this in years to come.

Once you have a copy of his proposal and chairmans report if you have any questions let us know, I am sure one of us can help

(I presume he is early on the IVA but if he isn't you should also ask for a copy of his annual reports)

sourcrates

Hi,

I’m afraid I have to disagree with pretty kitkat.

IVA ‘s have been mis-sold on a monumental scale, an IVA for a 15k debt only seeks to confirm this, although there is no upper or lower debt limit, IVA’s are generally designed for people with massive debts, but who cannot go bankrupt due to ownership of a property.

All Individual voluntery arrangements attract fees, but there is no fixed fee structure, so an IP can charge what ever they like to administer it, so they can be very lucrative.

It’s unlikely much of the debt will be written off, it will depend how things develop over the 5 years, or 6 years, as required.

His other options would of been debt relief order or debt management plan, either of which may of been more suitable.

foxy-stoat

Too late now but for anyone else considering IVA or BR, you need to do the PPI reclaim thing first, sell as much stuff as you can and down value the car(s) and spend less budget more - pay everything into your debt and reduce the monthly interest you pay to a minimum.

Obviously if your over committed and using one card to pay another and on the verge of defaulting then you are probably past the point where you can make a sizable difference so just pull as much cash from your remaining cards as you can - put the money in a safe and leave it in the attic and forget about it....push the button on an IVA.

Muffin5

Will we ever be able to get a mortgage in future or is he blacklisted? I am in my mid 30s and had my heart set on buying a house.

fatbelly

His credit file will be affected for 6 years. Yours will only be affected if you have a joint financial product such as a bank account or joint loan.

Muffin5

What about a joint savings account we had a while back? Also, we are jointly named on things like home insurance.

fatbelly

It's worth getting copies of your credit reports (they are now free) to see what is on there. Savings accounts should not be, home insurance is very unlikely to show

https://www.experian.co.uk/consumer/statutory-report.html
https://www.equifax.co.uk/Products/credit/statutory-report.html
https://www.callcredit.co.uk/consumer-solutions/your-credit-report/statutory-credit-report

Long-term this may not be a disaster. As you did not know about the IVA they should not have used your income details to calculate his share of the household expenses. The default is a 50:50 split, which is an advantage if you earn more than him.

As a couple you need to be saving toward a deposit (savings account in your name) and in 5 years his debts should be gone. If he was going to get debt free using a debt management plan, that would have cost him around £260 per month to clear in the same timescale, and it's an informal solution so you can still get awkward creditors who refuse to suspend interest. The IVA should have been set up at significantly less than £260 per month.

The devil's in the detail, as they say