Struggling with debt? Ask a stepchange debt adviser a question

Mark_the_Cabbie

Hello, we'd appreciate advice on the following... My daughter has had an IVA for sometime now... her overall debt was around £10k, which she understood was reduced to £5400, with 60 monthly payments £90... she has this in writing, which she has signed. However, they then reduced her payments to £67 per month even though she asked them not to, as she thought this would take her longer to pay off.
Then, out of the blue they increased her payments to £225 per month, based on her wages increasing. She explained that this was far more than she could afford (I understood that they could increase payments by 50% of any wage increase?). She has offered to increase the payments to £130 (more in line with what she can afford), but they are insisting on the higher amount. Furthermore, the IVA app shows that she has reduced the original £5400 to a little over £3k. We finally worked out a way for her to make the payments of £225, calculating that the remaining debt would be repaid by May next year, but the they informed her that the debt was now at £12k over 7 years... what was presented as a lifeline now has her in greater debt and making higher payments per month than her original loans and credit cards... is there anywhere she can turn to that will offer her an alternative solution to these unscrupulous people (who advertise on national radio, claiming to slash debt by up to 80% and allow you to make affordable payments)

StepChange_Aidan

Hi Mark,

Welcome to the forum.

An IVA is a legally binding agreement to allow people to make an affordable payment to their debts, usually over five or six years. At the end of the IVA any remaining debt is then written off.

It would depend on the terms of the agreement, but typically when someone has a wage increase, their monthly IVA contribution would rise by 50% of the increase in their disposable income. This doesn’t change the length of time that the IVA runs for, it can only by completed early if the debts and the Insolvency Practitioner’s (IP) fees have been repaid in full.

An IVA can be a good way to deal with debts in the right situation, but unfortunately there are a lot of referral companies that make commission by recommending IVAs to people when other debt solutions would be more suitable for them.

I’d recommend that your daughter contacts her IP to discuss her options. If an IVA is no longer viable, she could request that it is terminated and then look at other debt solutions (such as a Debt Management Plan or Bankruptcy). She could also raise a formal complaint to them if she feels that the IVA was mis-sold.

I hope this helps,

Aidan

fatbelly

StepChange_Aidan said:

Hi Mark,

I’d recommend that your daughter contacts her IP to discuss her options. If an IVA is no longer viable, she could request that it is terminated and then look at other debt solutions (such as a Debt Management Plan or Bankruptcy). She could also raise a formal complaint to them if she feels that the IVA was mis-sold.

I hope this helps,

Aidan

or even a Debt Relief Order

xcharlie87

Hi, I’m brand new to a DMP and step change have confirmed it’s set up with first payment being taken 1st of may. I was starting to relax and feel better about my situation when I got a letter today saying that my Halifax credit card have rejected my offer and will continue with their collection. 

I’m not sure what to do now.

StepChange_Aidan

fatbelly said:

StepChange_Aidan said:

Hi Mark,

I’d recommend that your daughter contacts her IP to discuss her options. If an IVA is no longer viable, she could request that it is terminated and then look at other debt solutions (such as a Debt Management Plan or Bankruptcy). She could also raise a formal complaint to them if she feels that the IVA was mis-sold.

I hope this helps,

Aidan

or even a Debt Relief Order

A DRO is also a potential option, although I took it from Mark’s post that his daughter would have more than £75 available in her monthly budget and so wouldn’t qualify.

@Mark_the_Cabbie Here are details of other some debt solutions that your daughter could consider looking into if her IVA is terminated.

Regards,

Aidan

fatbelly

Mark quotes various figures for the surplus including at one point £67 per month.

The girl needs a proper assessment by a debt adviser, ideally one who is also an approved intermediary

StepChange_Aidan

xcharlie87 said:

Hi, I’m brand new to a DMP and step change have confirmed it’s set up with first payment being taken 1st of may. I was starting to relax and feel better about my situation when I got a letter today saying that my Halifax credit card have rejected my offer and will continue with their collection. 

I’m not sure what to do now.

Hi Charlie,

Thanks for your post.

Some creditors may come back to you to say that they have rejected your offer in a DMP. Please don’t worry about this, it just means that they may pass the debt onto a collection agency.

You don’t need to do anything at this stage, but if the debt moves to another company please let us know so we can redirect the payments.

Contact from creditors will reduce over time, but if you receive any letters that have concerned you or need any further help, please get in touch with us.

There’s some more information on dealing with contact from creditors while on a DMP here.

I hope this helps,

Aidan

TroubleWithTribbles

Hi. I hope that you can help.  My 90 year old Mum has a DMP with Money Plus Advice for a good number of years and we have just completed an annual review and agreed a new payment going forward.  I only found out about all of this recently due to my father passing away in September and having to get more involved with sorting finances.  From what I can see, her current debt stands at about £11000

My concern is that she is paying a hefty monthly fee to this company and I have received recommendation through the forums to cancel payments to them and to transfer to a new DMP through Stepchange.

Is this possible and is it a simple enough procedure?  I would like to cancel the SO to Money Plus Advice and advise them that we no longer require their services, but I don't want to rush into things and maybe inadvertently create a problem.

Your advice would be very much appreciated.

Many Thanks.

StepChange_Patience

TroubleWithTribbles said:

Hi. I hope that you can help.  My 90 year old Mum has a DMP with Money Plus Advice for a good number of years and we have just completed an annual review and agreed a new payment going forward.  I only found out about all of this recently due to my father passing away in September and having to get more involved with sorting finances.  From what I can see, her current debt stands at about £11000

My concern is that she is paying a hefty monthly fee to this company and I have received recommendation through the forums to cancel payments to them and to transfer to a new DMP through Stepchange.

Is this possible and is it a simple enough procedure?  I would like to cancel the SO to Money Plus Advice and advise them that we no longer require their services, but I don't want to rush into things and maybe inadvertently create a problem.

Your advice would be very much appreciated.

Many Thanks.

Hi there

I'm sorry to hear about your dad passing away, I can understand how difficult it must be for your family at the moment. Thank you for sharing your mums situation.

A debt management plan (DMP) isn't a legally binding solution so she would be welcome to cancel it if she feels that the plan is no longer suitable for her and she's unhappy paying a fee each month leaving less to go towards her debts. 

You can find out more about cancelling a DMP here.

It would be worth supporting your mum to have a look at the terms and conditions to ensure there aren't any cancellation fees (these should be reasonable) and it's likely that she may not get a refund of the fees already paid. Once it's cancelled Money Plus Advice would advise her creditors that the plan has ended.

With that being said, if you're looking for StepChange to support her after this, if you make her creditors aware she's seeking free advice, they may give some discretionary time for her to do this or we could potentially support her with Breathing Space while she's getting debt advice or setting up a new solution. 

When you're both ready we'd gladly have a look at her situation to help her find the best way to deal with her debts, you can access our online tool for advice or alternatively we'd happily help over the phone. You can find the best way to contact StepChange here.

I hope this helps. 

Patience

TroubleWithTribbles

StepChange_Patience said:

TroubleWithTribbles said:

Hi. I hope that you can help.  My 90 year old Mum has a DMP with Money Plus Advice for a good number of years and we have just completed an annual review and agreed a new payment going forward.  I only found out about all of this recently due to my father passing away in September and having to get more involved with sorting finances.  From what I can see, her current debt stands at about £11000

My concern is that she is paying a hefty monthly fee to this company and I have received recommendation through the forums to cancel payments to them and to transfer to a new DMP through Stepchange.

Is this possible and is it a simple enough procedure?  I would like to cancel the SO to Money Plus Advice and advise them that we no longer require their services, but I don't want to rush into things and maybe inadvertently create a problem.

Your advice would be very much appreciated.

Many Thanks.

Hi there

I'm sorry to hear about your dad passing away, I can understand how difficult it must be for your family at the moment. Thank you for sharing your mums situation.

A debt management plan (DMP) isn't a legally binding solution so she would be welcome to cancel it if she feels that the plan is no longer suitable for her and she's unhappy paying a fee each month leaving less to go towards her debts. 

You can find out more about cancelling a DMP here.

It would be worth supporting your mum to have a look at the terms and conditions to ensure there aren't any cancellation fees (these should be reasonable) and it's likely that she may not get a refund of the fees already paid. Once it's cancelled Money Plus Advice would advise her creditors that the plan has ended.

With that being said, if you're looking for StepChange to support her after this, if you make her creditors aware she's seeking free advice, they may give some discretionary time for her to do this or we could potentially support her with Breathing Space while she's getting debt advice or setting up a new solution. 

When you're both ready we'd gladly have a look at her situation to help her find the best way to deal with her debts, you can access our online tool for advice or alternatively we'd happily help over the phone. You can find the best way to contact StepChange here.

I hope this helps. 

Patience

Thank you very much for your advice.  I have checked the T&C's with the existing DMP provider and there do not appear to be any cancellation fees involved.  I understand if (and when) I cancel with Money Plus Advice that they will in turn inform the creditors of this but I do not want them to become nervous that payments to them have ceased, but rather that there will be continuity.  If we complete an online application with yourselves, approximately how long does it take for the new DMP to become fully functioning and the creditors to be notified of this?  Currently, the next payment is due to be made on 1st May and I am wondering whether this should be cancelled or to let it stand and a new DMP in place before 1st June.  Again, your advice is very much appreciated.

Regards